1975 (4) TMI 114 - HC - VAT and Sales Tax

Sale of empty gunnies not in course of business if no profit motive

Deputy Commissioner of Agricultural Income-tax and Sales Tax Versus Balakrishna Pillai

The Court held that the sale of empty gunnies by the assessee was not in the course of business as they were considered discarded materials, not entered ... - Issues:1. Whether the turnover from the sale of empty gunnies by the assessee is liable to be taxed.2. Whether the sales of empty gunnies are considered to be in the course of business.3. Whether the findings of the Appellate Tribunal regarding the sale of empty gunnies are based on valid legal grounds.4. Whether the interpretation of a Supreme Court decision by the Appellate Tribunal is valid and sustainable.5. Whether the approach of the Appellate Tribunal to the issue of sales of empty gunnies is incorrect.Analysis:Issue 1:The case involved the revenue seeking to revise an order exempting the turnover from the sale of empty gunnies by the assessee. The Tribunal exempted the turnover from tax, stating that the sale of empty gunnies was not in the course of business.Issue 2:The Appellate Tribunal held that the sale of empty gunnies by the assessee was not in the course of business, as the gunnies were considered 'discarded materials' accumulated during the cashew business. It was determined that the sale was not entered into with a profit motive and was not taxable.Issue 3:Questions raised included whether the findings of the Appellate Tribunal were justified in law. The Tribunal's decision was based on the premise that the sale of empty gunnies was not in the course of business and that the volume of sales was negligible, not driven by profit motives.Issue 4:The Tribunal's interpretation of a Supreme Court decision was questioned for its validity and sustainability. The Tribunal's decision was analyzed against the background of the Kerala General Sales Tax Act, 1963, and relevant definitions were extracted for consideration.Issue 5:The Court considered the definition of a 'dealer' under the Act, including casual traders, and concluded that the assessee, dealing in cashew-nuts, could not be classified as a casual trader. Therefore, the Tribunal's decision to exempt the sales turnover of gunny bags was set aside, confirming the order of the Appellate Assistant Commissioner.The judgment highlighted the importance of conducting business activities with a profit motive to be considered in the course of business for tax purposes. The decision also emphasized the need for a consistent course of dealings indicating an intention to continue business activities. Ultimately, the Court set aside the Tribunal's decision and confirmed the tax liability on the turnover from the sale of empty gunnies.