Business test for Government timber auctions: first sale under sales tax law made later sales non-taxable.

Regular and continuous auction sales of forest timber by the Government can constitute carrying on business under the Andhra Pradesh General Sales Tax Act, 1957, because the statutory definitions of business and dealer extend to commercial sales activity by the State. Timber and firewood being taxable at the point of first sale, the Government's annual auction sales were treated as the first taxable sale in the State. On that basis, later sales by the purchaser were second sales and fell outside tax at the first-sale point.

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Issues: Whether the Government's periodic auction sales of forest timber constituted business and the first sale under the Andhra Pradesh General Sales Tax Act, 1957, so as to make the Government liable to tax and render the petitioner's subsequent sale not taxable.

Analysis: The Act defines business broadly to include trade or commerce and transactions incidental or ancillary to them, and defines dealer to include the State Government if it carries on the business of buying or selling goods. Timber and firewood were specified in the First Schedule as taxable at the point of first sale in the State. The Court applied the principle that regular, frequent and continuous sales of a commodity may amount to carrying on business, and held that the Government's annual auction sales of forest timber satisfied that test. The earlier contrary view was not accepted as laying down the correct law in the light of the Supreme Court's approach on business in such transactions. Since the Government was the first seller, the petitioner's later sales to third parties were second sales and could not be taxed at the first-sale point.

Conclusion: The Government's auction sale of forest timber was the first taxable sale and amounted to business under the Act, but the petitioner's subsequent sales were not liable to sales tax.

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