1991 (4) TMI 398 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Taxability of sales of condemned tyres and scrap batteries.
2. Definition and scope of "dealer" and "business" under the Tamil Nadu General Sales Tax Act, 1959.
3. Applicability of precedents from the Supreme Court and other High Courts.

Issue-wise Detailed Analysis:

1. Taxability of Sales of Condemned Tyres and Scrap Batteries:
The respondent/assessee was initially assessed for the assessment year 1971-72 on a taxable turnover of Rs. 52,063.52, which included a tax of Rs. 1,806.12. A subsequent notice proposed to assess an additional turnover of Rs. 12,779.22 for condemned tyres and scrap batteries. The Tribunal, referencing a similar case, initially favored the assessee, leading to the proposals being dropped. However, the Deputy Commissioner, relying on the Supreme Court decision in State of Tamil Nadu v. Burmah Shell Oil Storage and Distributing Co. of India Ltd. [1973] 31 STC 426, rejected the assessee's claim and held the turnover liable to tax at 4% multi-point. The Tribunal later set aside this order, distinguishing the case from the Supreme Court decision and applying the Andhra Pradesh High Court's decision in Andhra Pradesh State Road Transport Corporation v. Commercial Tax Officer [1971] 27 STC 42.

2. Definition and Scope of "Dealer" and "Business" Under the Tamil Nadu General Sales Tax Act, 1959:
The Tribunal concluded that the assessee was not a dealer in any commodity, thus not falling within the purview of the Supreme Court's decision in the Burmah Shell case. The Tribunal applied the Andhra Pradesh High Court's decision, which held that incidental or ancillary transactions must be connected with the trade or commerce carried on by the assessee and partake the nature of trade, commerce, manufacture, adventure, or concern. The Tribunal's decision was challenged on the grounds that it contradicted the Supreme Court's broader interpretation of "business" and "dealer" under the Tamil Nadu General Sales Tax Act, 1959.

3. Applicability of Precedents from the Supreme Court and Other High Courts:
The Government Advocate argued that the transactions were taxable under the Act, citing Supreme Court decisions in District Controller of Stores, Northern Railway v. Assistant Commercial Taxation Officer [1976] 37 STC 423 and State of Tamil Nadu v. The Hindu [1978] 41 STC 105. The Andhra Pradesh High Court's decisions were considered distinguishable due to the specific nature of the Andhra Pradesh State Road Transport Corporation's constitution and activities.

High Court's Conclusion:
The High Court found that the definitions of "business" and "dealer" under the Tamil Nadu General Sales Tax Act, 1959, are broad enough to include all sales transactions carried on in the course of business, even if the sold articles are not in the line of business undertaken by the assessee. The Court emphasized that the Tribunal's reliance on the Andhra Pradesh High Court's decision was misplaced and inconsistent with the Supreme Court's rulings. The High Court concluded that the sales of unserviceable articles were incidental to the assessee's business and constituted systematic disposal of surplus or unserviceable items. Consequently, the Tribunal's order was set aside, the Deputy Commissioner's order was restored, and the tax revision case was allowed.

Final Judgment:
The High Court allowed the petition, reinstating the Deputy Commissioner's order and subjecting the transactions to tax, with no order as to costs.