TMI Blog2005 (7) TMI 615X X X X Extracts X X X X X X X X Extracts X X X X ..... otive in the activity conducted by it qua its rendering services of efficient transport facility?" 2.. The facts leading to this reference may be stated in brief. Thus: The applicant, the undertaking established under the Bombay Municipal Corporation Act, 1888 has two fold activities: (1) generation and distribution of electricity for the Greater Bombay and (2) rendering transport facilities to the people in the city of Bombay. The applicant was registered as a "dealer" under the Bombay Sales Tax Act, 1959 under section 22(5A) and was assessed as such for the year 1981-82. The dispute is pertaining to the returns for the period from April 1, 1983 to March 31, 1984. The applicant was assessed for sales tax by the Assistant Commissioner of Sales Tax (Assessment) as a "dealer". The appeal preferred before the Deputy Commissioner came to be rejected mainly on the ground that the applicant was registered under section 22(5A) of the Bombay Sales Tax Act. The second appeal before the Maharashtra Sales Tax Tribunal also came to be rejected. Before the Assistant Commissioner (Assessment), it was submitted on behalf of the applicant that it was not a "dealer" qua its activity of provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ehemently contended that the applicant has voluntarily registered itself as a "dealer" under section 22(5A) and is, therefore, liable to assessment for sales tax for all the activities including transport and disposal of unserviceable and scrap material. 4.. The word "business" is defined in section 2(5A) of the Sales Tax Act as follows: " 'business' includes 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 any transaction in connection with, or incidental or ancillary to, the commencement or closure of such trade, commerce, manufacture, adventure or concern;" It is material to note that words "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" were inserted in the original definition of "business" by way of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scrap amounts to business and is liable to be taxed under the Sales Tax Act. It may be material to note that in both the matters, the Southern and the Northern Railways were carrying on business of transportation of goods on commercial basis. In the case of Eastern Railway [1989] 74 STC 5 (SC), it was found that the South Eastern Railway was carrying on the goods and the activity was commercial. If the activity of selling goods which remained unclaimed was adjunctive to the principal activity of carriage of goods it was necessarily incidental or ancillary to its business of carrier of goods. In the case of Northern Railway [1976] 37 STC 423 (SC), in view of the provisions of Rajasthan Sales Tax Act, the Supreme Court held that the Northern Railway which was carrying on business of transportation of goods was necessarily a dealer and a sale of unserviceable material and scrap by the Northern Railway were assessable or liable to the sales tax. Both these authorities will not be applicable to the present case because the Eastern and the Northern Railways were carrying on commercial activity of transportation of goods for profit, while in the present case, according to the applicant it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dity may arise. But it does not arise merely because the price received by sale of discarded goods enters the accounts of the trader and may on an overall view enhance his total profit, or indirectly reduce the cost of production of goods in the business of selling in which he is engaged. An attempt to realize price by sale of surplus unserviceable or discarded goods does not necessarily lead to an inference that business is intended to be carried on in those goods, and the fact that unserviceable goods are sold and not stored so that badly needed space is available for the business of the assessee also does not lead to the inference that 'business' is intended to be carried on in selling those goods." 9.. From these observations, it would be clear that to find whether a particular person is carrying on business in a particular commodity, volume, frequency, continuity and regularity of the transactions of purchase and sale of such goods is necessary and ordinarily the transaction must be with profit-motive, unless, the profit-motive is made irrelevant by law. The applicant is not actually carrying on business of purchase and sale of vehicles or the new spare parts for providing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the authorities mentioned in the Explanation carry on business and disposed of any goods remaining unclaimed or confiscated or as unserviceable or as scrap, surplus, old, obsolete or discarded material or waste product, it is deemed to carry on business in such material within the meaning of section 2(5A). It is material to note that the explanation was inserted with effect from August 16, 1985 by Maharashtra Amendment Act 24 of 1985. As per entry (d) shipping, transport and construction companies were included in the authorities of the companies who would be deemed to be a "dealer" as per the said Explanation. However, from entry "(d)" transport was deleted and was deemed to have been deleted with effect from August 16, 1985 itself by Maharashtra Amendment Act 30 of 1997. It means that the transport companies were never treated as the authorities or bodies to whom the explanation would be applicable. The word "transport" appears to have been deleted because the transport companies have to purchase vehicles to carry on business of transportation and for the maintenance of vehicles, such companies have to purchase spare parts, etc., and the scrap of unserviceable vehicles and ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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