TMI Blog1959 (11) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... of Madras. The Corporation charges the Port Trust at the rate of Rs. 4-7-0 per 1000 gallons of water supplied by it. The Port Trust, in turn, charges the ships which take water on the quayside at the rate of Rs. 5-8-0 per 1000 gallons. But, if the ships are outside the Harbour, water is supplied to them through barges, and the charge levied is at the rate of Rs. 8 per 1000 gallons. During 1940-1948, there had been no levy of sales tax on the charges thus collected by the Port Trust, the Government having exempted the Port Trust from such levy. The exemption, however, was cancelled on 27th October, 1948. After some correspondence, the Deputy Commercial Tax Officer, Harbour Division, Madras, by his letter dated 8th June, 1949, called upon the Chairman of the Port Trust to pay tax on sale of water from 1st July, 1948. The Port Trust did not accept the claim; they, however, paid under protest a sum of Rs. 3,761-13-3 on the amount of Rs. 2,40,757, which was realised as charges for supply of water to the ships in the year 1948-49. Thereupon, the suit, out of which this second appeal arises, was filed by them to recover the sum of Rs. 3,745 on the ground that the levy was unauthorised. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business of buying or selling goods". Section 2(h) defines "sale" as "transfer of the property in goods by one person to another in the course of trade or business for cash or for deferred payment or other valuable consideration........" To appreciate the case of the appellant, it is necessary first to ascertain the purpose for which the Port Trust is established, its powers and duties. The Port Trust Act was enacted for the proper working of the Madras Harbour by investing the control thereof in a body of persons, well acquainted with the affairs of the harbour, to whose judgment and experience the carrying out of the duties in connection with regulation, conservency and improvement of the port might be entrusted, and arming them with adequate powers for the duties in connection with the aforesaid purpose. The Madras Port Trust Act is a consolidating statute. The preamble to the Act states that the enactment was for the purposes of "regulation, conservancy and improvement of the Port of Madras". Section 6 enacts that the duty of carrying out the provisions of the Act would be with the Trustees of the Port of Madras who are to form a body corporate, having perpectual succession ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business of buying and selling goods. On behalf of the appellant, it was contended that water could never be the subject-matter of a sale, as it would not be goods within the meaning of the Act or the Sale of Goods Act. Reliance was placed for this contention in a passage contained in Mulla's Commentary on the Sale of Goods Act, at page 13, and to the observations in Rash Behari v. EmperorA.I.R. 1936 Cal. 753 at 766. It is unnecessary, however, to consider whether the authorities referred to above had in view only running water or water impounded and reduced to a person's possession as well. Under the Act, it is not the sale by any person that is rendered liable to tax. The sale should be by a dealer as defined in the Act, one who buys and sells goods with the object or intention of making a profit, whether the object has ultimately been achieved or not. In Gannon Dunkerley and Co. v. State of Madras[1954] 5 S.T.C. 216., the assessee, which was carrying on business as engineering contractors, supplied food-grains to its employees and recovered the cost of the goods supplied by debiting the same against the wages earned by them. It was found that there was no element of profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued that the provisions of the section contemplated a profit being made, to enable the balancing of the budget of the Port Trust, and that, therefore, the object of the levy could not be held to be free from profit motive. We cannot, however, agree with the contention. The supply of water to a ship is a service to be rendered by the Port. Sections 42 to 44-A clearly indicate that the rates levied are for services rendered. Even assuming that the power granted under section 45 would enable the Trustees to levy a fee higher than what it could cost them to render the services, with the object of raising funds for meeting the expenditure on other objects, still the levy would not amount to an attempt to make a profit. The statute has prescribed the conditions and limits within which the increase in the rates could be made and this would indicate that a limited power is delegated to a local authority to levy a fee for a specified purpose. But there may be cases where a statutory corporation is allowed to carry on business with a profit motive. In such a case, though the rights and duties are defined by the statute, the Corporation would be a dealer liable to be taxed on its sales or p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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