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PETITIONER: STATE OF TAMIL NADU

       Vs.

RESPONDENT: M/S BURMAH SHELL OIL STORAGE & DISTRIBUTINGCO. OF INDIA LTD.

DATE OF JUDGMENT10/10/1972

BENCH: REDDY, P. JAGANMOHAN BENCH: REDDY, P. JAGANMOHAN HEGDE, K.S. KHANNA, HANS RAJ

CITATION:  1973 AIR 1045            1973 SCR  (2) 636  1973 SCC  (3) 511  CITATOR INFO :  RF         1980 SC2038  (3)  RF         1989 SC 945  (12)

ACT: Madras General Sales Act 1959--The amendment Act of 1961 and 1964--S.2 d(iii) whether before and after the amendment, the assessee  is liable to Sales Tax for the sale of  scrap  and for  the  sale  of tea and edibles in  its  canteen  to  its workmen.

HEADNOTE: The  respondents in these two appeals are Oil Companies  and in C.A. No. 2119/69, the respondent under the Factories  Act had to supply tea and edibles to its workmen for the Canteen established   by  it.   It  also  supplied  to  its   agents calenders, purses and key chains.  Both the respondents also sell periodically as scraps, unserviceable oil drums, rubber hoses, jerry cans, rims etc. In  C.A.  No. 2119/69, the respondent challenged  the  Sales Tax, levied under the Madras General Sales Tax Act 1959,  in respect  of advertisement materials, canteen sales, sale  of scrap and the penalty.  Whereas in C.A. No. 2120/69 only the Sales Tax levied in respect of sale of scrap and penalty had been  challenged.   In both these appeals, the  turnover  of sales  for  the assessment year 1964-65 was divided  into  2 parts-(1)  1st  April  to  31st  August  1964  and  (2)  1st September  1964  to 31st March, 1965.  The  first  part  was governed  by the Madras General Sales Tax Act,  1959,  while the second part was governed by the Act after its  amendment in 1964. It was contended before the High Court that the Tribunal was wrong in holding that the Sales of publicity materials  were chargeable to sales tax on the ground that (a) there was  no sale at all by the assessee in the true sense-, and (b) even if  there was, it was not as a dealer.  The High Court  held in  favour of the assessee on the ground that  the  assessee does not engage itself in trade of publicity materials,  and that sale of scraps and canteen sales were not liable to tax following  its  earlier judgment in Deputy  Commissioner  of Commercial  Taxes, Coimbatore Division, Coimbatore, v.  Shri Thirumagal Mills Ltd., 20 S.T.C. 287.

