Taxability of manufacturing waste sales under the Central Sales Tax Act rejected where waste was treated as subsidiary by-product.

Sales of rayon yarn waste and staple fibre waste arising in the course of manufacture were held not exigible to tax under the Central Sales Tax Act, 1956 for the relevant assessment years. The Tribunal treated the goods as subsidiary by-products and relied on the absence, during that period, of any definition of "business" in the Central Act, while the Tamil Nadu General Sales Tax Act, 1959 had an expanded definition. The Madras HC accepted that the Revenue's earlier authorities did not displace that conclusion on the facts and legal setting governing the assessment years. The sales were therefore not liable to tax under the Central Sales Tax Act, 1956.

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Issues: Whether the sale of rayon yarn waste and staple fibre waste was exigible to tax under the Central Sales Tax Act, 1956, for the relevant assessment years.

Analysis: The turnover related to waste arising in the course of manufacture and sale of rayon yarn and staple fibre yarn. The Tribunal had treated the goods as subsidiary or by-products and had relied on the absence, during the relevant period, of any definition of "business" in the Central Sales Tax Act, 1956, while noting that the Tamil Nadu General Sales Tax Act, 1959, contained an expanded definition. The Court found that the earlier decisions relied on by the Revenue did not displace the Tribunal's conclusion on the facts and legal setting of the Central Act during the assessment years in question.

Conclusion: The sales of rayon yarn waste and staple fibre waste were not liable to tax under the Central Sales Tax Act, 1956.

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