NASIM SIKANDAR, J.---In this departmental appeal under section 47 of the Sales Tax Act, 1990 an order of the Customs, Excise and Sales Tax Appellate Tribunal, Lahore, dated 16-5-2002 is assailed.
2. The assessee/respondent was found to have sold vehicles amounting to Rs.100,000 and Rs.150,000 during the years 1997-98 and 1998-99 respectively without payment of tax which, according to the Department amounted to Rs.35,600. By way of the order-in-original, dated 10-4- 2001 the Deputy Collector (Adjudication) Faisalabad, after usual proceedings maintained the levy of sales tax on disposal of vehicles though the amount due as sales tax was reduced from Rs.35,600 to Rs.22,500.
3. Learned Tribunal by way of the impugned order however, disagreed. In their view the sale of vehicles not being in course of furtherance of the business or taxable activity of the registered ' person, their proceeds was not liable to charge of sales tax in terms of section 3(1) of the Sales Tax Act, 1990. Accordingly the demand of Rs.22,500 as sales tax along with additional tax on the sale of vehicles was set aside. This has grieved the department.
4. After hearing the learned counsel for the appellant/Revenue we will refuse to interfere with the impugned order. The issue if sale of vehicles was a "Taxable activity" under section 2(35) of the Sales Tax Act, 1990 came up for hearing before a Division Bench of the Karachi High Court in re.
Collector, Customs, Central Excise and Sales Tax, Karachi (West) v. Novartis Pakistan Ltd. (2002 PTD 976). Their lordships on consideration of the provisions of section 3, 7 & 47 of the Sales Tax Act as well as section 2(12)(35)(41) finally concluded that in order to construe as "business" the activity must be recurring for profit motive and in the nature of trade, commerce or manufacture. The disposal of fixed assets in that case in the view of their lordships could not be construed as activity for profit motive or in the nature of trade, commerce or manufacture. Therefore, the same was not found to be an activity in furtherance of "business". In the view of their lordships the term "taxable activity" as defined in section 2(35) of the Act also did not permit levy of sales tax on disposal of fixed assets. It was further found that in order to be construed as a "taxable supply", the transaction must first qualify to be a "supply". Also that in order to become a "supply" the transaction must be "in furtherance of business". With reference to a number of judgments of the Hon'ble Supreme Court of Pakistan as also those of the Supreme Court of India their lordships concluded that to be construed a "business" there must be a continuous exercise or activity for the purpose of gain. It was further noted that in respect of fixed assets in question the assessee/registered person had not been able to claim input tax under instructions from the Central Board of Revenue. Accordingly, their lordships answered the two questions of law framed by the appellant as Revenue in the manner that there' could be no sales tax on disposal of fixed assets.
5, Since the legal as well as factual position with regard to the disposal of vehicles by the, registered person in the present case also remains the same, for the various reasons stated in the aforesaid judgment to which we subscribe, it is held that the two essential conditions of the charging. Section 3 namely "taxable activity" and "taxable supply" are not satisfied in the case of disposal of vehicles by the assessee/registered person in this case.
6. This departmental appeal shall, therefore, be dismissed.