1. This is a reference, on a case stated, by the Maharashtra Sales Tax Tribunal under section 61(1) of the Bombay Sales Tax Act, 1959 (referred to hereinafter as the 'said Act'), at the instance of the Commissioner. The question referred to us for our determination is as follows :
'Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the sales of old newspapers and damaged newsprint effected by the assessee were not effected in the regular course of business and hence not liable to tax under the Bombay Sales Tax Act, 1959 ?'
2. The facts giving rise to the reference are as follows :
The respondent-assessee is a company incorporated under the Indian Companies Act and is engaged in the business of printing newspapers for sale. It is a registered dealer under the said Act. The period under assessment is from 1st May, 1970, to 30th April, 1971. During this period the assessee, inter alia, sold the following items :
(i) old newspapers which had remained unsold,
(ii) cuttings obtained from rolls of newsprint which could not be used for the purpose of printing, and
(iii) waste newsprint obtained due to damage caused in transit or due to newsprint getting torn or spoilt in the process of printing and jelly, kachara, core-ends and reel-ends.
3. As far as old newspapers were concerned, the undisputed position before the Tribunal was that these were newspapers which had been printed but remained unsold and therefore, had to be disposed of as waste paper. The Tribunal came to the conclusion that these could not be regarded as a by-product or subsidiary product which was obtained by the assessee during the manufacturing process and the sale of the same could not be held to be a part of the assessee's business. The Tribunal held that the sales of these old newspapers were not in the course of the assessee's business and were not liable to the levy of sales tax. As far as newspaper cuttings are concerned, it was held by the Tribunal that these cuttings were obtained regularly and continuously by the assessee in the printing of newspapers and were sold from time to time. The Tribunal came to the conclusion that the obtaining of such newspaper cuttings could be regarded as allied or incidental to the business activity and hence an intention to carry on business in the sale of such newspaper cuttings could be reasonably attributed to the assessee. The sales of these cuttings were, therefore, liable to the levy of sales tax. We may make it clear that no controversy is raised before us by the assessee regarding these cuttings and hence we are not concerned with the decision of the Tribunal regarding newsprint cuttings. As far as waste newsprint is concerned, the Tribunal held that this waste newsprint was obtained by the assessee by the reason of damage caused in transit or due to newsprint getting torn or spoilt in the process of printing and jelly, kachara, core-ends and reel-ends. The Tribunal took the view that it could not be said that the assessee had any intention to do business in such waste papers, etc., when it had purchased the newsprint. Hence the sales of waste newsprint were not liable to tax. The question referred to us pertains to the controversy regarding the taxability of the sales of old newspapers and damaged newsprint.
4. Before setting out the respective contentions urged by the counsel, it may not be out of place to refer to the relevant provisions of the said Act. Section 2 of the said Act is the definition section and sub-section (11) of section 2 defines the term 'dealer'. The relevant part of the said definition runs as follows :
''dealer' means any person who whether for commission, remuneration or otherwise carries on the business of buying or selling goods in the State, and includes ...'
Sub-section (13) of section 2 defines 'goods' as meaning every kind of movable property but excludes, inter alia, newspapers from the definition of the said term. It may be mentioned that at the relevant time sub-section (5A), which defines the term 'business', had not been introduced in the said section of the said Act. Sub-section (36) of section 2 defines the expression 'turnover of sales' and the said expression is defined as meaning the aggregate of the amounts of sale price received and receivable by a dealer in respect of any sale of goods made during a given period after deducting certain amounts with which we are not concerned.
5. The submission of Mr. Jetley, the learned counsel for the revenue, is that the sales of waste newsprint and old newspapers by the assessee in this case were in the regular course of the assessee's business and hence the sales of these items were liable to be included in the taxable turnover of the assessee. It was submitted by him that in the course of its business, the assessee regularly obtained waste newsprint as well as retained with it some old newspapers which could not be sold and these had to be sold by the assessee with a fair degree of regularity. The volume of the sales of these items could also not be said unsubstantial. Hence the intention of doing business in the sale of these goods must be attributed to the assessee. It was further urged by him that these products could rightly be regarded as by-products or subsidiary products of the assessee's business of printing newspapers. It was also urged by Mr. Jetly that the sales of these items did result in realisation of money which went either towards increasing the profit of the assessee or reducing its loss and hence the sales of these items were liable to be taxed under the said Act.
