STATE OF TAMIL NADU versus MIS BURMAH SHELL OIL STORAGE & DISTRIBUTING CO. OF INDIA LTD. & ANR.

Citation: [1973] 2 S.C.R. 636 · Decided: 10-10-1972 · Supreme Court of India · Bench: K.S. HEGDE · Disposal: Case Partly allowed

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Judgment (excerpt)

'636 
STATE OF TAMIL NADU 
v. 
MIS BURMAH SHELL OIL STORAGE & DISTRIBUTING 
CO. OF INDIA LTD. & ANR. 
October 10, 1972 
:[K. S. HEGDE, l'. JAGANMOHAN REDDY AND H. R. K!L\;>;;<A, JJ.] 
Madrc.s General Sales Act 1959-The amendment Ac/ of 1961 
and 
l 964-S.2 d(iii) whether before and after the amendment, the c.ssessee is 
liable to Sales Tax for the S'llle of scrap and for the sale of tea and edibles 
in its canteen to 
z~s workmen. 
The respondents in these two appeals are Oil Companies and in C.A. 
''°· 2119/69. the respondent under the Factories Act had to supply te> 
and edibles to its .workmen for the Canteen establish<!d by it. It also suppli· 
cd to its agents calender.;, purses and key chains. Both the respondents also 
sell periodically as scraps, unserviceable oil drums, rubber hoses. jerry 
cans, rims etc. 
Jn C.A. No. 2119/69, the respondent challenged the Sales Tax, lel'ied 
under the Madras General Sales Tax Act 1959, in respect of advertise-
m~nt materials, cant·~en mies, sale of scrap and the penalty. 
Where•s in 
C.A. No. 2120/69 only the Sales Tax levitla fo respect of sale of scrap 
and penalty had been challenged. 
In both these appeals. the turnover of 
sab for the assessment year 1964-65 was divided into 2 parts-(1 \ !st 
April to 31st August 1964 and (2) J•t September 1964 to 31st March, 
1965. The first p~rt was governed by the Madras General Sales Tax Act, 
1959, while the second part was govcr.rred by the Act after its amendmon~ 
in 1964. 
It was cono"nded before the High Court that the Tribunal was wrong 
in holding that the Sales of publicity m'tcrials were chargeable to sales ta~ 
·on the grmmd that (a) there was no sale at all by the aS<essee in the true 
sense; and (b) even if then! was, it was not as a dealer. The High C.ourt 
held in favour of the assessec on the ground that the assessee does not 
engage it<elf in trade of public)ty materiah, and that sale of scraps and 
canteen sales \\"\!re not Ii-able to tax fc•llowing its earlier judgment 
in 
Deputy Conunissioner of Co1n11zercial Taxes, Coilnbatore Dirision, Coiuzl•c.-
,nrc, v. Sim' Thimmaga/ Mills Ltd., 20 S.T.C. 287. 
Before this Court, as regards the lst part of the turnover, the appel-
lant ecmtcnded that ewn under the 1959 Act, before its amendmen~ trans-
actions •.vhich arc incidental to trade or comn1erce, whether or not profit 
has been made, arc liable to tax. Secondly, after the amendments in 1964, 
tho:! definition of 'bu iness' and 'casual trader' has been changed to in-
clude (i) any trade, commerce etc. whether or ll>Ot su~h trade is carried 
on \\·ith a motive to make profit or not. 
(ii) any transaction in con· 
ncction with or incidental to such trade, commerce etc., and 'casual trad~ 
ers' meant any person who had occasional transacti.o.ns of a business nature 
involving buying, selling etc. whether for cash or otherwise. 
Therefore, 
the assc··sment with respect to the second part of the turnover is also a 
valid assessment under the amendment Act 
The respondent contended 
that under G.0. 2238 dt. !st September 1964, canteen sale·s are exempt 
from tax. 
These were nevertheless included for assessment. 
Partly allow-
ing the appeal, 
HELD: (i) An attempt to realise price by sale of surplus unserviooable 
·or discarded good• may enter the accounts of a trader and may on over-
all vic\V, enhance his total profit; but it does not necessarily lead to 
ri.'.'"t 
A 
B 
c 
0 
E 
F 
G 
H 
A 
B 
c 
D 
F 
G 
H 
TAMILNADU v. BURMAH SHELL co. (Jaganmohan Reddy, J.) 637 
inference that business is intended to be carried on in those goods and 
the fact that unservic~able goods are sold does not lead to ain inference 
that business is intended to be carried on in selling those goods. There-
fore, the contention of the appellant, so far as the first part of turnover 
for 1964-65 is concerned, fails. [640GJ 
The State of Gujarat v. Raipur Manufacturing Co. Ltd. 19 S.T.C. 1, 
referred to. 
(ii) After the Amendments of 1961 and 1964 of the Madras General 
Sales Tax Act 1959, the definition of the word 'business' and 'casual trader' 
has chango'd considerably. 
Profit-motive is now immaterial and the con-
cept of business in respect of m~tters 'falling under Sec. 2(d) (ii) in the 
commercial sense put forward and accepted in earlier cases must be aban-
doned .. [642GJ 
Hyderabad Asbestos Cement Products Ltd. v. State of Andhra Pradesh. 
30 S.T.C. 26 referred to. 
(iii) Jn the present appeals, the sale of scrap comisted of 
spoiled 

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