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2015 (4) TMI 936 - SUPREME COURT

2015 (4) TMI 936 - SUPREME COURT - [2015] 80 VST 341 (SC) - Taxability of Trust as a dealer under Kerala General Sales Tax Act, 1963 - Activities carried out by trust like dealing in scrap items etc., other than its statutory functions - Trust is a statutory authority constituted for rendering port services under the Major Port Trusts Act, 1963 - Held that:- Since the definition of “dealer” is wide to include transactions conducted in the course of business or otherwise, to answer the question p .....

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ness which is a necessary prerequisite under the definition of a “dealer” under the TN Act. In the Act herein, the necessity of a person carrying on business to be placed under the definition of “dealer” is absent. The definition expressly includes the persons who whether in course of business or not engage in the sale or transfer of goods and thus, does not mandate the requirement of conducting business for a person to be exigible under the Act. The contradistinction between the definition of “ .....

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s now been declared as a dealer under the TN Act. Explanation (3) states that if the port trust disposes of any goods including unclaimed or confiscated or unserviceable or scrap surplus, old or obsolete goods or discarded material or waste products whether by auction or otherwise directly or through an agent for cash or for deferred payment or for any other valuable consideration, notwithstanding anything contained in the TNGST Act, it shall be deemed to be a dealer for the purpose of the Act. .....

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ay of or as part of any service, any goods directly or otherwise, whether for cash or for deferred payment or for commission, remuneration or other valuable consideration, whether in course of business or not, would fall within the purview of Section 2(viii) of the Act. Hence, the assessee-Port Trust would fall within the meaning of "dealer" under Section 2(viii) of the Act and is consequently assessable to tax under the Act. - Decided against the appellant. - CIVIL APPEAL NO. 1906 OF 2007 - Dat .....

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rt, the Act ) and dismissed the tax revision preferred by the appellant-assessee. 2. The question that arises for consideration in this appeal is whether the appellant-Trust is a dealer under the Act and liable to pay sales tax under the Act on account of certain activities in the nature of sale transactions carried on by it besides its statutory functions. For the sake of convenience and brevity, we would only notice the facts relevant to the discussion with respect to the question(s) before us .....

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sal of unserviceable equipment) is the subject matter of assessments in the instant appeal for the assessment years 1990-91, 1994-95 and 1997-98. 4. For the aforesaid assessment years, the assessing authority had raised demand notices under the Act for the sales of scrap items effected by the assessee vide assessment orders dated 18.11.1995, 31.03.1999 and 24.10.2001, respectively. 5. The assessee aggrieved by the said assessment orders had approached the Deputy Commissioner (Appeals) in first s .....

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5 and 1997-98, respectively. The appellate authority has considered the definition of dealer under the Act and rejecting the plea of the assessee, held that it is a dealer under the provisions of the Act. 6. Aggrieved by the aforesaid order(s), the assessee had preferred T.A. No. 479 of 1998 for the assessment year 1990-91 before the Kerala Sales Tax Appellate Tribunal (for short, the Tribunal ). The assessee had contended that in the instant case the assessee-Trust is a statutory body merely di .....

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f Trustees of the Port of Madras, (1999) 4 SCC 630 (Madras Port Trust case). By the order dated 24.09.2001, the Tribunal rejected the aforesaid stand adopted by the assessee and held that the assessee is a dealer engaged in activities of sale under the Act and thus, exigible to sales tax. 7. Further, the assessee has approached the Tribunal in T. A. No. 1 of 2000 and T. A. No. 143 of 2003 questioning the orders passed by the first appellate authority for assessment years 1994-95 and 1997-98. The .....

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nd hence be liable to pay sales tax under the Act. 8. Dissatisfied by the orders passed by the Tribunal, the assessee approached the High Court in TRC No. 412 of 2002 and Sales Tax Revision Nos. 321 and 326 of 2005. The question as to whether the assessee is a dealer under the Act which was the cardinal issue before the Tribunal was agitated before the High Court as the main issue by both parties to the lis. The High Court has delved into the said question and also considered whether the Madras .....

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ct and cannot be termed as a dealer . He would submit that the assessee is only discharging the statutory functions and is not engaged in any business or trade. Further, that the transactions in question being incidental and auxiliary would not qualify as business under the Act so as to deem the assessee as dealer under the Act. He would draw support from the observations of this Court in Madras Port Trust case wherein this Court has held that the said Port Trust constituted under the Major Port .....

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contend that the assessee herein is a dealer under the Act engaged in sale of scrap material and therefore, exigible to sales tax under the Act. She would submit that the provisions of the TN Act and the Act are not pari materia and the claim of the assessee requires to be examined in the context of the Act only and not on the basis of the provisions of the TN Act. She would urge that the observations of this Court in Madras Port Trust case would not be applicable to the instant case in light o .....