6. It was, on the other hand, contended by Mr. Patil, the learned counsel for the assessee, that the assessee had no intention to do business in the sale of waste newsprint and old newspapers. It was submitted by him that neither waste newsprint nor old newspapers could be considered to be by-products or subsidiary products of the assessee's business of printing newspapers and selling them. It was not that every sale transaction of a businessman was liable to be included in the taxable turnovers of sales, though the sale might be in the course of the assessee's business. What was further required for taxability to be attracted was that the assessee should be found to be dealing in the items sold. It was contended by him that merely because a person was a dealer in one commodity, it could not be concluded that his sales of other commodities were also in the course of his business as a dealer. It was urged by him that if in the course of his business a person disposes of goods which have become unserviceable or waste or damaged goods, no intention to carry on business in the sale of these goods could be attributed to the said person.
7. Before considering the aforesaid contentions, we propose to refer in some detail to the decision of the Supreme Court in State of Gujarat v. Raipur . : 1SCR618 , because the principles laid down therein, in our view, are directly applicable to the resolution of the controversy raised before us. In that case, the respondent-assessee carried on the business of manufacturing and selling cotton textiles. During the relevant period, besides selling cloth, the respondent also sold coal and various items of discarded, unserviceable goods and waste products from the factory. Those goods were classified by the Supreme Court as follows :
(1) Old containers - cans, boxes, etc., discarded stores, machinery and from scrap; miscellaneous discarded items, such cotton ropes chindis (rags), etc.
(2) Kolsi (cinders), waste caustic liquor, and
It is true that the said decision of the Supreme Court was under the Bombay Sales Tax Act, 1953, whereas we are concerned with the said Act, namely, the Bombay Sales Tax Act, 1959; but it is common ground that this does not make any difference to the applicability of the principles laid down by the Supreme Court in the aforesaid case. The Supreme Court held that 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 that class of goods and the transactions must be ordinarily entered into with a profitmotive. It was further held by the Supreme Court that in the turnover of a person carrying on the business of selling one commodity the price received by him by the sale of another commodity was not liable to be included, unless he carried on the business of selling that other commodity. 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. The Supreme Court held that it cannot be said that in disposing of miscellaneous old and discarded items, such as stores, machinery, iron scrap, cans, boxes, cotton ropes, rags, etc., the respondent-company was carrying on the business of selling those items of goods. These sales were frequent and their volume was large, but it could not be said that when the goods were acquired, there was any intention to carry on the business in those discarded materials nor were the discarded goods, by-products or subsidiary products of or arising in the course of the manufacturing process. In order that receipts from sale of a commodity may be 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. As far as 'kolsi' was concerned, the Supreme Court pointed out that it had been found by the High Court concerned that these 'kolsi' (cinders) were small pieces of coal which were not fully burnt. 'Kolsi' was not capable of extreme fuel potency required in the furnaces of the assessee-company, but it was capable of being used in lighter-furnaces. 'Kolsi' was discharged from the furnaces regularly and continuously day after day. The assessee collected that 'kolsi' and sold it to intending purchasers in bulk. 'Kolsi' could be appropriately regarded as a subsidiary product produced in the course of manufacture. 'Kolsi' results from coal which remains unburnt; it is on that account a subsidiary product. It was on the basis of these findings that the Supreme Court held that the amounts realised by the respondent from the sale of 'kolsi' were liable to be included in its taxable turnover. Similarly 'waste caustic liquor' was also found to be a by-product which resulted regularly and continuously in the process of mercerisation of cloth. This waste caustic liquor was continuously accumulated in the tanks. It was further found that this product had a market amongst other manufacturers or launderers. It was thus held by the Supreme Court that waste caustic liquor must be regarded as a by-product or a subsidiary product emerging in the course of manufacture and the sale thereof was incidental to the business of the company in that case and it was held that the sales of waste caustic liquor and 'kolsi' were liable to the levy of sales tax.
