TMI Blog1977 (6) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... hich the sales tax has been assessed or proposed to be assessed are as follows: (a) supply of water to visiting vessels; (b) bunkering of visiting vessels with liquid fuel; (c) offering of tender documents for a consideration to prospective contractors; (d) supply of water and issue of stores to accepted contractors (e) supply of water and issue of stores to its own engineers and staff and (f) disposal of unserviceable material or surplus material by auction or by inviting tenders. It is the contention of the petitioner in each of these writ petitions that it is not a dealer and that, under the scheme of the Act, since sales tax can be assessed only in respect of turnover of a dealer, the proceedings of the sales tax authorities should be quashed and set aside. On the other hand, the contention of the revenue in the counter-affidavit is that each of these writ petitions should be dismissed in limine. In the common counteraffidavits filed on behalf of the respondents in each of these writ petitions, it is contended that the question whether a transaction amounts to a sale taxable under the Act or not is a question of fact to be decided by the sales tax authorities an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is clear that it is only a dealer, be he a casual trader or an agent of a non-resident dealer as defined by the Act, who is liable to be assessed to sales tax. In this connection, it is worthwhile referring to several decisions of the different High Courts and the Supreme Court on the question as to what the High Court can do and should do when the question whether a particular assessee is a dealer or not arises. In Tata Engineering and Locomotive Company Ltd. v. Assistant Commissioner of Commercial Taxes[1967] 19 S.T.C. 520 (S.C.)., Hidayatullah, J. (as he then was), speaking for the Supreme Court, observed at page 524 of the Reports: "The power and jurisdiction of the High Court under article 226 of the Constitution has been the subject of exposition from this Court. That it is extraordinary and to be used sparingly goes without saying. In spite of the very wide terms in which this jurisdiction is conferred, the High Courts have rightly recognised certain limitations on this power. The jurisdiction is not appellate and it is obvious that it cannot be a substitute for the ordinary remedies at law. Nor is its exercise desirable if facts have to be found on evidence. The High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tirumala Tirupati Devasthanam was absolutely illegal and without jurisdiction. The Madras High Court in that case came to the conclusion that, when the Devasthanam realised cash from the sale by public auction of articles of silverware, etc., deposited in the Hundis, it could not be said that the Devasthanam was doing a business or was indulging in a commercial activity. It is true that Ramaprasada Rao, J., was dealing in that particular case with the unamended provisions of the Tamil Nadu General Sales Tax Act; but the principle, viz., that, if it is found that the particular transactions are not liable to sales tax, the action of the sales tax authorities would be illegal and without jurisdiction, clearly emerges from this decision of the Madras High Court. In Indian Institute of Technology v. State of U.P.[1976] 38 S.T.C. 428., a Division Bench of the Allahabad High Court held that the Indian Institute of Technology, Kanpur, could not be held to be a "dealer" within the meaning of section 2(c) of the U.P. Sales Tax Act, as the principal activity of the Institute was predominantly academic and the supply of foodstuffs was minor, subsidiary and incidental to the principal act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e authority as such. " We are unable to accept the contention of Sri D.V. Sastry urged on behalf of the respondents that these writ petitions should be dismissed in limine because they seek to challenge the assessment proceedings in respect of the different commodities. The main question at issue in this case is twofold: (1) Whether the Board of Trustees is a dealer and (2) whether it carries on business in one or the other of the particular commodities in respect of which sales tax is sought to be levied. In our opinion, Mr. Subrahmanyam is right when he contends that, in view of the charging section, unless a particular assessee is a dealer, the Commercial Tax Officer or the entire sales tax machinery setup under the Act has no jurisdiction to assess or collect sales tax from him and, hence, it is always open to the High Court, in exercise of its jurisdiction under article 226 of the Constitution, to examine the question whether the Board of Trustees is a dealer or not. If it is held that it is not a dealer, then the proceedings of the sales tax authorities will be without jurisdiction and hence they must be quashed. There are two enactments of the Parliament which have a b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iances for the purpose of supply of water at the port. It may also be pointed out that so far as bunkering of vessels with liquid fuel is concerned, under section 6 of the Act of 1908, power to make Port Rules is conferred on the Government and one of the purposes for which rules may be made is for regulating the bunkering of vessels with liquid fuel in any such port and the description of barges, pipe-lines or tank vehicles to be employed in such bunkering [see section 6(1)(eee)]. Section 48 of the Act of 1963 provides for scales of rates for services performed by the Board or other person and under clause (e) of sub-section (1) of section 48, such rates may be in respect of any other service in respect of vessels, passengers or goods excepting the services in respect of vessels for which fees are chargeable under the Indian