Business turnover and incidental scrap sales: unserviceable coal-dust was not taxable absent proof of a separate trading business.

Sales of discarded or unserviceable goods arising incidentally in manufacture are not taxable as business turnover unless the revenue proves that the dealer intended to carry on a separate business in those goods. The charging provision applies only where the assessee is engaged in the business of selling the commodity in question, and that intention must be shown by cogent evidence, including volume, frequency, continuity and regularity of sales. On the stated facts, the assessee was a dealer in glass bangles and not in coal-dust, and no material established a separate business in coal-dust. The coal-dust sales were therefore treated as outside taxable turnover.

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Issues: Whether sales of coal-dust, being unserviceable goods arising in the course of manufacture of glass bangles, formed part of the assessee's taxable turnover under the U.P. Sales Tax Act.

Analysis: Liability to tax under the charging provision depends on the dealer carrying on the business of selling the particular commodity in question. A manufacturer who incidentally disposes of discarded or unserviceable goods does not, by that fact alone, become a dealer in those goods. To treat such sales as business sales, there must be cogent evidence of an intention to carry on a business of selling that commodity, and the surrounding circumstances must show volume, frequency, continuity and regularity indicating such intention. On the undisputed facts, the assessee was a dealer in glass bangles, not coal, and the department produced no material to show any intention to carry on a business in coal-dust.

Conclusion: Sales of coal-dust were not taxable and the issue was decided in favour of the assessee.

Ratio Decidendi: Disposal of discarded or unserviceable goods arising incidentally in the course of manufacture is not taxable as business turnover unless the revenue proves an intention to carry on a separate business of selling those goods.

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