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TMI Blog1962 (11) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... d become worn out or unusable. The assessment of this turnover was taken in the appeal to the Appellate Assistant Commissioner before whom the assessees claimed that they are not dealers engaged in the buying and the selling of such articles, that these sales are only incidental to the carrying on of the contract work and that therefore the relevant turnover was not liable to sales tax. The appellate authority accepted the contention in so far as the sale of plant and machinery was concerned and deleted a sum of Rs. 6,450 in this regard. The other materials sold consisted of scaffolding poles, bricks, cement etc. The Appellate Assistant Commissioner held that such sales were not stray transactions but that they were sold periodically after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven to that part of the material which was not used in the construction and which the assessee finding it superfluous disposed of by sale. It was also contended that the profit motive, which is a necessary ingredient of the carrying on of business, is absent in respect of these transactions. Certain facts are not in dispute. That the assessees are building contractors and use materials for the purpose of these constructions is admitted. In so far as the value of the materials they used in such construction is concerned, in the absence of any separate agreement between the assessees and the party for whom the building was constructed establishing a separate agreement to sell materials as such, the position in law is that there would be no tu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Gannon Dunkerley case [1958] 9 S. T. C. 353., which can possibly suggest that a building contractor cannot be a dealer. The principal reason why there was held to be no taxable turnover in the transfer of property in goods involved in a works contract is that, in such a case there is no sale of goods as such and that the property in the goods passed by accretion as it were to an immovable property. The contention of the assessees that the principle of this decision should be extended even to cases where the assessees sell the materials as such cannot possibly be accepted. Learned counsel for the assessees contends that at the time they purchased the articles they purchased them with a view to utilise them in the works contract and that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Mysore v. Bangalore Woollen, Cotton and Silk Mills Co., Ltd. [1962] 13 S.T.C. 106., the assessee was a textile mill. It sold some unserviceable goods like waste cotton, useless ropes, scrap iron, worn out and broken parts of machinery etc. The sale of these items was held not liable to taxation. The learned Judges purported to distinguish a decision of the Bombay High Court in Aryodaya Spinning and Weaving Co. Ltd. v. State of Bombay [1962] 13 S.T.C. 106., on the ground that in that decision the assessee which carried on the business of manufacturing cotton textile and yarn had sought for registration as dealers " carrying on the business of selling yarn, cloth, cotton, cotton waste, stores, etc. "The fact that they were so registered a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S. T. C. 141., they observed that where a subsidiary product resulted from the normal business carried on by the assessee, an intention to carry on the business of selling the subsidiary product as a part or incident of the business of the assessee could be readily inferred and that the transaction could be regarded as an activity in the course of the business of the assessee. It seems to us that in these circumstances when the assessee is undoubtedly a dealer and the necessity of disposal of the surplus material is ingrained in the very nature of the business which the assessee carries on and he has to effect sales of such surplus material, there is no reason why he cannot be regarded as a dealer selling goods in the course of his busines ..... X X X X Extracts X X X X X X X X Extracts X X X X
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