Taxable turnover depends on business in the commodity: discarded goods escape tax, but regularly sold subsidiary products do not.

Under the Bombay Sales Tax Act, 1953, liability to include sale proceeds in taxable turnover depended on whether the assessee carried on business in that commodity. Sales of discarded or unserviceable articles and coal used in the factory were not taxable because mere disposal of surplus or used goods did not show an intention to trade in them, and the revenue had to prove a business of selling coal. By contrast, kolsi and waste caustic liquor, being regularly and continuously generated in the manufacturing process and sold as subsidiary products with market value, were treated as part of the taxable business turnover.

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Issues: (i) Whether sales of discarded or unserviceable articles and coal formed part of the assessee's taxable turnover under the Bombay Sales Tax Act, 1953. (ii) Whether sales of kolsi and waste caustic liquor were taxable as sales made in the course of the assessee's business in those commodities.

Issue (i): Whether sales of discarded or unserviceable articles and coal formed part of the assessee's taxable turnover under the Bombay Sales Tax Act, 1953.

Analysis: Liability to tax depended on whether the assessee was carrying on the business of selling the particular commodity whose sale proceeds were sought to be included in turnover. Mere sale of surplus, discarded, or unserviceable goods used in the business did not by itself establish an intention to carry on business in those goods. The same principle applied to coal purchased for use in the factory and later sold in part, because the revenue had to prove a business of selling coal and could not rely only on the volume or frequency of sales.

Conclusion: The assessee was not taxable on sales of discarded or unserviceable articles or coal.

Issue (ii): Whether sales of kolsi and waste caustic liquor were taxable as sales made in the course of the assessee's business in those commodities.

Analysis: Kolsi and waste caustic liquor were regularly and continuously produced in the manufacturing process and had a market value. They were not merely disposed of as surplus or unserviceable assets; they were subsidiary products arising from the manufacturing operations themselves. Their regular sale supported the inference that the assessee carried on business in those products, and the receipts from their sale were incidental to the business.

Conclusion: The assessee was taxable on sales of kolsi and waste caustic liquor.

Final Conclusion: The turnover from discarded stores, machinery, scrap, miscellaneous unserviceable articles and coal was excluded, but the turnover from kolsi and waste caustic liquor remained liable to sales tax.

Ratio Decidendi: For sales tax purposes, a person is liable on sale proceeds of a commodity only if the facts show an intention to carry on business in that commodity; sale of discarded or surplus assets does not suffice, whereas regularly produced and sold subsidiary products may form part of the taxable business turnover.

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