TMI Blog1985 (1) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... s incorporated by its Memorandum and Articles to carry on business in iron and steel and is admittedly engaged in the manufacture of iron and steel products at its works at Jamshedpur, which is registered under the Factories Act. The petitionercompany also owns, amongst others, a mine at Noamundi, which is registered under the Mines Act. In compliance with the statutory obligations under the Factories Act and also under the Mines Act the petitioner-company maintains, for the factory at Jamshedpur and for the Noamundi mines, canteens, both at Jamshedpur and Noamundi, for the facility of the concerned employees. These canteens are run on no profit no loss basis and indeed, with subsidies required to be provided under the law, thus eliminating any chance or consideration of making any profit therefrom. 4.. The Assistant Commissioner of Commercial Taxes, Jamshedpur, however, assessed sales tax on the sale proceeds of the aforesaid canteens for the assessment year 1962-63 by an order dated the 27th of September, 1966. The petitionercompany appealed, but the Deputy Commissioner of Commercial Taxes, Bihar, Patna, by his order dated the 29th January, 1975, rejected the petitioner's appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a law." And, finally"The conclusion which therefore emerges is that the transactions between the appellant, Messrs. Vishnu Agencies (Private) Ltd., and the allottees are sales within the meaning of section 2(g) of the Bengal Finance (Sales Tax) Act, 1941. For the same reasons, transactions between the growers and procuring agents as also those between the rice millers on the one hand and the wholesalers or retailers on the other are sales within the meaning of section 2(n) of the Andhra Pradesh General Sales Tax Act, 1957. The turnover is accordingly exigible to sales tax or purchase tax as the case may be." 7.. In view of the above, the answer to question No. I must now be rendered in the affirmative, i.e., in favour of the Revenue and against the assessee. 8.. That, however, does not in any way resolve the main issue, because the battle lines were joined primarily around question No. II. Mr. Chatterjee had contended with force and ability that despite the answer to question No. I, in order to come within the ambit of a dealer, there must first be a business, and yet again one that is run with the profit-motive or at least have an element of commercial character. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a dealer who resides outside Bihar and who sells goods in Bihar shall, in respect of such business, be deemed to be a dealer for the purpose of this Act." 10.. Now it seems to follow from the ordinary dictionary meaning of the word "dealer" as also from the plain language of section 2(f) of the Act that there must be some sustained business activity in which such a seller engages himself. Plainly enough, a person does not become a dealer by an isolated transaction of sale, barring of course the exception, where, by a legal fiction, the statute may declare him to be so. On larger principle, the concept of being a dealer cannot be divorced from a course of business, trade or some commercial activity or some activity of a commercial character. In this context one must notice the plausible submission of Mr. Chatterjee, when he pointed out that the law in this field now does not make any sharp distinction between levy of sale and purchase tax. If, therefore, an isolated transaction (in the absence of any sustained business activity) was to bring one within the ambit of a "dealer " then every ordinary purchaser of goods, even for home consumption like food, clothings, etc., would co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or profession which occupies the time, attention and labour of a person, normally with the object of making profit. To regard an activity as business there must be a course of dealings, either actually continued or contemplated to be continued with a profit-motive, and not for sport or pleasure. Whether a person carries on business in a particular commodity must depend upon the volume, frequency, continuity and regularity of transactions of purchase and sale in a class of goods and the transactions must ordinarily be entered into with a profit-motive. By the use of the expression 'profit-motive' it is not intended that profit must in fact be earned. Nor does the expression cover a mere desire to make some monetary gain out of a transaction or even a series of transactions. It predicates a motive which pervades the whole series of transactions effected by the person in the course of his activity. In actual practice, the profit-motive may be easily discernible in some transactions: in others it would have to be inferred from a review of the circumstances attendant upon the transaction." The aforesaid enunciation, which derives its source from earlier authorities, has been subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e shareholders cannot legitimise the carrying on of a business not authorised by its charter. The Tribunal in its revisional order itself categorically rejected the farfetched stand of the respondent-State that the Memorandum and Articles of Association authorised or enjoined such a business in the following words: "In putting such a construction on this provision of the Memorandum of Association, I am inclined to think, he is trying to stretch its scope a little too wide. The Memorandum, read as a whole, can hardly admit of such interpretation on this point. So, on the facts as they stand, their running of the