Service-oriented transport corporation's disposal of scrap and unserviceable assets did not amount to taxable business activity.

A statutory road transport corporation constituted to provide public transport services was held to be engaged in a service-oriented undertaking rather than trade or commerce. Its powers to deal with property, stores, and scrap were merely incidental to that dominant purpose. Repeated sales of scrap, old buses, spare parts, and other unserviceable material did not amount to a separate business of selling goods, because the items were discarded assets used in the transport undertaking and not goods held for resale. The corporation was therefore not a dealer liable to sales tax on those transactions, and the disputed sales were not taxable as business turnover.

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Issues: (i) Whether the transport corporation was rendering a service and not carrying on a commercial activity for the purposes of sales tax; (ii) Whether repeated sales of scrap, old buses, spare parts, and other unserviceable material constituted business activity so as to render the corporation a dealer liable to sales tax.

Issue (i): Whether the transport corporation was rendering a service and not carrying on a commercial activity for the purposes of sales tax.

Analysis: The statutory framework of the Road Transport Corporation Act, 1950 shows that the corporation was created primarily to provide efficient, economical, and properly coordinated road transport services. Its powers to deal with property, stores, and scrap were incidental to that service-oriented object. The dominant purpose of the undertaking was not trade or commerce in the ordinary sense, but the provision of transport facilities to the public.

Conclusion: The corporation was rendering a service and was not carrying on a commercial activity in the sense urged by the revenue.

Issue (ii): Whether repeated sales of scrap, old buses, spare parts, and other unserviceable material constituted business activity so as to render the corporation a dealer liable to sales tax.

Analysis: Under the Delhi Sales Tax Act, business includes trade, commerce, manufacture, and transactions incidental or ancillary thereto, and a dealer is a person carrying on business of selling goods. The sales in question were of worn-out and unserviceable items acquired and used for the transport undertaking, not goods purchased or held for resale. The mere volume, frequency, or repetition of such sales did not convert disposal of discarded assets into a business of selling goods, particularly when the corporation's main activity remained the provision of transport service.

Conclusion: The sales of scrap and unserviceable material did not amount to business activity, and the corporation was not a dealer liable to sales tax on those transactions.

Final Conclusion: The reference was answered in favour of the assessee, and the disputed sales were held not taxable as business turnover under the Act.

Ratio Decidendi: Where a statutory transport corporation is established to provide road transport services, disposal of discarded or unserviceable assets incidental to that undertaking does not, by itself, constitute business of selling goods or make the corporation a dealer for sales tax purposes.

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