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business of buying, selling, supplying or distributing goods, executing works contract, transferring the right to use any goods or supplying by way of or as part of any service, any goods directly or otherwise, whether for cash or for deferred payment, or for commission, remuneration or other valuable consideration and includes: (a)... (b)... (c)... (d)... (e) a person who, whether in the course of business or not, sells; (i) goods produced by him by manufacture, agriculture, horticulture or oth .....

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or any system of payment by instalments; (4) transfers the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration; (5) supplies, by way of or as part of any service or in any other manner whatsoever, goods, being food or any other articles for human consumption or any drink (whether or not intoxicating), where such supply or service is for cash, deferred payment or other valuable consideration; Explanation.-(1) & .....

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or trading activity and transactions effected by them whether in the course of business or not. It is profitable to refer to the decision of this Court in Assistant Commissioner, Ernakulam v. Hindustan Urban Infrastructure Ltd. and Ors., (2015) 3 SCC 735 where this Court has interpreted the said provision. This Court has examined the scope and ambit of the definition of dealer under the Act. The question before this Court was whether an Official Liquidator is a dealer within the meaning of secti .....

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n agent, a broker, an auctioneer and other mercantile agents. Sub-section (f) of the definition further expands the scope of the provision by including within its ambit, an array of transactions, which may or may not be in the course of business. Section 2(viii)(f)(1) expressly includes, within the definition of a dealer , a person who whether in the course of business or not transfers any goods, whether in the pursuance of a contract or not, for cash or deferred payment. 15. Therein, this Court .....

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ll within its ambit. It includes any person who transfers any goods, transfers property in goods involved in the execution of a works contract, delivers any goods on hire purchase or any system of payment by installments, transfers the right to use any goods for any purpose and lastly, any food or beverage supplier or service provider, fit for human consumption. The Explanation 1 to sub-clause (f) includes a society, club, firm or an association or body of persons, whether incorporated or not. E .....

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r . A careful reading of the definition of dealer under the Act, 1963, would make it evident that the legislature intended to provide for an inclusive criterion and broaden the ambit of the said classification. The legislature did not propose to restrict the scope of the term as perceived in common parlance. 16. Here, since the definition of dealer is wide to include transactions conducted in the course of business or otherwise, to answer the question posed before us, we do not deem it necessary .....

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whether the Madras Port Trust is a dealer under the TN Act or not. The definition clauses contained in the TN Act under Section 2(g) and 2(d) have been dealt with to examine the aforesaid question. For the sake of clarity, we would refer to Section 2(g) and 2(d) of the TN Act as under: Section 2(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, .....

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ent which, whether or not in the course of business, buy, sell, supply or distribute goods, directly or otherwise, for cash, or for deferred payment, or for commission, remuneration or other valuable consideration, shall be deemed to be a dealer for the purposes of this Act;" *** "Section 2(d) 'business' includes,- (i) any trade, or commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture, whether or not such trade, commerce, manufactu .....

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not established for carrying on business and thereafter, referred to the various activities of the Madras Port Trust and observed that its activities and services only indicate that the activity in question, that is, the sales of unserviceable or unclaimed goods is infinitesimal as compared to the very large range of the activities and services it is supposed to render. This Court has therefore concluded that the Madras Port Trust is not involved in any activity of "carrying on business&quo .....

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under. The aforesaid conclusion emanates from the stark distinction of definition of dealer under the TN Act and the Act. The definition under the Act is a wider definition while the TN Act as it then stood, provides for a very restricted meaning of the term dealer . A comparison of the definition clauses in the Act and the TN Act would show that the requirement of "carrying on business" by buying, selling, supplying or distributing goods directly or otherwise whether for cash or defer .....

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is not engaged in any business which is a necessary prerequisite under the definition of a dealer under the TN Act. In the Act herein, the necessity of a person carrying on business to be placed under the definition of dealer is absent. The definition expressly includes the persons who whether in course of business or not engage in the sale or transfer of goods and thus, does not mandate the requirement of conducting business for a person to be exigible under the Act. The contradistinction betw .....

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owever, this Court has only permitted them to support the submissions of the Madras Port Trust in the context of the Tamil Nadu statute and in paragraph 6 of the said judgment observed that the exigibility of the said Port Trusts under the respective State enactments is not examined thereunder. Therefore, this Court has only referred to the provisions of TN Act and not examined the scope of the Act vis-à-vis the assessee-Port Trust in Madras Port Trust case. 22. It is further pertinent to .....

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r deferred payment or for any other valuable consideration, notwithstanding anything contained in the TNGST Act, it shall be deemed to be a dealer for the purpose of the Act. Therefore, by amendment act the legislature has specifically brought in Port Trust also within the definition of "dealer" under Section 2(g) of the Act and thus, the substratum of the judgment in Madras Port Trust case has been lost. 23. Shri Giri has relied upon the decision of this Court in CST v. Sai Publicatio .....

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