Discarded business assets and rejected input tax credit claims do not automatically attract turnover tax, penalty, or interest.

Disposal of discarded business assets does not, by itself, amount to business in those goods for turnover-tax purposes; the sale proceeds of old cars used in the assessee's business were therefore not includible in taxable turnover. A mere claim for input tax credit, later rejected, does not attract penalty or consequential interest absent concealment or furnishing of inaccurate particulars; on that basis, the penalty and interest were unsustainable. The impugned order was set aside to that extent and the assessee's appeal was allowed.

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Issues: (i) Whether the sale proceeds from old cars used in the assessee's business could be included in taxable turnover as sales incidental or ancillary to business; (ii) whether penalty and interest could be sustained on the assessee's wrong claim of input tax credit.

Issue (i): Whether the sale proceeds from old cars used in the assessee's business could be included in taxable turnover as sales incidental or ancillary to business.

Analysis: The Court applied the settled principle that a disposal of discarded or unserviceable assets does not amount to carrying on business in those goods merely because the sale may arise in the course of the assessee's commercial activity. The old cars were purchased for use in business and were sold only after use and wear and tear, so the transaction was not treated as an integrated or incidental business activity in the sense required by the definition of business.

Conclusion: The issue was decided in favour of the assessee. The sale proceeds of the old cars could not be included in the taxable turnover.

Issue (ii): Whether penalty and interest could be sustained on the assessee's wrong claim of input tax credit.

Analysis: The Court held that the assessee had only made a claim for input tax credit, which was ultimately rejected, and the record did not show concealment of information or furnishing of inaccurate particulars. On that basis, the penal provision was held inapplicable, and the interest levied along with the penalty also could not survive.

Conclusion: The issue was decided in favour of the assessee. The penalty and the consequential interest were not sustainable.

Final Conclusion: The impugned order was set aside to the extent it sustained tax on the sale of old cars and the penalty and interest arising from the rejected input tax credit claim, and the appeal was allowed.

Ratio Decidendi: Disposal of discarded business assets does not by itself constitute business in those goods for tax purposes, and a mere rejected claim, without concealment or inaccurate particulars, does not attract penalty.

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