Judgment

JAGANMOHAN REDDY, J. :- These are two appeals by appeals by special leave against the judgment of the Madras High Court. In appeal No. 2119/69 the chargeability to sales tax under the Madras General Sales Tax Act 1959 (hereinafter called the Act ) as amended by Acts of 1961 and 1964 in respect of (1) advertisement materials (2) canteen sales (3) sale of scrap and (4) penalty have to be considered, while in Appeal No. 2120/1969 only the sales tax levied in respect of sales of scrap and penalty has been challenged. The respondents are oil companies and it appears in the first of the appeals the respondent under the Factories Act had to supply tea and edibles to its workmen for the canteen established by it. It also supplies to its agents at cost price or less than the cost price advertisement materials such as calendars, purses and key chains. Both the respondents also sell as scrap periodically unserviceable oil drums, rubber hoses, jerry cans, rims, unserviceable pipe fittings and old furniture. The amount of turnover in respect of each of the items in the respective appeals is not relevant, but what is relevant is that in both the appeals the year 1964-1965 for which assessment is made on the turnover of sales is dividend into two parts (i) 1st April to 31st August, 1964 and (ii) 1st September, 1964 to 31st March, 1965, the first part being governed by the 1959 Act while the second part is chargeable under the Act after its amendment in 1964. The definition of business, casual trader and dealer before and after the amendment is different and the question is, whether under the amended definition of the said terms on and after 1964 Act attracts sales tax on the above transactions. In the High Court is was contended that the Tribunal was wrong in holding that sales of publicity materials were chargeable to sales tax on the ground that (a) there was no sale at all by the assessee in the true sense and (b) even if there was it was not as a dealer. The High Court dealt with the latter aspect holding that the object of the respondent is not shown to be to engage itself in trade or commerce of publicity materials, and though it may be that the distribution of the publicity materials to the distributors is connected with the business of the assessee that will not be sufficient to make it a trade or an activity in a commercial sense. In this view it held that it was not a dealer nor is its business carried on as a dealer. The High Court also held that the sale of scrap and canteen sales were not liable to tax following its earlier judgment in Dy. Commr. of Commercial Taxes v. Thirumagal Mills Ltd., (1967) 20 STC 287 (Mad).

2. It may be mentioned that in the original Act viz., the Madras Sales Tax Act, 1939 dealer was defined as meaning any person who carried on the business of buying and selling goods. In that Act there was no definition of a casual dealer nor of business. The 1959 Act defined these terms for the first time and by the Amending Act of 1964 the definition of business was substituted so as to do away with motive for making profit or the making of profit as elements in determining what constitutes a business. Even the definition of casual trader in the 1959 Act was substituted by the Amending Act in 1961. These definitions are given below one against the other for facility of comparison :-

1959 Act After the 1961 and 1964 Amendment Act.

Section 2 (d) "business" includes (i) any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture, whether or not any profit accrures from such trade, commerce, manufacture, adventure or concern. Section 2 (d) "business" includes (i) 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 profit accrues from such trade, commerce, manuf