TMI Blog2015 (8) TMI 1239X X X X Extracts X X X X X X X X Extracts X X X X ..... ransaction of sale of goods in auction conducted by it to recover loan dues, was not correct –Petition disposed of – Decided against Assesse. - W. P. (C) No. 313 of 2014 - - - Dated:- 3-3-2014 - A. K. GOEL AND A.K. RATH, JJ. R. K. Rath, Senior Advocate, for the petitioners. R. P. Kar, Standing Counsel (Commercial Department), for the respondents. JUDGMENT The question raised for consideration is whether the petitioner-bank is covered by definition of dealer under section 2(12) of the Orissa Value Added Tax Act, 2004 ( the OVATAct ) and liable to value added tax on sale of pledged assets effected by it for recovery of loan. 2. The case set out in this petition is that the petitioner has been constituted under the State Bank of India Act, 1955. Its Stressed Assets Management Branch initiated action under section 13 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) for enforcing the security interest to realize the outstanding loan dues from the borrowers whose account had been classified as non-performing assets (NPA). The movable assets of such borrowers were put to auction under ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not amount to business, unless the Revenue could establish an independent intention by showing the volume of such business to be large enough in comparison to the main activity. Learned counsel submits that situation of sale transaction by the bank was at par with the port trust and in respect of such sale, the bank was not a dealer. He further submits that the view taken by this court in Indus Bank was contrary to the above decision of the honourable Supreme Court and required reconsideration. 5. On the other hand, learned counsel for the Revenue supports the order 5 of assessment. He submits that in view of the judgment of this court in Indusind Bank Ltd. (W. P. (C) No. 3127 of 2012 decided on March 12, 2012), learned Commissioner of Sales Tax rightly held the transaction of auction sale effected by the bank to be taxable for levy of value added tax. Judgment in Port Trust case is distinguishable. 6. Reliance has also been placed on the following decisions. (i) State of Orissa v. Orissa Road Transport Co. Ltd. [1997] 107 STC 204 (SC). (ii) Federal Bank Ltd. v. State of Kerala [2007] 6 VST 736 (SC); [2007] 137 Comp Cas 44 (SC); [2007] 4 SCC 188. (iii) Tata Motors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice 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; S. 2(9). casual dealer means any person, whether as principal, agent or in any other capacity, who has occasional transactions of buying, selling or supplying or distributing goods in the State without having a fixed place of business for cash or deferred payment or for commission, remuneration or other valuable consideration and includes, whether he has a fixed place of business in this State or not,- (a) a transporter who, while carrying any goods in his goods vehicle, fails to disclose the name and address of the consignor or consignee in the State or fails to furnish copy of invoice, challan, transport receipt or consignment note or document of like nature in respect of such goods, or (b) an owner or a lessee of a warehouse who fails to disclose the name and address of the owner of any goods stored at his warehouse or fails to satisfy the Commissioner that such goods are for his personal use or consumption; S. 2(7). business in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. 14. Rates of VAT.-(1) The value added tax payable by a dealer under this Act shall be levied on his taxable turnover in respect of different goods specified in Schedule B and Schedule C at the rate mentioned under the said Schedules in respect of those goods. 8. In Federal Bank [2007] 6 VST 736 (SC); [2007] 137 Comp Cas 44 (SC); [2007] 4 SCC 188, the question considered by the court was whether the bank was a dealer in relation to auction sales as per section 2(viii) of the Kerala General Sales Tax Act, 1963. While considering the said issue, the nature of activity of the bank was considered with reference to the provisions of the Banking Regulation Act, 1949 and it was observed as follows (page 753 in 6 VST): . . . The first question which, therefore, arises is: whether sale of pledged ornaments for consideration falls in the course of trade or business of the bank. It is no doubt true that banks have to act on instructions of the borrower. In the present case, we are not concerned with the provisions of section 176 of the Contract Act, 1872. We are concerned with the definition of the word sale under the 1963 Act. When a bank sells the pledged ornaments it is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Orissa Act. We are, however, of the view that the ratio of the judgment in Federal Bank is not confined to specific inclusion of the bank in the definition dealer but on consideration of the nature of banking business. No doubt, prior to amendment of the Kerala General Sales Tax Act, Kerala High Court had taken the view that in absence of express inclusion of the bank, the bank was not covered by the definition of dealer and after amendment, the Kerala High Court took a different view, but the basis of the judgment of the honourable Supreme Court is not only the change in the definition of dealer but the nature of banking business which had not been considered by the Kerala High Court on earlier occasion. In OVAT Act, dealer means any person who carries on the business of buying and selling. Any person does not exclude the bank when the bank is selling the goods as part of its business. The apex court clearly held that sale of goods to recover the loan is part of banking business. We do not find any reason to exclude the bank from the definition of dealer under the Orissa Value Added Tax Act even in the absence of express inclusion of bank in the said definition. Ratio ..... 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