9911796707
TMI Blog1987 (1) TMI 478X X X X Extracts X X X X X X X X Extracts X X X X ..... cision of the Supreme Court in State of Tamil Nadu v. Burmah Shell Co. Ltd. [1973] 31 STC 426, turned on the amended definition of the respective expression for the word "business" under the Tamil Nadu General Sales Tax Act which had not been incorporated in the Central Sales Tax Act at the material time. It is contended on behalf of the Revenue by the learned Additional Government Pleader that in so far as the order of the Tribunal, it related to sales of staple fibre waste and rayon yarn waste and the same is contrary to law and unsustainable; that the Tribunal having observed that "factually it is not disputed that rayon waste and staple fibre waste are subsidiary or by-products turned out in the course of manufacture and the sale of such products are incidental to the business of the manufacture and sale of rayon yarn and staple fibre yarn" should have held that the sales of these products are exigible to tax under the Central Sales Tax Act; that the order of the Tribunal is unsustainable and contrary to the decision of the Supreme Court reported in [1967] 19 STC 1 (State of Gujarat v. Raipur Manufacturing Co., Ltd.); and that the principles laid down by the Supreme Court in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e concept of "business" had been added as section 2(aa) in 1976 in the Central Sales Tax Act (74 of 1956). The Central Sales Tax Act, 1956, in section 2 containing the definitions only dealt with the "dealer" in section 2(b), and not defined "business". Section 2(b) of the Central Sales Tax Act, 1956, as it stood during the relevant time, reads as follows: "2. Definitions.-In this Act, unless the context otherwise requires,- (a)............ (b) 'dealer' means any person who carries on the business of buying or selling goods and includes a Government which carries on such business." Section 2(aa) of the Central Sales Tax Act inserted by Act No. 103/76 (the definition of word "business"), reads as follows: "2. (aa) 'business' includes- (i) any trade, commerce or manufacture, or any adventure or concern in the nature of trade, commerce or manufacture, whether or not such trade, commerce, manufacture, adventure or concern is carried on with a motive to make gain or profit and whether or not any gain or profit accrues from such trade, commerce, manufacture, adventure or concern; and (ii) any transaction in connection with, or incidental or ancillary to, such trade, commerce, manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mills Ltd. [1972] 29 STC 290 (SC), but before this judgment was rendered the Sales Tax Tribunal had held that that part of the assessment is also covered by the 1964 amendment. But the learned Advocate for the appellant none the less submits that even under the 1959 Act before its amendment the transactions which are incidental or ancillary to trade or commerce, whether or not profit has been made, are liable to tax." He also brought to our notice the observations of the Supreme Court in the decision in State of Tamil Nadu v. Burmah Shell Co. Ltd. [1973] 31 STC 426, at page 431, wherein their Lordships have dealt with the position that the decision in [1967] 20 STC 287 (Mad.) (Deputy Commissioner of Commercial Taxes v. Sri Thirumagal Mills Limited), had not been taken note of the word "such" in the second sub-clause, which, in their Lordships' view, imports by reference the definition in sub-clause (i) into that of sub-clause (ii). The learned Additional Government Pleader also pointed out to us the following observations of their Lordships in State of Tamil Nadu v. Burmah Shell Co. Ltd. [1973] 31 STC 426 (SC) at 432, which runs as follows: "...The sale of scrap in these appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcerisation of cloth, this Court held that that being a waste material it has still a market amongst other manufacturers or launderers as by-products or subsidiary products in the course of manufacture, and the sale thereof is incidental to the business of the company. In the view we hold the scrap sold is certainly connected with the business of the company and the turnover in respect of this commodity is liable to tax." So far as the instant revisions are concerned, the learned Additional Government Pleader stated that the facts are not in dispute that rayon yarn waste and staple fibre waste are subsidiary or by-products turned out in the course of manufacture and the sale of such products are incidental to the business of the manufacture and sale of rayon yarn and staple fibre yarn. The respondents herein are dealers in rayon yarn and staple fibre yarn. It is pointed out by the learned Additional Government Pleader that section 2(d)(ii) available in the Tamil Nadu General Sales Tax Act, regarding the definition of the word "business" had been utilised in construing the word "business" when that definition was not available in the Central Sales Tax Act during the relevant time. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il Nadu General Sales Tax Act prior to the amendment of 1964, such products obtained incidentally in the course of manufacture were not liable to be taxed. In order to enable the State to levy tax on such products also, the Tamil Nadu General Sales Tax Act has been amended in 1964. But there is no definition of the word 'business' under the Central Sales Tax Act and consequence of the amendment of the Tamil Nadu General Sales Tax Act as mentioned above, has not been incorporated by bringing about the amendment of the Central Sales Tax Act or bringing in a definition of the word 'business'. Subsequent to the amendment of the Tamil Nadu General Sales Tax Act, the Supreme Court has given a decision reported in [1973] 31 STC 426 (State of Tamil Nadu v. Burmah Shell Co. Ltd.), holding that under the Madras General Sales Tax Act, 1959, sales of advertisement materials and scraps and canteen sales during the period 1st April, 1964 to 31st August, 1964, were not liable to sales tax. Under the Madras General Sales Tax Act, 1959, before its amendment in 1964, transactions which were incidental or ancillary to trade or commerce where there was no profitmotive were not liable to tax. It was h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 the course of his activity. In actual practice, the profit-motive may be easily discernible in some transactions: in others it would have to be inferred from a review of the circumstances attendant upon the transaction. For instance, where a person purchases a commodity in bulk and sells it in retail it may be readily inferred that he has a profit-motive in entering into the series of transactions of purchase and sale. A similar inference may be raised where a person manufactures finished goods from raw materials belonging to him or purchased by him, and sells them. But where a person comes to own in the course of his business of manufacturing or selling a commodity, some other commodity which is not a byproduct or a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iles. In order that receipts from sale of a commodity may be included in the taxable turnover, it must be established that the assessee was carrying on business in that particular commodity, and to prove that fact it must be established that the assessee had an intention to carry on business 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 furnacesregularlyandcontinuouslydayafterday. 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' r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred and discussed in the decision in Deputy Commissioner (C.T.) v. South India Viscose Ltd. [1977] 40 STC 442 (Mad.), yet we find that the decision in Deputy Commissioner (C.T.) v. South India Viscose Ltd. [1977] 40 STC 442 (Mad.), has discussed the decision in State of Gujarat v. Raipur Manufacturing Co. Ltd. [1967] 19 STC 1 (SC), while referring the decision in State of Tamil Nadu v. Burmah Shell Co. Ltd. [1973] 31 STC 426 (SC). In these circumstances, we are unable to uphold the contention raised on behalf of the Revenue that the decision in State of Gujarat v. Raipur Manufacturing Co. Ltd. [1967] 19 STC 1 (SC), has not been independently considered in Deputy Commissioner (C.T.) v. South India Viscose Ltd. [1977] 40 STC 442 (Mad.). Mr. Inbarajan, learned counsel appearing for the respondents, refers to the decision in Khemka & Co. v. State of Maharashtra [1975] 35 STC 571 (SC), wherein it has been held that there is no provision in the Central Sales Tax Act, 1956, for imposition of penalty for delay or default in payment of tax and the provision in the State Sales Tax Act imposing penalty for non-payment of tax within the prescribed time is not attracted to impose penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
