2001 PLP (Trib (PTD)

5. We have heard the rival parties, carefully gone through the record.

6. We observe that in views of the provisions of section 23(41) Taxable Supply , the disposal of the goods cannot be brought within the ambit of taxable supply. The business of the appellant is manufacturing of drugs and medicines and not sale of supply of old and used vehicles of furniture. This Tribunal has already decided similar cases wherein disposal of the assets of the present king were not treated as taxable supply. The Ministry of Law had also clarified the legal position, which hardly leaves any doubt in the interpretation of the relevant provisions of law. It is reproduced below: "The undersigned is directed to refer to Central Board of Revenue's Letter No.3(54)/STP/99, dated the 24th May, 2000, on the above subject arid to state that the sale, auction or otherwise disposal of goods, moveable/fixed assets (including land, building, plant/machinery, equipment or vehicles) by a registered person shall not be chargeable to sales tax if such disposal is beyond the normal and continuous 'supply' as a business activity of such person and more particularly when there was no value addition to the goods for which the input tax was not allowed.

2. This issues with the approval of the Draftsman/Additional Secretary. "

7. The reliance placed by the learned counsel on the Indian judgment of the Supreme Court reported as (1967) 19 STC 1 (SC) supports our view. The relevant portion of the said judgment is reproduced hereunder: "In disposing of miscellaneous old and discarded items such as stores, machinery, iron scrap, cans, boxes, cotton ropes, rags etc. the company was carrying on businesses of selling those items of goods. These sales were frequent and the volume was large, but it cannot be presumed that when the goods were acquired there was an intention to carry on the business in those discarded materials; not are the discarded goods by products or subsidiary products of or arising in the course of the manufacturing process. They are either fixed assets of the company or are goods which are identical to the acquisition or use of stores or commodities consumed in the factory. Those goods are sold by the company for a price which goes into the profit and loss account of the business and may indirectly be said to reduce the cost of production of the principal item, but on that account disposal of those goods cannot be said to become part of or an incident of the main business of selling textiles. 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."

8. For what has been discussed above the appeal is accepted and the impugned order set aside.

9. This order will also apply to the following appeals as the subject is identical and common question of law and facts are involved: (i) Appeal ‑No. 192 of 2000 Messrs Tapal Tax (Pvt.) Ltd. v. Deputy Collector order, dated 7‑10‑2000. (ii) Appeal No. 11/12 of 2000 Messrs Zulfiqar Industries Ltd. v. Additional Collector (Adjudication) order, dated 6‑9‑2000. (iii) Appeal No. 107 of 2000 Messrs Diamoti Food Industries Ltd: v. Collector, order dated 31‑3‑2000. (iv) Appeal No.99 of 2000 Messrs Ishtiaq Textile Mills Ltd. v. Collector order, dated 24‑4‑2000. (v) Appeal No.25 of 2000 Messrs Crescent Steel & Allied Products v. Collector order, dated 24‑1‑2000. C.M.A./M.A.K./92/Tax(Trib.) Appeal accepted