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Before this Court, as regards the 1st part of the  turnover, the appellant contended that even under the 1959 Act, before its amendment, transactions which are incidental to trade or commerce, whether or not profit has been made, are liable to tax.  Secondly, after the amendments in 1964, the definition of  ’business’ and ’casual trader’ has been changed  to  in- clude (i) any trade, commerce etc. whether or not such trade is carried on with a motive to make profit or not. (ii)  any transaction in connection with or incidental to such  trade, commerce etc., and ’casual traders’ meant any person who had occasional  transactions  of  a  business  nature  involving buying,   selling  etc.  whether  for  cash  or   otherwise. Therefore, the assessment with respect to the second part of the turnover is also a valid assessment under the  amendment Act.  The respondent contended that under G.O. 2238 dt.  1st September  1964, canteen sales are exempt from  tax.   These were nevertheless included for assessment.  Partly  allowing the appeal, HELD  : (i) An attempt to realise price by sale  of  surplus unserviceable ,or discarded goods may enter the accounts  of a trader and may on over;all view, enhance his total profit; but it does not necessarily lead to an  637 inference  that  business is intended to be  carried  on  in those  goods and the fact that unserviceable goods are  sold does  not lead to an inference that business is intended  to be  carried  on  in selling those  goods.   Therefor--,  the contention  of  the appellant, so far as the first  part  of turnover for 1964-65 is concerned, fails. [640G] The  State  of Gujarat v. Raipur Manufacturing Co.  Ltd.  19 S.T.C. 1, referred to. (ii) After  the  Amendments of 1961 and 1964 of  the  Madras General  Sales  Tax  Act 1959, the definition  of  the  word ’business’  and  ’casual trader’ has  changed  considerably. Profit-motive is now immaterial and the concept of  business in respect of matters ’falling under Sec. 2 (d) (ii) in  the commercial  sense put forward and accepted in earlier  cases must be abandoned. [642G] Hyderabad  Asbestos Cement Products Ltd. v. State of  Andhra Pradesh, 30 S.T.C. 26 referred to. (iii)     In   the  present  appeals,  the  sale  of   scrap consisted  of  spoiled  drums, hose  pipes  etc.,  were  all connected  with the business of the Company.   The  assessee being an Oil Company, had to use oil drums, hose pipes etc., as   part   of  its  trading  activity  and  any   sale   of unserviceable goods as scrap is a transaction connected with its  trade  or commerce and the turnover in respect  of  the sale  of  the assessee’s advertisement materials,  such  as, calendars, wallets etc., are all given by the dealers to its customers  for  purposes  of increase  in  sales  etc.,  and therefore,  it  is also connected with the business  of  the assessee.   The  respondents, therefore,  had  been  rightly assessed. [643E] A.P.  State  Road Transport Corporation  v.  Commercial  Tax Officer,  27  S.T.C.  42  and State  of  Gujarat  v.  Raipur Manufacturing Co., 19 S.T.C. 1 discussed and distinguishes. (iv) In  view of the evidence that the assessee had  brought to  the  notice of the Sales Tax Officer its claim  and  was willing  to produce the accounts before him, the  Sales  Tax Officer will give an opportunity to the assessee to  produce its accounts to show that it subsidized at least 25% of  the total  expenses and in running the canteen in order  to  get relief under G.O. No. 2238 of the State Government. [645F]

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JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeals Nos.  2119  & 2120 of 1969. Appeals  by special leave from the judgment and order  dated August  2, 1967 of the Madras High Court in Tax  Cases  Nos. 108 and 110 of 1967. P.   Ram  Reddy  A.  V. Rangam and A.  Subhashini,  for  the appellants. (in both the appeals). T.   A. Ramachandran, for respondent (in C.A. No. 2119/69. S.   T.  Desai and A. K. Varma, for the respondent (in  C.A. No. 2120/69). 638 The Judgment of the Court was delivered by JAGANMOHAN REDDY, J.-These are two appeals by special  leave against  the judgment of the Madras High Court.   In  Appeal No. 2119/69 the chargeability to sales tax under the  Madras General Sales Tax Act 1959 (hereinafter called the ’Act’) as amended  by  Acts  of  1961  and  1964  in  respect  of  (1) advertisement materials (2) canteen sales (3) sale of  scrap and  (4) penalty have to be considered, while in Appeal  No. 2120/1969  only the sales tax levied in respect of  sale  of scrap and penalty has been challenged.  The respondents  are oil companies and it appears in the first of the appeals the respondent  under  the factories Act had to supply  tea  and edibles  to its workmen for the canteen established  by  it. It  also supplies to its agents at cost price or  less  than the  cost price advertisement materials such  as  calendars, purses  and key chains.  Both the respondents also  sell  as scrap  periodically unserviceable oil drums,  rubber  hoses, jerry  cans,  rims,  unserviceable  pipe  fittings  and  old furniture.  The amount of turnover in respect of each if the items in the respective appeals is not relevant, but what is relevant is that in both the appeals the year 1964-1965  for which assessment is made on the turnover of sales is divided into  two parts (i) 1st April to 31st August, 1964 and  (ii) 1st  September,  1964 to 31st March, 1965,  the  first  part being  governed  by the 1959 Act while the  second  part  is chargeable  under  the Act after its amendment in  1964  The definition of business, casual trader and dealer before  and after  the  amendment  is different  and  the  question  is, whether  under the amended definition of the said  terms  on and  after  1964,  Act,  attracts sales  tax  on  the  above transactions.   In the High Court it was contended that  the Tribunal  was  wrong  in holding  that  sales  of  publicity materials  were chargeable to sales tax on the  ground  that (a)  there  was no sale at all by the assessee in  the  true sense  and  (b) even if there was, it was not as  a  dealer. The High Court dealt with the latter aspect holding that the object of the respondent is not shown to be to engage itself in  trade or commerce of publicity materials, and though  it may  be that the distribution of the publicity materials  to the  distributors  is  connected with the  business  of  the assessee  that will not be sufficient to make it a trade  or an  activity  in a commercial sense.  In this view  it  held that  it was not a dealer nor is it its business carried  on as  a  dealer.  The High Court also held that  the  sale  of scrap and canteen sales were not liable to tax following its earlier judgment in Deputy Commissioner of Commercial Taxes, Coimbatore  Division,  Coimbatore v.  Sri  Thiromagal  Mills Limited(1) It  may  be  mentioned that in the original  Act  viz.   The Madras  Sales Tax Act, 1939 ’dealer’ was defined as  meaning any person (1)  20 S. T. C. 287.