canteens has to be taken as being in compliance of the aforesaid statutory requirements." Once it is so held, it is incongruous to say that a business, in terms prohibited by the Memorandum and Articles, and in any case not authorised by it, would become the business of a company for the purpose of making it a dealer therefor. To discharge a statutory obligation or a binding mandate of the law is not a business. It is only a compliance with the law in deference to the sanction provided for its infraction. Therefore, conforming to the statutory obligation does not mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the supply of tea and edibles to the workmen of the company for a canteen established by it under the Factories Act. The Supreme Court affirmed the High Court's view that such tax was not leviable on the unamended provisions of the Madras General Sales Tax Act. It is plain that these cases are on all fours with regard to the issues before us. By way of very close analogy, a reference may also be instructively made to State of Gujarat v. Vivekanand Mills [1967] 19 STC 103 (SC), State of Gujarat v. Raipur Manufacturing Company Ltd. [1967] 19 STC 1 (SC) and Director of Supplies and Disposals v. Member, Board of Revenue, West Bengal [1967] 20 STC 398 (SC). 18.. One must now turn to the Division Bench judgment of this Court in Commissioner of Commercial Taxes, Bihar v. Burn and Company Limited (Tax Case No. 58 of 1966 decided on 20th December, 1967) which had necessitated this reference to the Full Bench. A perusal of the brief judgment makes it plain that the issue before us was not at all presented from its various angles before the Bench. Though the question, undoubtedly, was with regard to the canteen sales maintained by Messrs. Burn and Company Limited, the only question raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their Lordships' notice. The view thus seems to run counter to those binding precedents of the Supreme Court. 20.. This apart, with respect, I am unable to agree with what has been said more or less as a dictum without detailed reasonings that the running of canteen is an integral part of the business of mining and quarrying. It deserves recalling that rule 64 of the Mines Rules requires the running of a canteen in a mine only wherein more than 250 persons are ordinarily employed and that also if the Chief Inspector of Factories or an Inspector of Factories so requires. It is thus plain that in mines employing less than 250 persons, and even in cases where the Chief Inspector or an Inspector of Factories does not so require, there is no obligation to provide a canteen. Can it be said that in such a case, the business of mining and quarrying cannot be carried on without a canteen provided by the employer? It is elementary that an integral part is one, which, if taken away, would jeopardise the whole. Could it possibly be said that the running of a canteen installed for mining workers or for those of a steel mill, if stopped entirely would halt the working of the steel mill or t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, even remotely analogous to such a provision, and no question of any ancillary or incidental transactions arises herein. 24.. In vain and virtually in a desperate attempt to distinguish and escape the observations in State of Tamil Nadu v. Thirumagal Mills Limited [1972] 29 STC 290 (SC), Director of Supplies and Disposals v. Member, Board of Revenue, West Bengal [1967] 20 STC 398 (SC), State of Gujarat v. Raipur Manufacturing Company Limited [1967] 19 STC 1 (SC) and State of Gujarat v. Vivekanand Mills [1967] 19 STC 103 (SC), Mr. Prasad had contended that in all these cases the definition of "dealer" in terms referred to a person, who "carries on the business" of selling or buying, etc. It was his stand that section 2(f) of the Act does not now employ the terminology "carries on the business" any longer. It was submitted that this change was designedly brought about by the Legislature to omit the words "carries on the business", which formed part of section 2(c) of the earlier 1947 Act, and now defining "dealer" under section 2(f) of the Act as any person who sells any goods. The substance of the submission herein was that section 2(f) deliberately excluded the concept of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ell Oil Storage and Distributing Company of India Limited [1973] 31 STC 426 (SC). As already noticed, it was a case, inter alia, of sales in canteens and expressly dealt with two assessments, one before the amendment in the Madras General Sales Tax Act and the other after the amendment in the relevant Act. Whilst the Government's appeal before the amendment was summarily rejected in favour of the assessee, holding that they were not liable to sales tax, the same succeeded with regard to the assessment subsequent to the amendment. It is thus patent that the statutory amendment was the watershed and it was vain to argue that these amendments were merely clarificatory or declaratory of the existing law. Similarly, in State of Tamil Nadu v. Thirumagal Mills Limited [1972] 29 STC 290 (SC) it has been held that under the pre-amendment law in Madras, the running of a fair-price shop and a canteen business were not exigible to tax. The strongest case is State of Gujarat v. Vivekanand Mills [1967] 19 STC 103 (SC), where, even the sale of a consignment of Californian cotton purchased for use in the textile mill, which had been rendered surplus, was held to be not exigible to sales tax, becau ..... X X X X Extracts X X X X X X X X Extracts X X X X
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