Sales of discarded materials are not liable to sales tax if they do not constitute 'business' as defined in the applicable law.

1The Revenue is the petitioner in all the three tax revision cases. In TRC. No. 105 and 106 of 1979, M/s. Carborandum Universal Ltd., Edappally who are dealers in Synthetic Abrasive Grains etc., is the assessee. T. R.C. No. 105 of 1979 relates to the assessment year 1970-71, and T.R.C No. 106 of 1979 relates to the assessment year 1971-72. The assessee was assessed to sales tax under the Kerala General Sales Tax Act 1963 on a net taxable turnover of Rs. 60,83931 for the year 1970-71 and Rs. 60,156.15 for the year 1971-72. In making the assessment the Assessing Authority has included in the taxable turnover of the assessee the turnover relating to sales of discarded materials such as gunnies, old drums, polythene bags, bottles, tins, etc. amounting to Rs. 50,904.50 for the year 1970-71 and Rs. 40,856.15 for the year 1971-72. In appeal, the Appellate Assistant Commissioner has directed the deletion of these amounts from the net taxable turnover for the periods in question holding that the assessee is not a dealer in respect of these articles viz. old gunnies, old drums, polythene bags, bottles, tins etc. This order of the Appellate Assistant Commissioner is confirmed by the Kerala Sales tax Appellate Tribunal, Trivandrum in Tribunal Appeal Nos. 331 and 332 of 1976.

2In T.R.C. No. 180 of 1979 M/s. Travancore Rayons Ltd., Perumbavoor, is the assessee and the period of assessment in question is the assessment year 1970-71. The Assessing Authority determined the total taxable turnover of the assessee at Rs 12,03,134.02. This included a sum of Rs. 15,870/-representing the sales turnover of scraps sold by the assesses to their employees. In appeal, the Appellate Authority directed deletion of this amount from the taxable turnover of the Assessee and this order of the Appellate Assistant Commissioner is confirmed by the Kerala Sales Tax Appellate Tribunal, Trivandrum in Tribunal Appeal No. 50/1977.

3The only question raised by the learned Counsel for the Revenue in these three tax revision cases is that the sales turnover of scrap materials such as old gunnies, old drums, polythene bags, bottles, tins etc. was liable to be included in the total taxable turnover of the assessees in these cases. The assessment relates to the period prior to 1-7-1974 with effect from which date the definition of "business" in sub-section (vi) of S.2 of the Kerala General Sales tax Act, 1963 was amended by Act 22 of 1974. Prior to the amendment the expression 'business' was defined in sub-section (vi) of S.2 as follows.
(vi) "business" includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture, with or without profit motive in such trade, commerce, manufacture, adventure or concern."
Clause (b) is added to the definition by the Amendment Act 22 of 1974 and by such addition any transaction in connection with, or incidental or ancillary to, the main business of the Assessee is also included in the definition of the expression 'business' as per the amendment effected on 1-7-1974. There is no substantial difference in the main part of the definition, which is incorporated as clause (a) of the amended definition of 'business' in S.2 clause (vi) except to clarify that motive to make profit or gain or the accrual of profit is immaterial. Since the assessments in the present cases relate to the periods prior to the amendment the question has to be decided with reference to the legal position that existed prior to the amendment of the expression 'business', by the Kerala Act 22 of 1974.
S. 2 (viii) of the Act defines "dealer" and the relevant portion of the definition is as follows:
"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
(a) x  x x x
(b) a casual trader;"
"Casual trader"