8. We will now refer to the case of Aryodaya Spinning and Weaving Company Limited v. State of Bombay  11 STC 141 cited by Mr. Jetly. In that case the assessee was carrying on the business of manufacturing cotton textiles and yarn and was registered as a dealer carrying on business in selling yarn, cloth, cotton waste, stores, etc. The question was whether the sales of some excess cotton and cotton waste by the assessee in the relevant period were liable to be charged to sales tax. In that case the Division Bench of this Court which rendered the decision placed reliance on the fact the assessee was registered as a dealer in cotton and cotton waste also. It was held by the Division Bench that cotton and cotton waste sold by the assessee could be regarded as subsidiary products of the business of the assessee of manufacturing cotton textiles and the intention of dealing in these goods could be attributed to the assessee with the result that the sales of these goods were liable to the charge of sales tax. In our opinion, this decision does not, in any way, make any difference to the principles laid down by the Supreme Court in the case of Raipur . : 1SCR618 . In fact, this decision is referred to by the Supreme Court in the aforesaid decision. It was on the facts of the case, that the Division Bench came to the conclusion that the goods sold were subsidiary products of the assessee's business and the intention to deal in those goods could reasonably be attributed to the assessee. The question is whether that can be said in the case before us. It must further be pointed out, in appreciating the decision of the Division Bench, that cotton waste was waste only in the sense that it was not of any use to the assessee. It was only cotton, which was discarded in the process of carding on accounts of its short staple and unsuitability for manufacturing yarn of the type required by the factory of the assessee. It is, however, common knowledge that cotton waste is a distinct commercial commodity.
9. Some other decisions were referred to by the counsel, but we do not see how any purpose would be served by referring to them here because it was not suggested that any of these decisions made any difference to the principles laid down by the Supreme Court in the case of Raipur . : 1SCR618 .
10. We have, therefore, to see whether the sales of waste newsprint and old newspapers could be said to have been effected by the assessee as a dealer in those commodities within the meaning of the said term in the said Act, in the light of the principles laid down by the Supreme Court in the case of Raipur . : 1SCR618 . It these tests are to be applied, it could perhaps be said that the sales of these articles were made by the assessee with a fair degree of regularity and were not such as could be regarded as negligible in volume. These circumstances would not, however, by themselves, render these sales taxable under the said Act. The question still arises whether these commodities could be properly regarded as subsidiary products or by-products of the assessee's business and the intention to deal in these goods could be reasonably attributed to the assessee. As far as waste newsprint is concerned, as we have pointed out, it comprised mainly of newsprint which had been damaged or spoilt in transit or in the course of printing. We fail to see how waste newsprint obtained in this manner could be said to be either a subsidiary product or a by-product of the assessee's business of printing newspapers. It is more in the nature of raw material, namely, newsprint, which has got damaged or spoilt in the course of the printing process or in the course of transit or storage. Thus it is really damaged or wasted raw material and is more akin to unserviceable goods referred to by the Supreme Court in the case of Raipur . : 1SCR618 , rather than a by-product or subsidiary product. It is not as if it can be regarded as a commercial commodity or product which has emerged in the course of manufacturing or printing of newspapers. in view of this, we fail to see how it can be said that at the time when the assessee purchased newsprint it was with the intention to sell waste newsprint or how it can be said that then assessee was a dealer in that commodity.
11. As far as old newspapers are concerned, the case of the revenue is even weaker, and in fact, Mr. Jetley fairly did not press his arguments in connection with the sales of old newspapers with his usual zest and vigour. If old newspapers are to be regarded as newspapers, they are expressly excluded from the definition of the word 'goods' under the said Act and if they are regarded as newspapers which have remained as unsold and hence not really newspapers, then they are like discarded goods and not by-products or subsidiary products. In either view of the matter, it cannot be said that the sales of old newspapers were liable to the charge of sales tax.
12. In the result, the question referred to us is answered in the affirmative and in favour of the assessee.
13. The applicant to pay the costs of the reference.