JUDGMENT The judgment of the Court was delivered by Dr. B. P. SARAF J. - By this reference, the Maharashtra Sales Tax Tribunal has referred the following question of law to this Court for opinion under section 61 of the Bombay Sales Tax Act, 1959 ("the Act") : "1. Whether, on facts and in the circumstances of the case and considering the provisions of the Merchant Shipping Act, 1958 to be read with the provisions of the Sale of Goods Act, 1930, the Tribunal was justified in law in holding that the sale of the ship had taken place prior to May 6, 1985 ? 2. Whether on a true and correct interpretation of section 2(5A) of the Bombay Sales Tax Act, 1959 read with public circular dated January 21, 1986 issued by the Commissioner of Sales Tax, the Tribunal was justified in law in confirming imposition of sales tax and penalty on the applicant ? 3. Whether, on the facts and in the circumstances of the case and considering the provision of the Bombay Sales Tax Act, 1959 the Tribunal was justified in law in holding that the applicants were liable to pay tax prior to August 16, 1985, when explanation came to be inserted in section 2(11) of the Bombay Sales Tax Act, 1959, holding the shipping companies, amongst other entities, liable as dealers ? 4. Whether the sale of tanker by the applicants on the high seas was a sale within the State as defined by section 2(28) of the Bombay Sales Tax Act, 1959 ?" The first two questions have been referred by the Tribunal under sub-section 61 of the Act. The other two question, viz., question Nos. 3 and 4, have been referred by it under the direction of this Court under sub-section (2) of section 61 of the Act. 2. The material facts giving rise to this reference, briefly stated, are as follows : The assessee is Government of India undertaking. It is engaged in the business of carrying passengers and cargo. The controversy in this reference pertains to the period April 1, 1983 to March 31, 1984. During this period, the assessee was held to be liable for payment of tax under the Bombay Sales Tax Act on the sale of a ship (also referred to as "vessel" or "tanker") made by it to Indian Navy. The controversy in this reference pertains to the period April 1, 1983 to March 31, 1984. During this period, the assessee was held to be liable for payment of tax under the Bombay Sales Tax Act on the sale of a ship (also referred to as "vessel" or "tanker") made by it to Indian Navy. The case of the assessee before the assessing authority was that the transaction of sale of the ship to the Indian Navy was not exigible to tax, because it was a sale of a capital asset. It was contended that the assessee was engaged in the business of carrying passengers and cargo and the sale of the ship was not in course of its business. The assessing authority, however, did not accept the above contention of the assessee and levied tax at the rate of 10 per cent on the sale price of the ship. Against the order of the assessing authority, the assessee appealed to the Deputy Commissioner of Sales Tax (Appeals), Bombay. At the time of hearing of the appeal, the attention of the Deputy Commissioner of the Sales Tax (Appeals) was drawn to the trade circular dated January 21, 1986 issued by the Commissioner of the Sales Tax informing the trade that it was decided not enforce the liability on the shipping companies to pay tax qua their disposal of unserviceable or scrap ships in respect of the period upto August 15, 1985 except in cases where tax had been separately collected by them on such disposals. It was urged that since no tax had been collected by the assessee from Indian Navy on the sale of the ship, the assessee was not liable to pay any sales tax on sale thereof in terms of the above circular. The assessee also reiterated its earlier contention that the sale of ship by it, being a sale of capital asset, could not be subjected to tax under the Bombay Sales Tax Act. The Deputy Commissioner (Appeals) did not accept any of the above contention of the assessee and dismissed its appeal. The assessee went in further appeal to the Maharashtra Sales Tax Tribunal ("the Tribunal"). The Tribunal dismissed the appeal and confirm the order of the assessing authority and the Deputy Commissioner (Appeals). Hence, this reference at the instant of the assessee. 3. The assessee went in further appeal to the Maharashtra Sales Tax Tribunal ("the Tribunal"). The Tribunal dismissed the appeal and confirm the order of the assessing authority and the Deputy Commissioner (Appeals). Hence, this reference at the instant of the assessee. 