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TMI Blog2009 (3) TMI 971X X X X Extracts X X X X X X X X Extracts X X X X ..... The following question of law has been referred by the Orissa Sales Tax Tribunal for opinion of this court: Whether, in the facts and circumstances of the case, Tribunal is correct to apply the test of business to the transaction falling in clause (ii) of section 2(b) of the Orissa Sales Tax Act, 1947? Bereft of unnecessary details, the facts and circumstances giving rise to the present petition are that opposite party-M/s. Steel Authority of India Ltd., Rourkela, is a Government undertaking and manufactures iron, steel products, chemical fertilizers, etc. It carries on business in these products inside and outside the State of Orissa. It is a registered dealer both under the Orissa Sales Tax Act, 1947 (hereinafter referred to as the OST Act ) and Central Sales Tax Act, 1956 (hereinafter referred to as the CST Act ). While scrutinizing the books of account for the year 1980-81 produced before the assessing officer in response to the notice issued under section 12(4) of the OST Act, it was noticed that the opposite party-company had sold old and unserviceable machineries, spare parts and other unserviceable items of machines and tax had not been paid on such sale at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in course of business and tax under the OST Act cannot be levied on such transaction. Tax on such sale was paid under protest. Mr. Panda in support of his contention, relied upon the judgments of this court in Steel Authority of India Limited v. State of Orissa [1988] 70 STC 2 (Orissa) and Steel Authority of India Ltd. v. State of Orissa [1999] 116 STC 21 (Orissa). To resolve the issue it is necessary to know how the terms business , casual dealer and dealer have been defined under the OST Act, relevant portions of which are quoted hereinbelow: 2(b) '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, manufacture, adventure or concern. (bb) 'casual dealer' means a person, who has, whether as principal, agent or in any other capacity, occasion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness nature. Dealer includes casual dealer . The question that arises for consideration in this case is whether the opposite party, who is carrying on business in manufacture and sale of iron, steel products and chemical fertilizers, etc., in its regular course of business when it sells scrap materials and old unserviceable materials occa sionally is liable to pay tax on such sale under the OST Act and whether the Tribunal is justified in holding that in absence of continuous trading activities of those materials the levy of tax is not sustainable. The words in connection with occurring in the definition of business fell for consideration in State of Tamil Nadu v. Burmah Shell Oil Storage and Distributing Co. of India Ltd. [1973] 31 STC 426 (SC). In that case, sales fell into two periods. The oil company's sales during April 1, 1964 to August 31, 1964 and those during September 1, 1964 to March 31, 1965 were in question. The amendment, which made profit-motive irrelevant and included sales made in connection with main business in the definition of business came into force with effect from September 1, 1964 in Madras State. In respect of the pre-amendment period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isposed of as scrap, the sale of human hair offered by pilgrims to the temple in fulfilment of vow as an activity not commercial and no tax was therefore is exigible on it as the main activity of the Devasthanam was neither commercial nor trading in nature. The honourable apex court in State of Orissa v. Orissa Road Transport Co. Ltd. [1997] 107 STC 204 (SC) held (i) that the respondent, as a prudent organization, in the course of the carrying on of its business sold some obsolete parts, spare parts, etc., which were used or intended for use in its business, when they were not required by it. Such sales were occasional sales of a business nature which would make the respondent a casual dealer within the meaning of the definition in section 2(bb) of the Act. The respondent was a dealer carrying on the business of selling spare parts, etc., and thereby became liable to pay sales tax on the sale of such items; and (ii) that, though the attention of the High Court was not drawn to section 2(bb), on the facts as found by the Tribunal, it was evident that the provisions of section 2(bb) were attracted. The fact that the High Court had ignored a relevant statutory provision could n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the business of the dealer (Steel Authority of India) and are therefore not includible in the turnover of the dealer for the purpose of assessment to sales tax. Again this court in Steel Authority of India Ltd. v. State of Orissa [1999] 116 STC 21 (Orissa) following the decision of this court in State of Orissa v. Orissa Road Transport Company Ltd. [1983] 53 STC 329 (Orissa) and Steel Authority of India Limited v. State of Orissa [1988] 70 STC 2 (Orissa) held that sales of scrap and unserviceable materials do not constitute business of the dealer and therefore, are not includible in the turnover of the dealer for the purpose of assessment to sales tax. Since the case of State of Orissa v. Orissa Road Transport Company Ltd. [1983] 53 STC 329 (Orissa) has been reversed in State of Orissa v. Orissa Road Transport Co. Ltd. [1997] 107 STC 204 (SC), both the decisions of this court in Steel Authority of India Limited v. State of Orissa [1988] 70 STC 2 (Orissa) and in Steel Authority of India Ltd. v. State of Orissa [1999] 116 STC 21 (Orissa) are of no help to the petitioner. In view of the above, we answer the question in negative, i.e., in favour of the petitioner-Revenue and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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