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639 who carried on the business of buying and selling goods.  In that  Act-there was no definition of a casual dealer nor  of business.   The 1959 Act,defined these terms for  the  first time  and  by  the Amending Act of 1964  the  definition  of business  was substituted so as to do away with  motive  for making  profit  or  the  making of  profit  as  elements  in determining   what   constitutes  a  business.    Even   the definition of casual trader in the 1959 Act was  substituted by  the Amending Act in 1961.  These definitions  are  given below one against the other for facility of comparison:- 1959 Act Section 2 (d) "business includes (i) any trade, commerce  or manufacture  or  any adventure or concern in the  nature  of trade,  commerce or manufacture, whether or not  any  Profit accrues  from such. trade, commerce, manufacture,  adventure or concern. (e)  "casuai  trader"  means a person who  has,  whether  as principal, agent, or in any other capacity, occasional tran- cash   or   for  deferred  payment,   or   for   commission, remuneration, or other valuable consideration; (g)"dealer" means any person who carries on the business  of buying,  selling, supplying or distributing goods,  directly or otherwise, whether for cash, or for deferred payment,  or for    commission,    remuneration   or    other    valuable consideration, and includes (i)------ (ii) a casual trader; After the 1961 and 1964 Amendment Act. Section  2(d)  "business" includes any  trade,  commerce  or manufacture  or  any adventure of concern in the  nature  of trade,  commerce or manufacture whether or not  such  trade, commerce,  manufacture, adventure or concern is  carried  on with a motive to make gain or profit and whether or not  any profit  accrues  from  such  trade,  commerce,  manufacture, adventure  or  concern, and or incidental or  ancillary  to, such trade, commerce, manufacture, adventure or concern, and (ii)  any transaction in connection with, or  incidental  or anciallary to, such trade, commerce, manufacture,  adventure or concern; (e)  "Casual  trader"  means a person who  has,  whether  as principal,  agent,  or  in any  other  capacity,  occasional transactions  of  a business nature  involving  the  buying, selling,  supply  or  distribution of goods  in  the  State, whether   for  cash,  or  for  deferred  payment,   or   for commission,  remuneration or other  valuable  consideration. and  who does not reside or has no fixed place  of  business within the State; (g)  "dealer". means any person who carries on the  business of buying, selling, supplying or distributing goods directly or otherwise, whether for cash, or for deferred payment,  or for    commission,    remuneration   or    other    valuable consideration, and includes------ (i)---- (ii) a casual trader; At the outset the learned advocate for the appellant did not press the contention in respect of the penalty having regard to the decision of this Court in State of Madras v. Javaraj, Nadar & 640 Sons(1).   In so far as the business turnover for the  first part  of the assessable year 1964-65 is concerned it is  not denied  that the Act of 1959 prior to its amendment in  1964 is  applicable.  The contention that the 1964 amendment  has retrospective operation was negatived in State of Tamil Nadu

