The sale of scrap material by the Andhra Pradesh State Road Transport Corporation (APSRTC) is not liable to tax under the Andhra Pradesh General Sales Tax Act, 1957, because the APSRTC is not a "dealer" within the meaning of the Act and the sale of scrap material is incidental to its main activity of providing road transport services.

SEETHARAM REDDY, J.

( 1 ) IN this batch of revisions, preferred against the order made by the Sales Tax Appellate Tribunal, the question that arises for determination is whether the sales effected during the assessment years 1969-70 to 1980-81 by the Andhra Pradesh State Road Transport Corporation ("apsrtc" for short) in respect of scrapped vehicles, old tyres, tubes, tender forms and other unserviceable material, would be exigible to sales tax. The Appellate Tribunal held that it is not possible to hold that the corporation is carrying on any business or it is a dealer. Therefore, the sale of discarded and unserviceable material by it amounts to no business.

( 2 ) THE contention of the Revenue is that the activity of the corporation is nothing but commercial in nature and, therefore, it must be held that it is carrying on business and consequently the scrap material which the corporation is selling away must be held to be incidental to its main activity and, therefore, the sale of such scrap material must be subjected to sales tax. It is further contended that though the activity of the corporation is commercial in nature which might not attract sales tax but any other activity like sale of scrap material would come within the definition of "business" or commerce and, therefore, it must be subjected to sales tax.

( 3 ) SECTION 2 (1) (e) of the Andhra Pradesh General Sales Tax Act is the relevant statutory provision which deals with the definition "dealer". It reads : "dealer means any person who carries on the business of buying, selling, supplying or distributing goods, directly or otherwise, whether for cash, or for deferred payment, or for commission, remuneration or other valuable consideration, and includes - "

( 4 ) WE may now advert to the case law on which reliance was placed by both sides. Shri Reddappa Reddy, learned standing counsel for "apsrtc", placed reliance upon a decision of a Division Bench of this Court in Andhra Pradesh State Road Transport Corporation v. Commercial Tax Officer [1971] 27 STC 42. This case is the first one that dealt with the corporation in question directly. The question that fell for consideration before the Bench in this case was whether the sale of scrapped vehicles, old tyres and other unserviceable material left with the corporation which it has been disposing of periodically by public auction or by inviting tenders, amounted to sales attracting thereby sales tax. It was held :"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. . . . . . . . . . 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 the aforesaid case, this Court has also dealt with the objects of the corporation to the following effect : "the Andhra Pradesh State Road Transport Corporation is constituted under the Road Transport Corporations 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 asse

Click Here to Read the rest of this document