ANDHRA PRADESH STATE ROAD TRANSPORT CORPORATION HYDERABAD Vs. COMMERCIAL TAX OFFICER HYDERABAD III HYDERABAD ANDHRA PRADESH

JUDGEMENT

(1.) THE Andhra Pradesh State Road Transport Corporation was provisionally assessed to sales tax on a taxable turnover of Rs. 4,85,321 in respect of the sale of scrapped vehicles and other scrap effected during the period 1st April, 1966, to 30th September, 1966. The Corporation contends that these transactions could not be deemed to be business of the Corporation so as to make it liable to be assessed to tax on the value realised by such sale.

(2.) THE Andhra Pradesh State Road Transport Corporation is constituted under the Road Transport Corporation Act, 1950. The object of this Corporation is to provide or secure or promote the provision of an efficient, adequate, economical and properly co-ordinated system of road transport service in the State. It is not a trading Corporation. Ever since it was constituted in 1958 it has been operating bus services on various routes in the State. In the course of its activity, scrapped vehicles, old tyres, old containers and other unserviceable material were left with the Corporation which it has been disposing of periodically by public auction or by inviting tenders. The proceeds of the sale of this material is sought to be included in the taxable turnover of the Corporation for the purpose of assessing it to sales tax. The decision of this writ petition depends upon the view we take as to the nature of the activity of the Corporation in disposing of the scrap material and precisely whether such activity could be termed its business. "business" is defined in section 2 (bbb) as follows :

(3.) IN view of these pronouncements of the Supreme Court, the Andhra Pradesh State Road Transport Corporation which is primarily constituted for operating an efficient road transport service, could not be held to be carrying on business of selling the discarded vehicles and other scrap which it has come into possession in the course of its activities. It is, however, argued by Mr. Ramachandra Reddy, learned counsel for the Government Pleader that the sales of these goods was a transaction in connection with or incidental or ancillary to such trade, commerce, manufacture, adventure or concern within the meaning of clause (ii) of section 2 (bbb) and, therefore, properly included in the taxable turnover of the petitioner. To our mind any incidental or ancillary transaction or activity should be in connection with the trade or commerce or adventure carried on by the petitioner and should itself partake of the nature of trade, commerce, manufacture, adventure or concern. In State of Gujarat v. Vivekanand Mills ([1967] 19 S. T. C. 103 (S. C.)), where the assessee was carrying on the business of manufacturing cotton fabrics, had agreed to purchase under user's import licence 500 bales of Californian cotton in January, 1953, and believing that the shipment would arrive after six months, the assessee purchased 300 bales of similar cotton to meet its immediate requirements but finding that the consignment from California arrived much earlier than expected even in April 1953, it was obliged to dispose of 411 bales of the cotton already purchased by it. It was contended that this sale constitute "business" and the said turnover was liable to tax as being a business activity incidental to its main business of manufacturing cotton textiles. Dealing with this contention the Gujarat High Court held that such a disposal even if made with a profit-motive would not make a part of the business or an incident to the business of the assessee. The Supreme Court on appeal held that in those circumstances no intention on the part of the assessee to carry on business of selling cotton could be inferred and upheld the conclusion arrived at by the High Court in that behalf. In view of the above, the Commercial Tax Office was not right in holding that the Andhra Pradesh State Road Transport Corporation was a "dealer" carrying on "business"in the old or scrapped vehicles and other scrap. He was, therefore, not entitled to even provisionally assess it to sales tax. The assessment order is, therefore, quashed. In the result, the writ petition succeeds and is accordingly allowed with costs. Advocate's fee Rs. 100. Petition allowed.