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v.  Thirumagal  Mills Ltd.(2) but before this  judgment  was rendered  the Sales Tax Tribunal had held that that part  of the  assessment is also covered by the 1964 amendment.   But the  learned advocate for the appellant nonetheless  submits that  even  under  the  1959 Act  before  its  amendment  to transactions  which are incidental or ancillary to trade  or commerce whether or not profit has been made, are liable  to tax.   This  contention was clearly negatived  in  State  of Gujarat  v.  Raipur Manufacturing Co. Ltd.(3) In  this  case which  was  under the Bombay Sales Tax Act  1953  where  the definition of a dealer under s. 2(6) is in pari materia with s. 2(g), the disposal by a company carrying on the  business of   manufacturing  and  selling  cotton  textiles  of   its miscellaneous  old and discarded items such as cans,  boxes, cot-ton  ropes, rags etc., was held by this Court not to  be carrying  on the business of selling these items  of  goods. It further stated that from the fact that the sales of these items were frequent and their volume was large it cannot  be presumed  that  when the goods were acquired  there  was  an intention  to  carry  on the  business  in  those  discarded materials,  nor  are  the discarded  goods,  by-products  or subsidiary   products  of  or  arising  in  the  course   of manufacturing  process.  Shah, J. who spoke, for  the  Court observed at pages 7-8 :               "But the question is of intention to carry  on               business  of selling any particular  class  of               goods.    Undoubtedly  from   the   frequency,               volume,    continuity   and   regularity    of               transactions carried on with a profit  motive,               an inference that it was intended to carry  on               business  in the commodity may arise.  But  it               does  not  arise  merely  because  the   price               received by sale of discarded goods enters the               accounts  of the trader and may on an  overall               view  enhance his total profit, or  indirectly               reduce the cost of production of goods in  the               business  of selling in which he  is  engaged.               An attempt to realize price by sale of surplus               unserviceable  or  discarded  goods  does  not               necessarily lead to an inference that business               is  intended to be carried on in those  goods,               and the fact that unserviceable goods are sold               and  not stored so that badly needed space  is               available  for  the business of  the  assessee               also does not lead to inference that  business               is intended to be carried on in selling  those               goods.               (1) 28 S.T.C. 700.        (3) 19 S.T.C. 1.                (2) 29 S.T.C. 290.  641 The  contention  on behalf of the State in  respect  of  the first part of the turnover for 1964-65 therefore fails. With respect to the second part of the turnover the question whether  the  amendments  in  1964  to  the  definition   of "business"  and "casual trader" are directly applicable  has to  be  considered.   It will be  observed  that  under  the definition   of  "business"  even  commercial   transactions carried  on  without  a motive to make gain  or  profit,  or whether  or  not any profit accrues from such  activity  are included  in that definition.  The amended sub  clause  (ii) also includes with that definition transaction in connection with  or incidental or ancillary to such trade,  manufacture or adventure or concern.  The question is, whether the  word "such"  in  sub-cl. (ii) of cl. (d) of s. 2  refers  to  the trade etc. defined in sub-cl. (i).  It was contended  before

