Case Details: State of Tamil Nadu vs. Burmah Shell Oil Storage & Distributing Co. of India Ltd. (2026) 41 Centax 49 (S.C.)
Judiciary and Counsel Details
- Jaganmohan Reddy, K.S. Hegde & Hans Raj Khanna, JJ.
Facts of the Case
The respondent-assessee, being oil companies, periodically sold unserviceable oil drums, hose pipes, jerry cans, rims, unserviceable pipe fittings and old furniture as scrap. Fact-finding recorded that such scrap arose from and related to trading operations. The High Court, following its earlier judgment, held that the sale of scrap was not liable to tax. The matter involved the determination of tax liability for the sale of scrap before and after the amendment made in 1964 to the definition of business under section 2(d) of the Tamil Nadu General Sales Tax Act, 1959, whereby transactions incidental or connected with business were included. The matter was placed before the Hon’ble Supreme Court.
Supreme Court Held
The Hon’ble Supreme Court held that under the law prior to the amendment in 1964, sale of scrap did not necessarily lead to an inference that business was intended to be carried on in those goods. It was observed that discarded goods were not treated as by-products or subsidiary products, and their disposal could not be regarded as part of or incidental to the main business, and such turnover was not liable to tax. It was further held that after the amendment, the definition of business included transactions incidental or connected with trade, manufacture or concern irrespective of profit motive. The Court held that the sale of unserviceable drums, hose pipes and other scrap was connected with the business of the assessee and formed part of the taxable turnover. Accordingly, the appeals filed by the department were partly allowed for the later period and dismissed for the earlier period.
List of Cases Reviewed
- Burmah Shell Oil Storage and Distributing Company of India Limited v. State of Madras — Tax Case Nos. 108 and 110 of 1967, decided on 2-8-1967 by Madras High Court — Partly affirmed [Para 10]
List of Cases Cited
- A.P. State Road Transport Corpn. v. Commercial Tax Officer — 27 S. T. C. 42. — Distinguished [Para 6]
- Deputy Commissioner v. Sri Thiromagal Mills Limited — 20 S. T. C. 287 — Disapproved [Paras 4, 5]
- Hyderabad Asbestos Cement Products Ltd. v. State of Andhra Pradesh — 30 S. T. C. 26 — Approved [Para 5]
- State of Gujarat v. Raipur Manufacturing Co. Ltd. — 19 S.T.C. 1 — Relied on [Paras 3, 6]
- State of Madras v. Javaraj, Nadar & Sons — 28 S.T.C. 700 — Noted [Para 3]
- State of Tamil Nadu v . Thirumagal Mills Ltd. — 29 S.T.C. 290 — Relied on [Para 3]
