STATE OF ANDHRA PRADESH versus ABDUL BAKHI AND BROS.

Citation: [1964] 7 S.C.R. 664 · Decided: 08-04-1964 · Supreme Court of India · Bench: K. SUBBA RAO · Disposal: Dismissed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

1964 
April 8 
664 
SUPREME COURT REPORTS 
[1964] 
STATE OF ANDHRA PRADESH 
v. 
ABDUL BAKHI AND BROS. 
[K. SuBBA RAO, J. C. SHAH ANDS. M. SIKRI, JJ.] 
Sale.• Tax-Total Turnover included price for buying tan-
ning bark-That price 
is 
taxable--Dealer-Meaning of--
Hyderabad General Sales Tax Act, 1950, s. 2(c), 2(m)-Sales 
Tax Rules, rr. 5-(1), 5(2). 
The respondents are registered 
dealers carrying on the 
business of tanning hides and skins and selling the tanned 
skins. The authorities under the Hyderabad General Sales Tax 
Act, 1950 assessed the respondent for the total turnover which 
included the price paid by the respondent for purchasing, tan-
ning bark used in the tanning process. The respondent contend-
ed that the price paid for the purchase of trnning bark should 
be excluded from -the taxable turnover because the tanning 
bark was bought by the respondent for consumption and not 
for sale and hence the respondent was not "dealer" qua the 
•tanning bark. 
His contention was not accepted by the Tax 
authorities. In a petition to the High Court under s. 22(1) of 
the Hyderabad General Sales Tax Act the contention of the 
respondent was accepted and the assessment was modified. In 
appeal filed with special leave, 
Held: The High Court was in error in holding that a 
· purchaser is liable to pay tax under r. 5(2) of the Saks Tax 
· Rules only when he is carrying on a business of buying and 
. selling a commodity specified in sub-r. (2) and not when he buys 
it for consumption in a process for manufacturing a commodity 
to be sold by him. 
(ii) To regard an activity as a business there must be a 
course of dealing either actually continued or con lemplated to 
be continued with a profit motive and not for sport or pieasure. 
But to be a dealer a person need not follow the activity of 
buying, selling and supplying the same commodity. The Act 
requires merely that buying of the commodity mentioned in 
r. 5(2) must be in the course of business; that is it must be 
for sale or use with a view to take profit out of the integrated 
activity of buying. and disposal. The commodity may itself be 
converted into another saleable commodity or it may be used 
as an ingredient or in p. id of a manufacturing process leading 
to the production of such saleable commodity. 
(iii) In the present case the tanning bark was not bought 
by the respondent for any purpose unconnected with the busi-
ness. Consumption of the tanning bark in the manufacturing: 
process did not therefore exclude the respondents from the 
definition of dealer qua the tanning hark. 
Sadak Thamby and Companu v. State of Madras, 14 S.T.C. 
153, approved. 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 473 
of 1963. 
Appeal by special leave from the judgment and 
order March 22, 1960, of the Andhra Pradesh High Court 
in Tax Revision Case No. 88 of 1960. 
A. Ranganadham Chetty, B. R. G. K. Achar and R. N. 
Sachthey, for the appellant. 
The respondent did not appear. 
7 S.C.R. 
SUPREME COURT HEPOH'l'S 
6()5 
April 8. 1964. The Judgment of the Court was delivered 
by 
SHAH, J.-The respondents who are registered as dealers 
under the Hyderabad General Sales Tax Act. 1950 carry on 
the business of tannin2 hides and skins and of selling the 
tanneJ skins in the town of Hyderabad. For the purposes bf 
their business the respondents purchase undressed hides am! 
skins and also tanning bark and other materials required in 
their tannery. For the- assessment year 1954-55 the Sales-tax 
Officer, Circle IV, Hyderabad. found that the total turnover 
of the respondents was Rs. 5,70,417-12-4 (0.S.) in respect of 
the hides, skins, wool and tanning bark. The respondents 
disputed their liability to pay tax on Rs. 6 J ,431-14-9 (O.S.1 
included .in the turnover contending that this amount repre-
sented the price paid for buying tanning bark required in 
their tannery. They submitted that tanning bark was bought 
for consumption in the tannery and not for sale, and they 
were accordingly not dealers in tanning bark and therefore 
the price paid for buying tanning bark was not liable to duty 
under the Hyderabad General Sales Tax Act. The Sales-tax 
Officer rejected the contention of the respondents. and his 
order was confirmed in appeal by the Deputy Commissioner. 
C. T .. Hyderabad Division and also by the Sales Tax Appel-
late Tribunal. Hyderabad. But the High 
Court of Andhra 
Pradesh in a petition under s. 22(1) read with rule 40 fram-
ed under the Andhra Pradesh General

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