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the Madras High Court that it is not so and that  incidental or  ancillary activity must partake the nature of  ’business in its generic sense.  In Dy.  Commr. of Commercial Taxes v. Thirumagal Mills Ltd. (supra) a Bench of that Court had held that  notwithstanding the amendment the presence or  absence of  profit  will not make any difference.  According  to  it what has to be considered is that the activity should be  of a  commercial  character  and  in the  course  of  trade  or commerce and accordingly the definition of ’business’ in the second  clause  was  still  one  invested  with   commercial character inasmuch as the reference was to "any  transaction in connection with or incidental or ancillary to any  trade, commerce,  manufacture,  adventure  or  concern’.   It   was observed that unless the transaction is connected with trade that is to say, it has something to do with trade or has the incidence or elements of trade or commerce it will not  come within the definition.  The Court observed :               "The  words ’in connection with or  incidental               or  ancillary  to’ in the second part  of  the               definition of "business" in our opinion, still               preserve  or  retain the  requisite  that  the               transaction  should  be,  in  the  course   of               business  understood  in a  commercial  sense.               The  intention of Madras Act 15 of  1964  does               not  appear to be to bring into the tax net  a               transaction  of sale or purchase which is  not               of commercial character." In  this  view it held that the fair price shop  which  the, assessee,  a  spinning mill manufacturing  cotton  yam,  had opened to make available to its workmen sale of  commodities at  fair  prices  could not be said to be  carrying  on  the business of selling commodities in the fair price shop in  a trade  or commercial sense even if profit accrued to it  and it was therefore with reference to the fair price shop,  not a dealer within the meaning of the Act.  This decision 642 does  not take note of the words "such" in the  second  sub- clause which in our view imports by reference the definition in  sub-cl.  (i)  into  that of  sub-cl.  (ii).   A  similar question came up for consideration before the Andhra Pradesh High Court on the analogous provisions of the Andhra Pradesh General Sales Tax’ Act in Hyderabad Asbestos Cement Products Ltd.  v.  State  of Andhra Pradesh(1).   In  that  case  the assesee company maintained a canteen for the use of  workers in compliance with the provisions of the Factories Act  1948 and  the rules made thereunder.  The question  was,  whether the  turnover relating to the supplies of food and drink  to the  workers at the canteen could be, charged to  sales  tax under  the Andhra Pradesh General Sales Tax Act, 1957.   The assessee  contended  that  it was compelled  by  statute  to provide and maintain a canteen for use of the workers,  that the  canteen  was not run with a profit motive, as  such  it could  not be said that there were any sales when  food  and drink  were supplied to the workers at the canteen and  that even if profit motive was not an ingredient of ’business’ it must  be  established  that  the  assessee  intended  to  do business  in food and drink before it could be subjected  to the levy of sales tax.  The Court held that in, view of  the definition of "business’ as amended ’by the Amendment Act of 1966,  proof of profit motive is unnecessary  to  constitute business  and  that the transaction of supply  of  food  and drink to the workmen in the canteen maintained by the asses- see,  in pursuance of the Factories Act and the Rules,  were sales  and constituted business for the purpose of the  Act. Dealing  with  the case of Dy.  Commissioner  of  Commercial

