DY COMMISSIONER C T Vs. VIJAYALAKSHMI MILLS LIMITED

JUDGEMENT

(1.) THIS revision petition been filed under S. 38 of the tamilnadu General ST Act against the order of the Tribunal dt. 4th October, 1973. There are two items of turnover which are disputed in the present revision petition. The first is a sum of Rs. 51, 000, for the which the assessee sold carding machines and drawing frames. The assessee is a manufacturer of cotton yarn and he claimed that he did not carry on any business in carding machines and drawing frames etc. He had purchased these goods for use in the manufacture of yarn. According to the assessee he did not purchase them with the intention of carry in on any business in these goods and that they were not by-products of subsidiary products as these goods were the assets of the assessee and as they were sold when they were not serviceable, the sale could not be said to be a sale in the course of business. The Tribunal accepted this submission of the assessee ad held that the assessee could not be taxed on the said amount. The question that requires to be considered is whether the said sum of Rs. 51, 000 is taxable in the hands of the assessee.

(2.) THERE is no dispute that these carding machines and drawing frames had been purchased and had been utilised for the purpose of the assessee's business. The amounts realised from the sale were also credited to its machinery account. We consider that in view of the fact that these goods have been acquired in the course of business and have also been sold because they becomes unserviceable and had to be replaced, the assessee is liable to be taxed under the Tamilnadu General ST Act, 2 (d) defines the word'business'as including any transaction in connection with or incidental or ancillary to such trade, commerce manufacture or any adventure or concern. In the present case the sale is incidental or ancillary to the trade. Having regard to the language of S. 2 (d) (ii) the turnover in the present case was liable to be taxed under the Tamilnadu General ST Act. The decision of the Supreme Court in State of madras Burmah Shell Co. Ltd. applies to the present case. The learned counsel for the assessee brought to our notice a decision of the Supreme Court in Board of Revenue vs. A. M. Ansari, and submitted that the present case in governed by the said decision. In that case the Supreme Court was concerned with the assessability or otherwise of the sale effected by the Forest Department of the government of Andhra Pradesh in annual auctions. The Supreme Court held that though in view of the amendment introduced to the Andhra Pradesh General ST Act in the consideration of profit motive could not be regard as an essential constituent of the term'business'in S. 2 (1) (bbb) or the Andhra Pradesh general ST Act but still the other ingredients of the term'business'viz. , volume, frequency, continuity and regularity of transactions of sale and purchase must be satisfied in order that a person could be said to be carrying on the business of selling goods. In or opinion, the Supreme Court had no occasion to consider the case of a trader or a manufacturer who, in the course of his trade or manufacturing activity had to sell certain goods as part of or incidental to his trade. As the Supreme Court was dealing with a Government department and as it did not deal with any trader or manufacturer, we consider that the principle laid down in the said decision does not apply to the facts here. In the present case, the goods were acquired admittedly for the purpose of business. The goods have also been sold only because they became unserviceable and they were replaced by other goods, the amounts were credited to the machinery account. THERE is also a certain amount of periodicity in the sense that such goods came to be sold as and when necessary. In these circumstances, we do not consider that the principle laid down by the Supreme Court has any scope for application here. It may be further stated that in the present case in addition to the turnover with which we are concerned, there are other items of turnover which arose as a result of the assessee carrying on the business. As the present item of turnover is only incidental to the said admitted carrying on of the business, the present case falls squarely within the scope of the definition in S. 2 (d) (ii ). We therefore set aside the order of the Tribunal on this point and hold that the said amount was rightly brought to tax.