TaxTMI 
TaxTMI 
TaxTMI 
1966 (9) TMI 82
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....al. The Sales Tax Authorities brought the turnover from sales of these commodities to tax under the Bombay Sales Tax Act, 1953, and their order was confirmed in appeal by the Sales Tax Tribunal. The Tribunal was of the view that "a cotton textile mill manages to collect unserviceable articles in the course of manufacture of cloth" and since these articles have to be sold, if it is to survive as an economic unit, sales of these articles must be regarded "as part of the business of the textile mill" if the transactions of sale are large and frequent. The Tribunal did not deal with the sale of coal independently of the sale of other goods. At the instance of the Company, three questions were referred to the High Court of Gujarat, out of which one alone is material in this appeal: "Whether on the facts and in the circumstances of the case, was the Tribunal correct in holding that the applicants were liable to be taxed on the sale of stores and old machinery and other sundry articles." The High Court answered the question in the negative; with special leave, the State of Gujarat has appealed to this Court. Section 5 of Bombay Act 3 of 1953 imposes a general tax at specified rates on....
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....Bros.[1964] 15 S.T.C. 644; A.I.R. 1965 S.C. 531., a person to be a dealer must be engaged in the business of buying or selling or supplying goods. The expression "business" though extensively used in taxing statutes, is a word of indefinite import. In taxing statutes, it is used in the sense of an occupation, or profession which occupies the time, attention and labour of a person, normally with the object of making profit. To regard an activity as business there must be a course of dealings, either actually continued or contemplated to be continued with a profit-motive, and not for sport or pleasure. Whether a person carries on business in a particular commodity must depend upon the volume, frequency, continuity and regularity of transactions of purchase and sale in a class of goods and the transactions must ordinarily be entered into with a profit-motive. By the use of the expression "profit-motive" it is not intended that profit must in fact be earned. Nor does the expression cover a mere desire to make some monetary gain out of a transaction or even a series of transactions. It predicates a motive which pervades the whole series of transactions effected by the person in ....
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....mbay High Court held that no business of selling or supplying was intended to be carried on in those goods. In State of M.P. v. Bengal Nagpur Cotton Mills Ltd. [1961] 12 S.T.C. 333., a company which carried on the business of manufacturing textiles, supplied steel and cement on several occasions to their contractors, who were constructing buildings for the company, and debited the price of the materials to the contractors' account. It was held that the company was not liable to pay sales tax as the com- pany was not a dealer carrying on the business of selling steel and cement. In Commissioner of Sales Tax, Madhya Pradesh, Indore v. Ram Dulare Balkishan and Bros. [1963] 14 S.T.C. 202., a transport operator who sold unserviceable cars, trucks, tyres and motor accessories, was held not to be a dealer even though the activity was "continuous, serious and large". In The State of Mysore v. The Bangalore Woollen, Cotton and Silk Co. Ltd. [1962] 13 S.T.C. 106., the assessee a manufacturer of textiles who sold unserviceable goods like waste cotton, useless ropes, scrap iron, worn out and broken parts of machinery, old paper, and tubes, was held not to be a dealer. In that case, no d....
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....e bought by a person a condition for treating him as a dealer. But the principle of that case has no application in the present case. In that case this Court declined to accept the view which prevailed with the High Court of Andhra Pradesh that unless a person is carrying on business both of purchasing and selling the same commodity, purchase of articles used in the course of manufacture of another commodity is not in the course of carrying on the business of purchasing that article. Counsel for the State also relied upon the judgment of the Kerala High Court in Gosri Dairy, Vyttila v. The State of Kerala [1961] 12 S.T.C. 683.. In that case the assessee-firm which was registered as a dealer in dairy products sold a part of its live-stock every year and replaced the same by fresh stock. The question arose whether the proceeds of such sales were to be treated as part of the turnover of the assessee liable to sales tax. It was held that the frequency, regularity and volume of sale transactions by the assessee were such that they could be regarded as "an activity in the course of the business of the assessee", and there- fore the assessee's sales of cattle were part of its busin....
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....siness in that commodity. A person who sells goods which are unserviceable or unsuitable for his business does not on that account become a dealer in those goods, unless he has an intention to carry on the business of selling those goods. But in dealing with the liability to pay tax on the price for sale of "kolsi" and "waste caustic liquor" different considerations arise. As found by the High Court "kolsi" (cinders) are small pieces of coal which are not fully burnt. It appears that "kolsi" is not capable of "extreme fuel potency required in the furnaces " of the appellant- Company, but it is still capable of being used in "lighter furnaces". This "kolsi" is discharged from the furnaces regularly and continuously day after day. The Company collects that "kolsi" and sells it to intending purchasers in bulk. "Kolsi" would be appropriately regarded as a subsidiary product in the course of manufacture. "Kolsi" results from coal which remains unburnt: it is on that account a subsidiary product. When such subsidiary product is turned out in the factory regularly and continuously and is being sold from time to time, an intention to carry on business in "kolsi" may be reasonably attribut....
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....le, the Company should be regarded as a dealer in respect of those goods. Unless there is evidence to show that there was an intention to carry on business of selling coal, the mere fact that coal of the value exceeding Rs. 16,000 was sold will not by itself make the Company a dealer carrying on business in coal. We have no evidence on the record as to what the total quantity of the coal purchased by the Company was, and what percentage thereof was sold. No investigation has been made as to the circumstances in which the coal came to be sold. Mere sale of a commodity which a Company requires for the purpose of its business and which has been purchased for use in that business will not justify an inference that a business of selling that commodity was intended, unless there are circumstances existing at the time when the commodity was purchased or which have come into existence later which establish such an intention. It may be pointed out that the burden of proving that the Company was carrying on business of selling coal lay upon the Sales Tax Authorities and if they made no investigation and have come to the conclusion merely because of the frequency and the volume of the sales, ....