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Taxes v. Thirumagal Mills Limited (supra) the learned Judges said  that they were unable to agree with that case  as  the Madras  High Court had not paid sufficient attention to  the word  "such" occurring in the second part of the  definition which  according to them obviously referred to  the  "trade, commerce,  manufacture, adventure or concern"  mentioned  in the  first part of the definition, that is to  say,  "trade, commerce,  manufacture,  adventure or concern"  of  which  a motive to make gain of profit is not an essential requisite, nor  was it permissible to hold that there was no  "business in the commercial sense of ’business’ with a motive to  make profit,  when  such  motive  has  been  expressly   declared unnecessary  by the Legislature.  In their view  under  both parts of the definition profit-motive is now immaterial  and the concept of business in respect of matters falling  under See.  2  (d) (ii) in the commercial sense  put  forward  and accepted  in the earlier cases must be abandoned.  We  think the  view  adopted by the Andhra Pradesh High  Court  is  in consonance with our own reading of the section which we have indicated earlier. (1)  30 S. T. C. 26. 643 The learned advocate for the respondent in the second of the appeals  contended that the very two learned Judges  of  the Andhra Pradesh High Court had earlier rendered a decision in A.P.   State  Road  Transport  Corpn.  v.   Commercial   Tax Officer(1) which is in conflict with the Hyderabad  Asbestos Cement Products Ltd. case, and in the latter case the former case was neither referred to nor distinguished by them.   We think  that  this comment is the result of  an  insufficient appreciation of what was decided in the former case  because therein  the  assessee was not a dealer and  consequently  a seller  of scrapped vehicles and other scrap was not  liable to be assessed.  It was pointed out at the very outset  that in view of the pronouncements of the Supreme Court, the A.P. State  Road  Transport Corporation which is  primarily  con- stituted  to provide an efficient, adequate, economical  and properly co-ordinate system of road transport service  could not  be held to be a dealer carrying on the business in  old and  scrapped vehicles and other scrap and it could  not  be assessed to sales tax.  The Commercial Tax Officer was  not, therefore,  right in holding that the  assessee  Corporation was a dealer.  The chargeable section, viz., s3, makes every dealer liable to pay tax in respect of the turnover for  the year and consequently the assessee not being a dealer cannot be  assessed  to tax under the Act.  The sale  of  scrap  in these  appeals which as we have said earlier,  consisted  of spoiled drums, hose pipes etc. were all held to be connected with the business of the company.  This finding is a finding of fact but even otherwise the very nature of the particular scrap  prima  facie would indicate that they  are  connected with   the business of the company.  The assessee  being  an oil  company  has to use oil drums, hose pipes,  jorry  cans etc.  as part of its trading activity and any sale of  these unserviceable goods as scrap is a transaction connected with its trade or commerce.  It is a contended by the  respondent that in State of Gujarat v. Raipur Manufacturing Co. (supra) this Court had observed at p. 9 that the miscellaneous,  old and  discarded items such as stores, machinery  iron  scrap, cans,  boxes,  cotton ropes, rags etc, were held to  be  not part  of_or  incidental  to the  main  business  of  selling textiles.   This contention in our view does not  take  into account  the context in which that finding had  been  given. In  that case, as already pointed out, what was  held  under analogous  Bombay  Sales Tax Act which was similar  to  that

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under  the  Madras Sales Tax Act prior to its  amendment  in 1964,  the  sale of scrap does not necessarily  lead  to  an inference that business which was an element in  determining the  liability of the dealer for the turnover in such  goods was  intended to be carried on in those goods.   This  Court had  observed,  it cannot be presumed, that when  the  goods were acquired (1)  27 S. T. C. 42. 644 there  was  an  intention  to carry  on  business  in  those discarded  material nor are the discarded goods  by-products or  subsidiary  products or are produced in  the  course  of manufacturing process; that they are either fixed assets  of the  company  or  are  goods which  are  incidental  to  the acquisition or use of stores or commodities consumed in  the factory  and  that when these go into the  profit  and  loss account of the business and may indirectly be said to reduce the  cost of production of the principal item, the  disposal of those goods on that account cannot be said to be part  of or incidental to the main business of selling textiles.   As the scrap in that case was not held to be incidental to  the acquisition or use of stores, or commodities consumed in the factory,  the turnover was not included but in the  case  of caustic   liquor   which  is  regularly   and   continuously accumulated in that tanks in the process of mercirisation of cloth,  this Court held that that being a waste material  it has still a market amongst other manufacturers or launderers as  by  products  or subsidiary products in  the  course  of manufacture,  and  the  sale thereof is  incidental  to  the business  of  the cornpany.  In the view we hold  the  scrap sold is certainly connected with die business of the company and  the turnover in respect of this commodity is liable  to tax.  It cannot also be said that the turnover in respect of the  sale  of the assessees advertisement material  at  cost price  or  less than cost price is not  connected  with  the business of the assessee.  Calenders, wallets and key chains are  all given by the dealers to its customers for  purposes of  maintaining and increasing the sales of the products  of the  assessee and is therefore connected with the  business. What the, assessee is doing is to facilitate the dealers  to acquire  at  their  cost such  advertising  materials  of  a uniform type approved by the assessee company which  instead of allowing each of them to have these separately printed or manufactured, itself undertook to do so and supplied them to its  dealers.   The supply of such material is in  our  view being  connected with the business is liable to be  included in the turnover of the assessee. It is pointed out by the learned advocate for the respondent in  the first of the appeals that under G.O. 2238 dated  1st September   1964   the   canteen  sales   are   exempt   and notwithstanding the fact that the assesee in that appeal has complied  with  the terms and conditions of  that  G.O.  the canteen  sales  have not been excluded.  The G.O.  to  which reference is made is in, the following terms:-               "III  No.  336 of 1964.--In  exercise  of  the               powers  conferred by section 17 of the  Madras               General  Sales Tax Act, 1959 (Madras Act  1  of               1959), the Governor of Madras hereby  exempts,               with  effect  on and from the  1st  September,               1964, the tax payable under the said                645               Act  on  the sales by all canteens run  by  an               employer  or by the employers on  Co-operative               basis  on  behalf  of the  employer,  under  a               statutory  obligation without  profit  motive,

