Casual sale of discarded equipment is not taxable business turnover absent systematic trading activity and business nexus.

A one-time sale of discarded equipment by an assessee running a canteen was held not to form part of taxable business turnover under the Karnataka Value Added Tax Act, 2003. Tax liability depends on a sale being made in the course of the dealer's business, which requires real, substantial and systematic activity in the relevant commodity, usually with continuity, frequency and profit motive. Because the assessee's business was confined to food, snacks and beverages, and the equipment was only once sold as discarded goods with no evidence of trading in such items, the transaction was treated as a casual disposal of fixed assets and not taxable turnover.

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Issues: Whether the one-time sale of discarded equipment by an assessee engaged in running a canteen formed part of the taxable business turnover under the Karnataka Value Added Tax Act, 2003.

Analysis: Liability to tax under the Act depends on a sale taking place in the course of the dealer's business. A transaction becomes taxable only where there is a real, substantial and systematic business activity in the relevant commodity, ordinarily with continuity, frequency and a profit-motive. The assessee's business was confined to sale of food articles, snacks and beverages. The impugned items were used equipment, sold once as discarded goods, and there was no material to show that the assessee carried on the business of buying or selling such items. A casual or isolated disposal of fixed or discarded assets does not ordinarily constitute business turnover for levy of tax.

Conclusion: The sale consideration from the discarded equipment was not liable to tax under the Act, and the levy could not be sustained.

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