Ports Act. Under sub-section (2), different scales and conditions may be framed for different classes of goods and vessels. Under sub-section (1) of section 54, whenever the Central Government considers it necessary in the public interest so to do, it may, by order in writing together with a statement of reasons therefor, direct any Board to cancel any of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is authoritative pronouncement of the Supreme Court, the fact that the Board of Trustees is compelled by statute to render service particularly to visiting vessels is totally immaterial for deciding the question whether the different commodities in which the Board of Trustees have been dealing are liable to be assessed to sales tax. But this decision cannot help us in deciding the major question, viz., whether the Board of Trustees is or is not a dealer. Under section 2(1)(e) of the Act, "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 the Central Government, a State Government, local authority, a company, a Hindu undivided family or any society (including a co-operative society), club, firm or association, which carries on such business. Under section 2(1)(bbb), "business" includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture whether or not such trade, commerce, manufacture, adventure or concern is carried on or unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at page 344 of the Reports: "The term 'commerce' comprehends more than the mere exchange of goods. It embraces commercial intercourse in all its branches, including transportation of passengers and property by common carriers, whether carried on by water or by land." It is not unlikely that Mathew, J., when he spoke for the Supreme Court in District Controller of Stores v. Assistant Commercial Taxation Officer[1976] 37 S.T.C. 423 (S.C.)., had this interpretation of the word "commerce" in Monodu v. New York, New Haven Hartford Railroad Co.56 L. Ed. 327. in view, while observing that the railway, since it is concerned in the activity of transportation, is engaged in commerce. It is true that the Port Trust authorities are in some way connected with transportation of goods or passengers, unlike railways. The facilities for transport of goods and services are provided by the Board of Trustees; but the Board of Trustees itself is not concerned in the transportation of goods. Whatever services it provides are for the purpose of facilitating the easier flow of goods and passengers. It does not carry any goods or passengers itself. That basic distinction should be borne in mind when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the business of buying, selling, supplying or distributing goods and though the word "business" will have a very wide meaning, it cannot be said that the Board of Trustees carried on any business even in the widest definition in section 2(1)(bbb). After the amendment of the definition in section 2(1)(bbb) by the Amendment Act of 1966, the element of "motive to make gain or profit" cannot be considered to be a factor so far as the definition of "business" is concerned, but in any event, it must be trade, commerce or manufacture before it could be said to be a business and we are unable to accept the contention of the learned Government Pleader that what the Board of Trustees is doing is commerce in the sense of transport activities. It must be emphasised that the Board of Trustees is not carrying on any transport activity by itself. Under these circumstances, we are unable to accept the contention urged on behalf of the Government that the Board of Trustees is a "dealer" in any particular goods or services. It may be pointed out that the question in connection with scrap material has been dealt with by two earlier decisions of the Supreme Court and neither of those decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This decision of the Supreme Court was followed and accepted by the subsequent decision of the Supreme Court in State of Tamil Nadu v. Burmah Shell Co. Ltd.[1973] 31 S.T.C. 426 (S.C.). At page 432 of the Reports, Jaganmohan Reddy, J., speaking for the Supreme Court, observed with reference to the decision in State of Gujarat v. Raipur Manufacturing Co. Ltd.[1967] 19 S.T.C. 1 (S.C.).: "In that case, as already pointed out, what was held under the analogous Bombay Sales Tax Act, which was similar to that 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, there was an intention to carry on business in those discarded materials 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m, viz., supply of water and issue of stores to its own engineers and staff by the Board of Trustees can never amount to carrying on any business because, by supplying water and issuing stores again, the Board of Trustees is facilitating its own work. Hence, on that ground, the Board of Trustees cannot be said to be carrying on any business activity within the meaning of section 2(1)(bbb) of the Act before us. We have approached this case from both angles, viz., from the angle whether, under, its constitution under the two Acts, one of 1908 and the other of 1963, the Board of Trustees can be said to be a dealer in the sense of carrying on any trade or commerce and our conclusion is that it is not a dealer. We have examined the different activities in respect of which the sales tax is sought to be levied with a view to find out whether the Board of Trustees can be said to be carrying on any business activity in any of these heads which are sought to be brought to tax. In any event, the Board of Trustees cannot be said to be a dealer nor can any of these activities be said to amount to carrying on business in any sense of the term defined under section 2 of the Act. Under these cir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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