Scrap sales and taxable turnover under pre-amendment sales tax law were excluded absent business in those discarded items.

For assessment periods governed by the unamended definition of "business" under the Kerala General Sales Tax Act, taxability turned on whether the assessee was carrying on business in the particular commodity. Mere disposal of surplus, discarded or unserviceable items from the course of a principal business did not, by itself, establish business in those articles, and the sales of scrap and discarded materials were not business transactions within the definitions of "dealer" and "casual trader". The later enlargement of "business" from 1 July 1974 did not apply to the periods in question, so the sale proceeds of the discarded materials and scrap were excluded from taxable turnover.

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Issues: Whether the sale proceeds of discarded materials and scrap such as old gunnies, old drums, polythene bags, bottles, tins and similar items formed part of the taxable turnover under the Kerala General Sales Tax Act, 1963, for periods prior to the amendment of the definition of "business" by Act 22 of 1974.

Analysis: For the relevant assessment years, the unamended definition of "business" in Section 2(vi) governed the controversy. On the pre-amendment footing, taxability depended on whether the assessee was carrying on business in the particular commodity. The settled principle applied was that mere disposal of surplus, discarded, unserviceable or waste articles from the course of a principal business does not by itself show an intention to carry on business in those articles. The definitions of "dealer" and "casual trader" in Sections 2(viii) and 2(vii) also required transactions of a business nature, and the sale of scrap and discarded materials in these cases was found not to amount to such business transactions. The later amendment enlarging the definition of "business" with effect from 1 July 1974 did not govern the assessments in question.

Conclusion: The sale proceeds of the discarded materials and scrap were not includible in the taxable turnover of the assessees for the periods in question.

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