1979 (7) TMI 231 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether sales of coal-dust made by the assessee are liable to tax under the U.P. Sales Tax Act.
2. Interpretation of the definition of "dealer," "goods," "sale," and "turnover" under the Act.
3. Application of the Supreme Court's decision in State of Gujarat v. Raipur Manufacturing Company Limited to the present case.

Analysis:
1. The case involves a revision under section 11(1) of the U.P. Sales Tax Act regarding the tax liability on sales of coal-dust by an assessee engaged in the manufacture of glass bangles. The dispute arose when the assessing authority taxed the sales, which was later accepted by the Appellate Assistant Commissioner (Judicial) but overturned by the Additional Judge (Revisions), Sales Tax, Agra, leading to a further revision before the High Court.

2. The Act imposes tax on the taxable turnover in respect of the sale of goods by every dealer. The definition of "dealer," "goods," "sale," and "turnover" under sections 2(c), 2(d), 2(h), and 2(i) respectively is crucial. A person must be engaged in the business of selling a particular commodity to include its sales in the taxable turnover. In this case, the assessee is a dealer in glass bangles, not coal, and sells coal-dust as it is unserviceable for the glass bangle manufacturing process.

3. Referring to the Supreme Court's decision in State of Gujarat v. Raipur Manufacturing Company Limited, the court emphasized that for a person to be considered a dealer in a commodity, there must be evidence of intention and a course of dealings indicating a profit motive. The volume, frequency, continuity, and regularity of activity are essential factors in determining the intention to carry on the business of selling a specific commodity. In the absence of such evidence in the present case, the court held that no tax could be levied on the sales of coal-dust.

In conclusion, the High Court dismissed the revision, upholding that the sales of coal-dust by the assessee were not liable to tax under the U.P. Sales Tax Act. The court awarded costs to the assessee and dismissed the petition.