Case: State of Andhra Pradesh Vs. M/s. H. Abdul Bakhi &amp; Bros

1. The respondents who are registered as dealers under the Hyderabad General Sales Tax Act, 1950 carry on the business of tanning hides and skins and of selling the tanned skins in the town of Hydarabad. For the purposes of their business the respondents purchase undressed hides and skins and also tanning bark and other materials required in their tannery. For the assessment year 1954-55 the Sales-tax Officer, Circle lV, Hyderabad, found that the total turnover of the respondents was Rs, 5,70,417l2-4 (O.S.) in respect of the hides, skins, wool and tanning bark. The respondents disputed their liability to pay tax on Rs.61,431-14-9 (O.S.) included in the turnover contending that this amount represented the price paid for buying tanning bark required in their tannery.T hey 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 Appellate Tribunal, Hyderabad. But the High Court of Andhra Pradesh in a petition under S.22(1) read with rule 40 framed under the Andhra Pradesh General Sales Tax Act VII of 1957 modified the order passed by the taxing authorities and excluded from the computation of the taxable turnover the price paid by the respondents for the tanning bark used in the tannery. With special leave, the State of Andhra Pradesh has appealed to this Court.

Reasoning: 4. We are unable to agree with this view of the High Court. A person to be a dealer must be engaged in the business of buying or selling or supplying goods. The expression "business" though extensively used is a word of indefinite import; in taxing statutes it is used in the sense of an occupation, or profession which occupies the time, attention and labour of a person, normally with the object of making profit. 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. But to be a dealer a person need not follow the activity of buying, selling and supplying the same commodity. Mere buying for personal consumption i.e., without a profit motive will not make a person dealer within the meaning of the Act, but a person who consumes a commodity bought by him in the course of his trade, or use in manufacturing another commodity for sale, would be regarded as a dealer. The Legislature has not made sale of the very Article bought by a person a condition for treating him as a dealer; the definition merely requires that the buying of the commodity mentioned in Rule 5 (2) must be in the course of business, i.e., must be for sale or use with a view to make profit out of the integnraed activity of buying and disposal: The commodity may itself be convened into another saleable commodity, or it may be used as an ingredient or in aid of a manufacturing process leading to the production of such saleable commodity.5. It cannot be said in the present case that tanning bark was bought by the respondents for any purpose unconnected with the business carried on by them, viz., manufacture and sale of the dressed hides and skins. Consumption in the business and not sale of the commodity bought therefore does not exclude the respondents from the definition of dealer qua the tanning bark. This is the view which has, in our judgment, been rightly taken by the Madras High Court in the interpretation of a similar statute in operation in the State of Madras in L.M.S. Sadak Thamby and Co. v. State of Madras, (1963) 14 STC 753 (Mad) . ,