JUDGMENT Rajes Kumar, J.
1. Present revision under Section 11 of U.P. Trade Tax Act (hereinafter referred to as "Act") is directed against the order of Tribunal dated 18.09.1995 relating to the assessment year 1985-86.
2. Applicant was carrying on the business of woolen yarn and during the year under consideration sold one old fiat car, the value of which was assessed by the assessing authority at Rs. 55,000/- and the tax has been assessed therein. First appellate authority reduced the value of the fiat car to Rs. 35,000/- but upheld the view of levy of tax. Tribunal by the impugned order confirmed the levy of tax.
3. Heard learned counsel for the parties.
4. Learned counsel for the applicant submitted that fiat car, which was sold during the year under consideration was capital assets of the firm and was not the stock in trade and, therefore, in respect of the sale of old car, it was not the dealer, in as much as it was not carrying on the business of car. In support of his contention he relied upon the decision of Bombay High Court in the case of Morarji Brothers (Import & Export) Pvt. Ltd., v. State of Maharashtra, reported in 99 STC 117. Learned Standing Counsel supported the order of the Tribunal.
5. There is no dispute that the applicant was carrying on the business of woolen yarn. Fiat car, which was sold during the year under consideration was not part of the stock in trade, and was capital assets. Question is whether in respect of sale of fiat car, which was capital assets, the applicant can be treated as dealer and the sale is liable to tax under U.P. Trade Tax Act. To adjudicate the aforesaid question, it is relevant to refer the definition of "dealer" and "business". "Dealer" is defined by Section 2 (c) and the business is defined by Section 2(aa), which reads as follows:
"2 (aa) 'business', in relation to business of buying or selling goods, includes:-
8. In the case of The State of Gujurat v. Raipur Manufacturing Co., Ltd., reported in 19 STC, 1, company was carrying on the business of manufactur in and sale of cotton textiles. In the assessment year 1953-54 the company beside selling cloth, sold coal and 25 different items of discarded or unserviceable good and waste products from the factory. Question came up before the Apex Court whether the sale of various other items were liable to tax or not. Under the Bombay Sales Tax Act, which was applicable to the Gujarat "dealer" was define by Section 2 (h), which means "any person, who carried on the business of selling goods in the State of Bombay, whether for commission, remuneration otherwise..."
9. Apex Court held as follows:
"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 Section 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 he included in the turnover. In other words, he must carry on the business of selling a commodity before his turnover from sale of that commodity is taxable. As pointed out by this Court in State of Andhra Pradesh v. Abdul lakshi and Bros., a person to be a dealer must be engaged in the business of buying or selling or supplying goods. The expression "business" though extensively used in taxing statutes, is a work of indefinite import. In taxing statutes, it is used in the sense of an occupation, or profession which occupies the time, attention and labour of a person, normally with the object of making profit. To regard an activity as business there must be a course of dealings, either actually continued or contemplated to be continued with a profit-motive, and not for sport or pleasure. Whether a person carries on business in a particular commodity must depend upon the volume, frequency, continuity and regularity of transactions of purchase and sale in a class of goods and the transactions must ordinarily be entered into with a profit-motive. By the use of the expression "profit-motive" it is not intended that profit must in fact be earned. Nor does the expression cover a mere desire to make some monetary gain out of a transaction or even a series of transactions. It predicates a motive which pervades the whole series of transactions effected by the person in the course of his activity. In actual practice, the profit-motive may be easily discernible in some transactions: in others it would have to be inferred from a review of the circumstances attendant upon the, transaction. For instance, where a person purchases a commodity in bulk and sells it in retail it may be readily inferred that he has a profit-motive in entering into the series of transactions of purchase and sale. A similar inference may be raised where a person manufactures finished goods from raw materials belonging to him or purchased by him, and sells them. But where a person comes to own in the course of his business of manufacturing or selling a commodity, some other commodity which is not a by-product or a subsidiary product of that business and he sells that commodity, cogent evidence that he has intention to carry on business of selling that commodity would be required. Where a person in the course of carrying on a business is required to dispose of what may be called his fixed assets or his discarded goods acquired in the course of the business, an inference that he desired to carry on the business of selling his fixed assets or discarded goods would not ordinarily arise. To infer from a course of transactions that it is intended thereby to carry on business ordinarily the characteristics of volume, frequency, continuity and regularity indicating an intention to continue the activity of carrying on the transactions must exist. Hut no test is decisive of the intention to carry on the business: in the light of all the circumstances an inference that a person desires to carry on the business of selling goods may be raised.
It is clear from these cases that to attribute an intention to carry on business of selling goods it is not sufficient that the assessee was carrying on business in some commodity and he disposes of for a price articles discarded, surplus or unserviceable. It was urged, however, on behalf of the state that where a dealer with a view to reduce the cost of production disposed of unserviceable articles used in the manufacture of goods and credits the price received in his accounts, he must be deemed to have a profit-motive, for it would be uneconomical for the business to store unserviceable articles and to survive as an economic unit. Hut the question is of intention to carry on business of selling any particular class of goods. Undoubtedly from the frequency, volume, continuity and regularity of transactions carried on with a profit-motive, an inference that it was intended to carry on business in the commodity may arise. But it does not arise merely because the price received by sale of discarded goods enters the accounts of the trader and may on overall view enhance his total profit, or indirectly reduce the cost of production of goods in the business of selling in which he is engaged. An attempt to realize price by sale of surplus unserviceable or discarded goods does not necessarily lead to an inference that business in intended to be carried on in those goods, and the fact that unserviceable goods are sold and not stored so that badly needed space is available for the business of the assessee also does not lead to the inference that business is intended to he carried on in selling those goods.