3. The only controversy in this case is about the eligibility of tax under the Bombay Sales Tax Act on the sale of a ship by the assessee to the Indian Navy. The factual position is that the assessee was not engaged in the business of selling or supplying the ship, nor the sale or supply of the ship was incidental or ancillary of its business of carrying passengers and cargo. It was an isolated transaction of sale of a ship by the assessee to the Indian Navy. There is no a serious dispute about the fact that the ship was a capital assets in the hands of the assessee. The question that falls for determination is whether in the above circumstances, the sale of the ship by the assessee, can be subjected to tax under the Bombay Sales Tax Act. 4. Mr. G. S. Jetly, learned counsel for the assessee, submits that the controversy in this case is squarely covered by the decision of the Court in the Morarji Brothers (Import & Export) Pvt. Ltd. v. State of Maharashtra [1995] 99 STC 117 wherein, on the perusal of the provisions of the Bombay Sales Tax Act, it was held that the sale of the capital asset by an assessee would not amount to sale by a dealer within the meaning of section 3 read with clauses (11) & (5A) of Section 2 of the Act. Our attention was also drawn to the trade circular dated December 30, 1985 issued by the Commissioner of Sales Tax, by which all concerned were informed about the decision of the department not to enforced the liability to pay any tax by shipping companies qua their disposal to scrap or unserviceable ships in respect of the period upto August 15, 1985. It was pointed out that the only exception carved out in the said circular was the case of shipping companies which had obtained registration under the Bombay Sales Tax Act, 1959 qua their disposal of scrap or unserviceable ships and collected separately tax on such disposal. It was pointed out that the only exception carved out in the said circular was the case of shipping companies which had obtained registration under the Bombay Sales Tax Act, 1959 qua their disposal of scrap or unserviceable ships and collected separately tax on such disposal. It was contended that in the instant case, the assessee did not collect any tax on the disposal of the ship and being so, it did not fall in the exception carved out in the said circular. Our attention was also drawn to another trade circular dated January 12, 1986 issued by the Commissioner of Sales Tax reiterating the above decision. It was contended that it was well-settled now that any transaction of sale or purchase of capital asset is not a transaction in the course of business and hence sales tax cannot be levied thereon. Learned Counsel pointed out that though after the decision of this court in Morarji Brothers [1995] 99 STC 117, and attempt was made to levy tax on sale of capital goods with retrospective effect from January 15, 1975 by amending explanation of clause (5A) of Section 2 of the Act by insertion of sub-clause (ii) in the explanation thereto with retrospective effect by the Maharashtra Ordinance No. 11 of 1996, by Maharashtra Ordinance 4 of 1997, the Legislature itself made specific provision with a view of giving relief to the dealers in respect of the past transactions involving sales of capital assets. The learned counsel, therefore, submits that in any view of the matter, the sale of ship by the assessee to the Indian Navy in the instant case during the period prior to August 15, 1985, cannot be subjected to tax under the Act and the Tribunal was not correct in deciding to the contrary. 5. Mr. R. V. Desai, learned counsel for the Revenue, on the other hand, submitted that the ratio of the decision of this Court in Morarji Brothers [1995] 99 STC 117, is not applicable to the present case in view of fact that the assessee was a registered dealer under the Bombay Sales Tax Act. So far as the trade circulars issued by the Commissioner are concerned, it was submitted that the case of the assessee was not covered by the same. The learned counsel also submitted that the Commissioner is seriously considering withdrawal of the trade circulars in question. So far as the trade circulars issued by the Commissioner are concerned, it was submitted that the case of the assessee was not covered by the same. The learned counsel also submitted that the Commissioner is seriously considering withdrawal of the trade circulars in question. He also tried to content that the "ship" sold by the assessee was not its capital assets. 