Intention to carry on business of selling goods is essential for liability to sales tax.

Judgement

SHAH, J. : M/s. Raipur Manufacturing Company-hereinafter called the Company - carries on the business of manufacturing and selling cotton textiles. In the account year 1953-54 the Company beside selling cloth sold coal and 25 different items of discarded or unserviceable goods and waste products from the factory. The goods sold may be classified under three heads :

"(1) Old containers-cans, boxes, etc.; discarded stores, machinery and iron scrap; miscellaneous discarded items, such as, cotton ropes, chindis (rags), etc.

(2) Kolsi (cinders), waste caustic liquor.

(3) Coal."

The Sales tax authorities brought the turnover from sales of those commodities to tax under the Bombay Sales Tax Act, 1953 and their order was confirmed in appeal by the Sales Tax Tribunal. The Tribunal was of the view that "a cotton textile mill manages to collect unserviceable articles in the course of manufacture of cloth" and since these articles have to be sold, if it is to survive as an economic unit, sales of those articles must be regarded "as part of the business of the textile mill" if the transactions of sale are large and frequent. The Tribunal did not deal with the sale of coal independently of the sale of other goods.

2. At the instance of the Company, three questions were referred to the High Court of Gujarat, out of which one alone is material in this appeal:

"Whether on the facts and in the circumstances of the case, was the Tribunal correct in holding that the applicants were liable to be taxed on the sale of stores and old machinery and other sundry articles ?"

The High Court answered the question in the negative. With special leave, the State of Gujarat has appealed to this Court

3. Section 5 of Bombay Act 3 of 1953 imposes a general tax at specified rates on his taxable turnover in respect of sale of goods upon every dealer who was liable to pay general tax under the Bombay Sales Tax Ordinance No. III of 1952 whose turnover in respect of all the sales exceeds Rs. 30,000 during the year commencing on April 1,1952. The expression "dealer" is defined in S. 2 (6) as meaning "any person who carries on the business of selling goods in the State of Bombay, whether for commission, remuneration or otherwise * * *". Section 2(8) defines "goods" as meaning "all kinds of movable property other than newspapers, actionable claims, stocks, shares and securities, and includes all materials, articles and commodities". Section 2 (13) defines "sale" as meaning "a sale of goods made within the State of Bombay for cash or deferred payment or other valuable consideration and includes any supply by a society or club or an association to its members on payment of price or on fees or subscription, but does not include * * * *". Section 2 (14) defines "sale price" as meaning "the amount payable to a dealer as valuable consideration for the sale of any goods, less any sum allowed as cash discount according to trade practice, * * *". "Turnover" is defined in S. 2 (20) as meaning "the aggregate of the amounts of sale price received and receivable by a dealer in respect of any sale of goods made during a given period after deducting the amount, if any, refunded by a dealer to a purchaser, in respect of any goods purchased and returned by the purchaser within the prescribed period".

4. Under the Bombay Sales Tax Act, 1953, the aggregate of the price received and receivable by a person carrying on business of selling goods is liable to be included in his taxable turnover. It follows as a corollary that in the turnover of a person carrying on the business of selling one commodity will not be included the price received by him by sale of another commodity unless he carries on the business of selling that other commodity. That is so because within the meaning of S. 2 (6) of Bombay Act 3 of 1953 to be a dealer a person must carry on the business of selling those goods, price whereof is sought to be included in the turnover. In other words, he must carry on the business