1986 (4) TMI 321 - SC - VAT and Sales Tax

Sales tax liability - Held that - Appeal dismissed. The business of selling the surplus copies as waste paper attracted sales tax, having regard to the terms of clause (d) of section 2 of the Act, which defines the expression business , as it stood at the relevant time. Thus the High Court is plainly right in maintaining the sales tax assessment on the turnover of the surplus copies of newspapers sold as waste paper.

Summary

Issues:
1. Assessment of turnover of unsold newspapers under the Tamil Nadu General Sales Tax Act, 1959.
2. Whether the sales of old newspapers as waste paper are taxable.
3. Determination of whether the appellant was carrying on a business in selling surplus newspapers as waste paper.
4. Interpretation of the definition of "business" under clause (d) of section 2 of the Act.
5. Applicability of sales tax on the turnover of surplus newspapers sold as waste paper.
6. Comparison with previous court decisions in State of Gujarat v. Raipur Manufacturing Co. Ltd. and State of Tamil Nadu v. Burmah Shell Oil Storage and Distributing Co. of India Ltd.

Analysis:
The judgment by the Supreme Court of India involved an appeal against the High Court of Madras's decision regarding the assessment of turnover of unsold newspapers under the Tamil Nadu General Sales Tax Act, 1959. The appellant, engaged in the business of printing and publishing newspapers, sold surplus newspapers as waste paper. The Appellate Assistant Commissioner and the High Court held that the sales were taxable as they were ancillary to the newspaper business. However, the Sales Tax Appellate Tribunal allowed the appeal, stating that the sale of unsold newspapers as waste paper was not part of the newspaper business. The High Court, upon revision, restored the assessment order, considering the appellant's regular activity of selling surplus newspapers as a business connected with publishing newspapers.

The Supreme Court analyzed the nature of newspapers and the sale of old newspapers as waste paper. It determined that old newspapers, when sold as waste paper, lose their character as newspapers since they no longer contain fresh news. The Court emphasized that the sale of old newspapers as waste paper was not for reading purposes but for disposal. Additionally, the Court established that the appellant's regular activity of selling surplus newspapers as waste paper constituted a business, motivated by profit and incidental to the newspaper business.

The Court further interpreted the definition of "business" under the Act, emphasizing that the sale of surplus newspapers as waste paper fell within the scope of business activities. Referring to previous court decisions, the Court noted that the appellant's reliance on those decisions did not assist their case due to the specific circumstances and legal provisions involved in the present matter. Ultimately, the Supreme Court upheld the High Court's decision to maintain the sales tax assessment on the turnover of surplus newspapers sold as waste paper, dismissing the appeal without costs.

In conclusion, the judgment clarified that the sale of surplus newspapers as waste paper constituted a taxable business activity under the Tamil Nadu General Sales Tax Act, 1959, and upheld the assessment order made by the Deputy Commercial Tax Officer.