6. We are carefully considered the rival submission. The controversy in this case pertains to period prior to December 16, 1985. There is no dispute about the fact that the ship or tanker sold by the assessee was a capital assets of the assessee. The business of the assessee consisted of transporting goods and passengers. The sale of ship was not incidental to or connected with the business of the assessee. The case of the assessee is that sale of capital asset could not be subjected to tax, in any event for the period prior to the insertion of explanation to clause (11) of Section 2 of the Act. From the trade circular issued by the Commissioner from time to time, it is evident that all throughout, the Revenue was also of the same opinion. The real question that falls for our determination, therefore, is whether under the law as it stood prior to August 16, 1985 [before insertion of the explanation to clause (11) of section 2 of the Act] sale of a capital asset by a shipping company could be held to be a exigible to tax under the provisions of the Act. It may be pertinent to mention that the definition "dealer" in clause (11) was amended by the Maharashtra Act 14 of 1985 with a view to levying tax on disposal of unclaimed or confiscated goods by certain persons including unserviceable ships, etc., by shipping companies, notwithstanding anything contained in clause (5A) and any other provisions of the Act. Identical controversy came up before this Court in Morarji Bothers (Import & Export) Pvt. Ltd. v. State of Maharashtra [1995] 99 STC 117, wherein, on perusal of the definition of "business" in clause (5A) and the definition of "dealer" in clause (11) of section 2 of the Bombay Sales Tax Act, it was held that sales of fixed or capital assets by a dealer were not connected with or incidental to the business of selling goods. It appears that the Legislature wanted to levy tax on sales of capital goods despite the above decision with retrospective effect from January 15, 1975 and with that object in view, by the Maharashtra Ordinance No. 11 of 1996, amended the definition of "business" contained in clause (5A) of section 2 of the Act with retrospective effect from January 15, 1975 to include therein the sale or purchase of capital goods pertaining to the business of the assessee. By the said amendment, the following clause was added to the definition of "business" : "(ii) any transaction of sale of purchase of capital assets pertaining to such trade, commerce, manufacture, adventure or concern shall be deemed to be business and the expression 'capital assets' shall have the same meaning as assigned to if in the income-tax Act, 1961." The above Ordinance was replaced by the Maharashtra Act 19 of 1996. However, by Maharashtra Ordinance No. 4 of 1997, the above Act was amended to provide relief in respect of the past transaction involving the sale of capital assets of a dealer by substituting sub-sections (4) and (5) of section 16 of Maharashtra Act 19 of 1996 by the following : "(4) When any registered dealer who, before the date of commencement of this Amendment Act, has effected, - (a) any purchases from a person who is not a dealer; or (b) the sale of capital assets pertaining to his business, has objected to levy of the tax on such purchases or sales, or has not paid the tax only on the ground that such purchase tax is not payable on the purchases effected from the person who is not dealer or, as the case may be, such sales tax is not payable on the sales of capital assets or a business and that no such tax could have been levied or collected but for the amendments made in the Bombay Sales Tax Act, by this Amendment Act; and, - (1) where such dealer has been assessed, he has filed an appeal, or as the case may be, an application for reference against such levy on the grounds as aforesaid; or (2) where such dealer has not been assessed, he has not paid such tax on the grounds as aforesaid or has paid the tax under protest, then, notwithstanding anything contained in the Bombay Sales Tax Act as amended by this Amendment Act, he shall not be liable to pay the purchase tax or, as the case may be, the sales tax, in respect of such purchases or sales. (5) For the purposes of sub-section (4), the burden of proving that the purchases were effected from the person who was not a dealer, or that the sale was of the capital assets pertaining to the business of the dealer, and if the tax was not paid, such non-payment was only on the ground that such tax was not payable as aforesaid, shall be on the registered dealer who has effected such purchases or sales and is claiming such benefit." It is clear from the decision of this Court in Moraraji Brothers (Import & Export) Pvt. Ltd. v. State of Maharashtra [1995] 99 STC 117 and the Maharashtra Ordinance No. 11 of 1996, Maharashtra Act 19 of 1996 and the Maharashtra Ordinance No. 4 of 1997 by which provision was made for relief in respect of the past transactions involving sale of capital assets by a dealer, that no tax is leviable on the sale of capital assets made by a dealer prior to August 15, 1985. In the instant case, as the assessee had all through been objecting to levy of tax on the sale of ship made by it on the ground that no sale tax was payable thereon as it was a sale of capital asset of its business, even on the basis of the provisions of Ordinance No. 4 of 1997, on sales tax would be leviable on the sale of the ship by the