We may now consider whether the turnover from the goods sold by the Company was taxable. The goods sold broadly fall, as already observed, under three heads, viz., old discarded machinery, stores and scrap and miscellaneous goods; coal; and by-products and subsidiary products such as "kolsi" and waste caustic liquor, though not usable by the factory, are goods regularly and continuously produced in its manufacturing processes. We are unable to hold that in disposing of miscellaneous old and discarded items such as stores, machinery, iron scrap, cans, boxes, cotton ropes, rages etc., the Company was carrying on business of selling those items of goods. These sales were frequent and the volume was large, but it cannot be presumed that when the goods were acquired there was intention to carry on the business in those discarded materials; nor are the discarded goods, byproducts or subsidiary products of or arising in the course of the manufacturing process. They are either fixed assets of the Company or are goods which are incidental to the acquisition or use of stores or commodities consumed in the factory. Those goods are sold by the Company for a price which goes into the profit and loss account of the business and may indirectly be said to reduce the cost of production of the principal item, but on that account disposal of those goods cannot be said to become part of or an incident of the main business of selling textiles. In order that receipts from sale of a commodity may he included in the taxable turnover, it must be established that the assessee was carrying on business in that particular commodity, and to prove that fact it must be established that the assessee had an intention to carry on business in that commodity. A person who sells goods which are unserviceable or unsuitable for his business does not on that account become a dealer in those goods, unless he has an intention to carry on the business of selling those goods."
10. It appears that after the decision of the Apex Court, definition of the "dealer" and "business" under the U.P. Trade Tax Act have been amended. Definition of "business" has been amended including "any transactions relating to business, selling or supplying of plant, machinery, raw materials, processing materials, packing materials, empties, consumable stores, waste or by-product, or unserviceable or obsolete or discarded machinery, or any parts or accessories thereof or any waste or scrap or any of them which is ancillary to or is connected with or is incidental to, or results from such trade, commerce, manufacture, adventure or concern"
11. Perusal of the definition of business" under the U.P. Trade Tax Act after the amendment shows that it includes the sale of goods in the nature of stock in trade as well as goods of a capital nature and, therefore, the argument of learned counsel for the applicant that the goods of capital nature is not liable to tax, can not be accepted.
12. In the case of Morarji Brothers (Import & Export) Pvt. Ltd. v. State of Maharashtra, reported in 99 STC, 117, decision of the Apex Court in the case of State of Gujarat v. Raipur Manufacturing Co., Ltd., reported in 19 STC 1 and the amended definition of '"business" defined by clause (5A) of Section 2, inserted by Maharashtra Act 62 of 1974, w.e.f. 15.01.1975 has been considered, which shows that clause (5A) of Section 2 includes any trade, commerce or manufacture or any adventure in the nature of trade, commerce or manufacture and any transaction in connection with, or incidental or ancillary to such trade, commerce, manufacture, adventure or concern.
13. Having regard to the above definition of the word "business", the Division Bench of Bombay High Court held that the decision of the Apex Court in the case of State of Gujarat v. Raipur Manufaturing Co., Ltd.(Supra) has not been overruled in its entirety and it has been held that fixed assets, which is not stock in trade was not liable to tax even after the amendment in the definition. In my opinion, the decision of Division Bench of the Bombay High Court is not applicable to the present case. The definition of" business" under the U.P. Trade Tax Act shows that it includes the transaction of sale of plant, machinery, unserviceable or obsolete or discarded machinery, or any parts or accessories, which are goods of capital nature. Therefore, in my opinion, fiat car is liable to tax though it is a capital assets, in view of the definition of "business", and the applicant is held to be "dealer".
14. In the case of CST v. India Tobacco Co., Saharanpur, reported in 1983 UPTC, 157, this Court upheld the levy of tax on the sale of fixed assets under the amended definition of "business."
15. In the case of CST v. S.R. Industries, Nai Basti, Ferozabad, reported in 1981 UPTC 411, it has been held that when a glass manufacturer sells coal dust, sale of coal dust shall be exigible to tax under the amended notification.
16. In the case of State of Tamilnadu v. Burmah Shell Oil Storage and Distributing Co. of India Ltd. and Anr. , reported in 31 STC, 426 after the amendment in the definition of "business", it has been held that the sales of advertisement materials and scrap etc. are liable to sales tax under the Madras General Sales Tax act. After the amendment in 1964 "any trade, commerce or manufacture of any adventure of 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, manufacture, adventure or concern" had been added.
17. In the case of Bharat Aluminium Company Limited v. CST, Madhya Pradesh, reported in 101 STC, 446, dealer was carrying on the business of manufacturing and sales of aluminium and during the relevant period sold unserviceable jeep tyres, batteries and building material. These materials have been held exigible to tax. Division Bench of Madhya Pradesh High Court on consideration of definition of the "business" given in Section 2 (bb) of the of Madhya Pradesh General Sales Tax Act, which is almost similar to the definition of the "business" given in U.P. Trade Tax Act held the aforesaid items liable to tax.
18. In the case of General Sea Food v. State of Kerala, reported in 71 STC, 130, assessee was carrying on the business of processing of sale of sea foods and has sold two motor boats and a motor jeep. Division Bench of Kerala High Court held the sale of motor boats and motor jeep as ancillary to the business. In view of the definition of the business contained in Section 2 (vi) of the Act, which is almost similar to the definition of the business under the U.P. Trade Tax Act.
19. In the result, revision fails and is accordingly, dismissed.