1975 (12) TMI 143 - SC - VAT and Sales Tax

Whether the appellant, the Northern Railway, Jodhpur, is liable to pay sales tax on the sales of unserviceable materials and scrap, etc., for the period in question? Held that - Appeal dismissed. There can be no dispute that the legislature was competent to give retrospective effect to the definition of business introduced by the amending Act. Thus the High Court was right in its conclusion.

Summary

Issues:
Whether the appellant, a railway, is liable to pay sales tax on the sales of unserviceable materials and scrap.
Interpretation of the definition of "business" in the Rajasthan Sales Tax Act, 1954.
Applicability of the retrospective amendment to the definition of "business."
Determining if the activity of selling unserviceable materials and scrap constitutes "business" for the purpose of taxation.

Analysis:
The Supreme Court considered whether the Northern Railway, Jodhpur, is liable to pay sales tax on the sales of unserviceable materials and scrap. The High Court had held that the sales were subject to tax based on the definition of "business" in the Rajasthan Sales Tax Act, 1954. The definition of "dealer" includes any person involved in buying, selling, supplying, or distributing goods. The appellant contended that it was not engaged in buying and selling, thus the sales should not be taxable. However, the Court held that the activity of selling unserviceable material and scrap falls within the definition of "business" introduced by an amending Act, irrespective of profit motive.

The Court analyzed the definition of "business" as including trade, commerce, or manufacture, with or without a profit motive. Even if the railway's activity did not align with the traditional concept of business, it still qualified as "business" under the amended definition. The Court also noted that the railway's involvement in transportation constitutes engagement in commerce, making the sale of unserviceable materials and scrap a transaction connected to such commerce. The legislature's power to apply the amended definition retrospectively was acknowledged by the Court.

Ultimately, the Court affirmed the High Court's decision, stating that the railway's sales of unserviceable materials and scrap were subject to sales tax. The appeal was dismissed, and costs were awarded to the respondents.