assessee to Indian Navy. 7. Moreover, it is the consistent stand of the Revenue itself that the liability to pay tax by a shipping company qua its disposal of unserviceable or scrap ships in respect of the period up to 15th August, 1985 would not be enforced, if no tax had been collected separately on such disposal. By the trade circular dated December 30, 1985 issued by the Commissioner of Sales Tax, Maharashtra, the trade was informed of the decision of the department not to enforce the liability to pay tax by shipping companies qua their disposal of unserviceable or scrap ships in respect of the period up to August 15, 1985. The only exception was in respect of shipping companies which had obtained registration under the Bombay Sales Tax Act qua their disposal of scrap or unserviceable ships and which had separately collected the tax on such disposal. The only exception was in respect of shipping companies which had obtained registration under the Bombay Sales Tax Act qua their disposal of scrap or unserviceable ships and which had separately collected the tax on such disposal. It was made clear in the said circular that in view of the explanation added to the term "dealer" in clause (11) of section 2, the shipping companies would be liable as a dealer in respect of the disposal of unserviceable/scrap ships effected on or after August 16, 1985. By another trade circular dated January 21, 1986, it was made further clear that the above circular would be applicable not only to disposal of unserviceable or scrap ships, but also to sale of capital assets. The said circular reads as under : "By above referred trade circular, it was decided not to enforce the liability on shipping companies to pay tax qua their disposal of unserviceable or scrap ships in respect of the period up to August 15, 1985 except in such cases where the shipping companies had separately collected tax on such disposal. After the issue of the said trade circular, a representation was received that the shipping companies, liability, not only the respect of the tax on their disposal of unserviceable or scrap ships, but also of any other tax (such as sales tax on sales of other capital assets or purchase tax, etc.) payable for the period upto August 15, 1985 should not be enforced. On reconsidering the issue and having due regard to the legislative intention behind amendment to the terms 'dealer' which come into force from August 16, 1985 it has now been decided not to enforce liability on shipping companies to pay any tax for the period upto August 15, 1985. However, it is hereby clarified that if the shipping companies have collected taxes separately for the period up to August 15, 1985, such shipping companies would be assessed in accordance with the provisions of law. You are requested to please bring the contents of this circular to the notice of your members." In the instant case, there is no dispute about the fact that the assessee did not collect any tax on sale of the ship to Indian Navy. You are requested to please bring the contents of this circular to the notice of your members." In the instant case, there is no dispute about the fact that the assessee did not collect any tax on sale of the ship to Indian Navy. And distinction was, however, sought to be made between the shipping companies which were registered under the Bombay Sales Tax Act and companies which were not so registered and it was notified that shipping companies registered during the period up to August 15, 1985 would be liable to pay tax on capital assets for the period up to August 15, 1985 irrespective of whether they had collected tax or not. 8. It is clear from the above that the department itself had taken a view that no sales tax was leviable on sale of unserviceable or scrap ship or ship which was a capital asset of shipping company, if tax had not been collected separately on the sale thereof. The distinction sought to be made later between different shipping companies on the basis of registration, in our opinion, is not tenable in law. It is well-settled that the liability to pay tax is not dependent on registration under the Act. If a transaction of sale or purchase by any person is liable to tax under the provisions of the Act, tax would be leviable irrespective of whether he is registered under the Act or not. 9. In view of the above, we are of the clear opinion that no tax can be levied on the sale of ship, which was a capital asset in the hands of the assessee, made prior to August 16, 1985. In these premises, we answer question No. 3 in the negative and in favour of the assessee. In view of the above answer to question No. 3, the other three questions have become academic. They are, therefore, returned unanswered. The reference is disposed of accordingly with no order as to costs. Reference disposed of accordingly.