TMI Blog1980 (10) TMI 185X X X X Extracts X X X X X X X X Extracts X X X X ..... cted the deletion of these amounts from the net taxable turnover for the periods in question holding that the assessee is not a dealer in respect of these articles, viz., old gunnies, old drums, polythene bags, bottles, tins, etc. This order of the Appellate Assistant Commissioner is confirmed by the Kerala Sales Tax Appellate Tribunal, Trivandrum, in Tribunal Appeals Nos. 331 and 332 of 1976. 2.. In T.R.C. No. 180 of 1979, M/s. Travancore Rayons Ltd., Perumbavoor, is the assessee and the period of assessment in question is the assessment year 1970-71. The assessing authority determined the total taxable turnover of the assessee at Rs. 12,03,134.02. This included a sum of Rs. 15,870 representing the sales turnover of scraps sold by the assessee to their employees. In appeal, the appellate authority directed deletion of this amount from the taxable turnover of the assessee and this order of the Appellate Assistant Commissioner is confirmed by the Kerala Sales Tax Appellate Tribunal, Trivandrum, in Tribunal Appeal No. 50 of 1977. 3.. The only question raised by the learned counsel for the revenue in these three tax revision cases is that the sales turnover of scrap materials such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trader is a person having occasional transactions of a business nature and a dealer means a person who carries on the business of buying, selling, supplying or distributing goods, etc. The meaning of the expression "business" is therefore of considerable importance in considering the question whether the assessee is a dealer in respect of scrap and discarded materials sold during the relevant period and brought to its accounts. 4.. The question has been considered by two decisions of the Supreme Court and also by a few decisions of this Court. In State of Gujarat v. Raipur Manufacturing Co. Ltd.[1967] 19 S.T.C. 1 (S.C.). the question arose whether a company which was carrying on the business of manufacturing and selling cotton textiles was liable to sales tax in respect of the turnover relating to sales effected of several items of discarded or unserviceable goods and waste products from the factory. After considering the decided cases on this aspect, the Supreme Court at pages 7-8 of its judgment stated: "It is clear from these cases that to attribute an intention to carry on business of selling goods it is not sufficient that the assessee was carrying on business in some c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not usable by the factory, are goods regularly and continuously produced in its manufacturing processes. We are unable to hold that in disposing of miscellaneous old and discarded items such as stores, machinery, iron scrap, cans, boxes, cotton ropes, rags, etc., the company was carrying on business of selling those items of goods. These sales were frequent and the volume was large, but it cannot be presumed that when the goods were acquired there was an intention to carry on the business in those discarded materials; nor are the discarded goods, by-products or subsidiary products of or arising in the course of the manufacturing process. They are either fixed assets of the company or are goods which are incidental to the acquisition or use of stores or commodities consumed in the factory. Those goods are sold by the company for a price which goes into the profit and loss account of the business and may indirectly be said to reduce the cost of production of the principal item, but on that account disposal of those goods cannot be said to become part of or an incident of the main business of selling textiles. In order that receipts from sale of a commodity may be included in the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax. This contention was clearly negatived in State of Gujarat v. Raipur Manufacturing Co. Ltd.[1967] 19 S.T.C. 1 (S.C.). In this case which was under the Bombay Sales Tax Act, 1953, where the definition of a dealer under section 2(6) is in pari materia with section 2(g), the disposal by a company carrying on the business of manufacturing and selling cotton textiles of its miscellaneous old and discarded items such as cans, boxes, cotton ropes, rags, etc., was held by this court not to be carrying on the business of selling these items of goods. It further stated that from the fact that the sales of these items were frequent and their volume was large, it cannot be presumed that when the goods were acquired there was an intention to carry on the business in those discarded materials, nor are the discarded goods by-products or subsidiary products of or arising in the course of manufacturing process." After quoting a passage from pages 7-8 of the judgment in State of Gujarat v. Raipur Manufacturing Co. Ltd.[1967] 19 S.T.C. 1 (S.C.)., the Supreme Court in State of Tamil Nadu v. Burmah Shell Oil Storage and Distributing Co. of India Ltd.[1973] 31 S.T.C. 426 (S.C.). held: "The contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a capital asset or was a business transaction would arise for consideration. When a person engages in the business of growing rubber trees with the view to draw latex from those rubber trees it may be possible to take the view that the sale of rubber trees which fall down in course of time due to age and decay or both or due to other reasons like storm or other upheavals of nature is carrying on an adventure in the nature of trade and that such sales may form a part of the business transactions of the assessee though they were only of a casual nature not having the frequency or the periodicity of the business transactions and even if there was no profit-motive. But this is an aspect which the Supreme Court has to consider as we feel bound by the decision in State of Tamil Nadu v. Burmah Shell Oil Storage and Distributing Co. of India Ltd.[1973] 31 S.T.C. 426 (S.C.)." It is thus clear that the decision reported in Deputy Commissioner of Agricultural Income-tax and Sales Tax v. Kottamullai Tea Co. Ltd.(4) is held as not correctly decided, in view of the decision of the Supreme Court in State of Tamil Nadu v. Burmah Shell Oil Storage and Distributing Co. of India Ltd.(2) The revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age and Distributing Co. of India Ltd.[1973] 31 S.T.C. 426 (S.C.). which was apparently not brought to the notice of the Division Bench. The impact of the said decision of the Supreme Court has been considered in detail in the subsequent Division Bench ruling of this Court reported in Deputy Commissioner of Agricultural Income-tax and Sales Tax v. Tirumbadi Rubber Co. Ltd.[1975] 36 S.T.C. 492. It is worthy of note that the judgment in this later case (Deputy Commissioner of Agricultural Income-tax and Sales Tax v. Tirumbadi Rubber Co. Ltd.[1975] 36 S.T.C. 492. is by Govindan Nair, C. J., who was a member of the Division Bench which decided the case in Deputy Commissioner of Agricultural Income-tax and Sales Tax v. Balakrishna Pillai[1975] 36 S.T.C. 487.In the light of this later pronouncement by the Division Bench which in our respectful opinion correctly lays down the law governing the matter no reliance can be placed on the earlier ruling reported in Deputy Commissioner of Agricultural Income-tax and Sales Tax v. Balakrishna Pillai[1975] 36 S.T.C. 487. A casual trader by the definition itself should have occasional transactions of a business nature involving the buying, selling, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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