A.P. Sen, J.
1.This order shall also govern the disposal of Miscellaneous Civil Case No. 291 of 1965 (The Commissioner of Sales Tax, Madhya Pradesh v. Perfect Pottery Company, Ltd., Ratlam) heard along with this reference.
These are references by the Sales Tax Tribunal, Madhya Pradesh, under Section 44(1) of the Madhya Pradesh General Sales Tax Act, 1958, at the instance of the Commissioner of Sales Tax, Madhya Pradesh and the question for decision is whether, in the facts and circumstances of the case, sales tax can be imposed under the Madhya Pradesh General Sales Tax Act, on the sales of coal ash and cinders in the year 1961 and of coal ash and empty drums in the year 1962 by M/s. Perfect Pottery Company Ltd., Ratlam.
2. The question relates to the assessment for tax purposes in the assessment years 1961 and 1962 of the assessee, M/s. Perfect Pottery Co. Ltd., Ratlam, a manufacturer of stone-ware, pipes and sanitary fittings. During the assessment years in question, the Sales Tax Officer, Ratlam, subjected the assessee to tax on its sales of coal ash and cinders worth Rs. 17,583.72 P. in the year 1961 and of coal ash and empty drums amounting to Rs. 27,237-52 P. and Rs. 975 in 1962. The assessments were upheld in appeal by the Additional Appellate Assistant Commissioner of Sales Tax, Indore. In second appeal, the Sales Tax Tribunal, relying on the decision of the Gujarat High Court in Ambica Mills Ltd. v. The State of Gujara  19 S.T.C. 1, held that the sale transactions of coal ash and cinders and empty drums were not liable to sales tax as the assessee was not a dealer in those commodities. The Tribunal observed :-
All these sales were made regularly but they were not made as a part of their business activity but only to get rid of the waste product or unserviceable stocks.
3. In the statements of the case as sent by the Tribunal the material facts had not at all been set out and they were not to be found even in the order which it had passed disposing of the second appeal. Apart from this, the decision of the Gujarat High Court in Ambica Mills case  19 S.T.C. 1, on which the Tribunal had relied, has been partly reversed by their Lordships of the Supreme Court in The State of Gujarat v. Raipur .(  19 S.T.C 1.). In the light of that decision, this court by its order dated 16th November, 1967, required the Tribunal to submit further statements of the case. In compliance of that direction, the Tribunal has now furnished a supplementary statement of the case in each year of assessment.
4. The facts which emerge from these supplementary statements of the case are these : In the period from 1st January, 1961, to 31st December, 1961, the assessee effected the following sales of coal ash and cinders :-
Value of coal ash and cinders(i) Coal ash .... Rs. 7,19247 P.(ii) Cinders .... Rs. 10,391-25 P.---------Total Rs. 17,583-72 P.---------
Similarly, in the period from 1st January, 1962, to 31st December, 1962, the sales of coal ash and empty drums were of the following extent:-
Value of coal ash and empty drums(i) Coal ash .... Rs. 27,237-52 P.(ii) Empty drums.... Rs. 975.00 P.---------Total Rs. 28,212.52 P.---------
These sales show that they were made regularly in each month and sometimes three to four times in a month and to different purchasers. In the years in question, the sale proceeds were accounted for in the relevant coal consumption accounts, set out below :-
1961 Coal Consumption Account (24)
Coal consumption Rs. 2,85,902.34 By sale of ash Rs. 17,583.72
By rate difference
and adjustment 7,117.35
profit and loss
Rs. 2,85,902.34 Rs. 2,85,902.34
1962 Coal Consumption Account (24)
Coal consumed Rs. 3,16,770.53 By sale of coal
cinder Rs. 27,237.52
By balance trans-
ferred to profit
and loss account 2,89,533.01
Rs. 3,16,770.53 Rs. 3,16,770.53
After allowing credit for these sales in the coal consumption accounts, the balances of Rs. 2,85,902.34 in the year 1961 and Rs. 2,89,533.01 in the year 1962, were duly transferred to the respective profit and loss account for the relevant year.
5. On these facts, we are of the view that the sales of these commodities were definitely with a view to earn profits by the assessee and it cannot be said that they were simply disposed of as waste material or unserviceable stock. The question whether the sales of coal ash and cinders and of empty drums were liable to tax had to be adjudged from the volume, frequency, continuity and regularity of sales of these commodities. The fact that the assessee is engaged in such sales clearly raises an inference as regards its intention to carry on business in these commodities. The transactions were not isolated or solitary transaction of sale unconnected with the business of the assessee. The sales of these commodities were made by the assessee regularly in the course of its usual business activity and the sale proceeds thereof went to inflate the commercial profits earned by the assessee. We are, therefore, satisfied that the Tribunal was wrong in excluding these sales from the taxable turnover of the assessee.
6. Their Lordships of the Supreme Court in Atnbica Mills case (19 S.T.C.1.) had occasion to deal with a somewhat similar question. The assessee in that case was a company carrying on the business of manufacturing and selling cotton textiles. It sold' old machinery, stores, scrap and miscellaneous goods, as also by-products and subsidiary products as 'kolsi' and 'waste caustic liquor'. Their Lordships held that in disposing of old and discarded items the company was not carrying on the business of selling those items, but when the subsidiary products, such as 'kolsi' and 'caustic liquor', were turned out in the assessee's factory regularly and continuously and were sold from time to time, an intention to carry on the business in those items could reasonably be attributed to the company. This view was reiterated by their Lordships in Commissioner of Sales Tax, Madhya Pradesh v. Madhya Pradesh Electricity Board1. In that case their Lordships held that sales of coal ash, which was regularly and continuously produced as a subsidiary product, were liable to be assessed to sales tax.
7. In view of the foregoing discussion, our answer to the reference is in the affirmative. The Commissioner of Sales Tax shall have the costs of this reference. Hearing fee Rs. 75.