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             provided  that the employer subsides at  least               twenty-five  per  cent of the  total  expenses               incurred in running the canteen. Under  this  G.O.  what has to be established  is  that  the assessee  has subsidised at least 25% of the total  expenses in  running the canteen.  The Sales Tax  Officer  disallowed this  amount  because  the assessee  had  not  produced  the accounts.   In  the memorandum of appeal  to  the  Appellate Assistant  Commissioner  the  assessee  characterized   this statement  as  unfair  as the  Commercial  Tax  Officer  was invited  to state what other records he required but he  did not  raise this point during the checking of  the  accounts. In  support  of this grievance a letter  of  the  assessee’s advocate to the officer was referred.  In that letter it was stated that out of the turnover of Rs. 35,974-96 in  respect of the canteen sales, the assessee had supplied free tea  to the  staff  of the value of Rs. 13,740-37.  It  was  further mentioned  in  that  letter  that  the  assessee  bears  the expenses  towards  salaries and amenities provided  for  the employees  in the. canteen as also the electric charges  and corporation  taxes.   It also provides free  of  charge  all equipment  including furniture and fittings and a rent  free building  for  this canteen.  It therefore prayed  that  the turnover  be exempted under the aforesaid G.O.  Neither  the Appellate Assistant commissioner nor the Sales Tax  Tribunal considered  this  aspect  nor  did  the  assessee  pray  for producing any evidence before them.  We think as the assesee had  sufficiently  brought to the notice of  the  Sales  Tax Officer  its  claim and was willing to produce  accounts  it should  be permitted to do so.  The Sales Tax Tribunal  will give  an opportunity to the assessee to produce evidence  to show  under  the  terms  of G.O.  2238  it  is  entitled  to exemption from the turnover in respect of the canteen sales. In  the result both the appeals are dismissed in respect  of levy of penalty.  They are partly allowed so far as they are related to scrap in respect of the second period, 1-9-64  to 31-3-65 and   dismissed in respect of the 1st period, 1-4-64 to  31-8-64.  In so far as appeal 2119 of 1969 is  concerned it  is also partly allowed in respect of  the  advertisement materials for the period 1-9-64 to 31-3-65 and dismissed  in respect  of  the  1st period, 1-4-64  to  31-8-64  and  with respect to canteen sales the appeal dismissed in respect  of the  1st period, 1-4-64 to 31-8-64 and allowed in    respect of  the  second  period 1-9-64 to  31-3-65  and  the  matter remanded with the directions given above.  There will be  no order as to costs in both these appeals. S.C.                             Appeals partly allowed. 646