TMI Blog2015 (12) TMI 1040X X X X Extracts X X X X X X X X Extracts X X X X ..... ars that no demand as such has been raised against the Bank for any period prior to 29th March 1996. Therefore, a question that has not been raised in this appeal is not required to be considered by the Court. Sale of the repossessed cars by the Appellant Bank is incidental or ancillary or in connection with the Appellant’s business - Appeal disposed of. - ST. REF. 1/2003 - - - Dated:- 14-12-2015 - S. Muralidhar And Vibhu Bakhru, JJ. For the Petitioner : Mr. Rajesh Mahna with Mr. Ramanand Roy, Advocates For the Respondent : Mr. Satyakam, Additional Standing Counsel, GNCT of Delhi JUDGMENT Dr. S. Muralidhar, J. 1. This is a reference made to this Court by the Appellate Tribunal Sales Tax, Delhi ( Tribunal ) under Section 49 of the Delhi Sales Tax Act, 1975 ( DST Act ) requiring it to answer the following questions of law: (i) Whether in the facts and under the circumstances of the case, the findings of the Tribunal that the ex parte order dated 21st July 1998 passed by the Commissioner of Sales Tax was passed after reasonable and adequate opportunity is perverse? (ii) Whether the Tribunal was correct in holding that the period of six months requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to get the endorsement of hypothecation done in the registration certificate book from the concerned Road Transport Office. Clause 2 (5) states that the hypothecation of the vehicle shall be first and exclusive charge against the bank dues. Clause 4 sets out 8 instances of event of default and states that on the occurrence of the events, the Bank shall be entitled to demand immediate repayment of the loan, together with extra 2% or any other rate applicable at that time in terms of the bank policy on the principal amount outstanding. Clause 4 (9) states the bank is entitled to take the repossession of the hypothecated vehicle whether the entire loan amount has been recalled or not, whenever in the absolute discretion of the Bank there is likelihood or due money not being paid and/or the vehicle is likely to be transferred to defeat the security and the due amounts of the Bank. Clause 4 (10) inter alia states that the authorized representative of the Bank would be entitled to sell the vehicle by public auction or private treaty, without being liable for any loss, without prejudice to the Bank s rights and remedies to suit against the borrowers and to give proper receipts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. The above order of the CST was challenged by the Bank before the Tribunal, which by an order dated 28th May 2002 agreed with the CST that the Bank was carrying on the business of hypothecating and selling of cars and had adjusted such sale proceeds towards any outstanding amount. It was held that this being incidental, ancillary or in connection with the activity of banking, amounts to business under clause (i) of section 2(c) of the DST Act and therefore makes the Bank a dealer. 7. It is thereafter that the case was sent to this Court by way of present reference under Section 49 of DST Act. 8. This Court has heard the submissions of Mr. Rajesh Mahna, learned counsel for the Bank and Mr. Satyakam, learned Additional standing counsel for the Respondent. 9. At the outset it requires to be noted that of the six questions referred to this Court for its opinion, Mr. Mahna stated on instructions that he was not pressing Question Nos. 1 and 2 since in any event the Bank has been heard by both the Tribunal and the CST on the same issue. 10. Question No. 3 is the main question urged and it is whether the Tribunal was correct in holding that disposal of repossessed cars by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arrying on business'. 13. In Corporation Bank v. Government of Andhra Pradesh (2002) 125 STC 346 (AP) the question that arose was whether the sales by the Bank of gold ornaments pledged to it against security of loans was amenable to sales tax under the Andhra Pradesh General Sales Tax Act, 1957 ( APGST Act ). The Andhra Pradesh High Court referred to the decision of the Supreme Court in State of Tamil Nadu v. Board of Trustees of the Port of Madras (supra) and held as under: the transaction of selling the gold pledged is basically for the purpose of a banking activity and is for securing the bank's own advanced amounts. In view of the judgment of the Supreme Court the sale as defined in the Act is not mere transfer of property or goods by one person to another person, this could be sale for the purposes of sales tax if it is in the course of trade or business. Therefore, we are of the view that the transactions in question are not amenable to sales tax. 14. In Panacea Biotech Limited v. Commissioner of Trade and Taxes (2013) 59 VST 524 (Del), the Petitioner/Dealer, Panacea Biotech Limited ( PBL ) was engaged in manufacture and sale of pharmaceutical prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ( SARFAESI Act ) for enforcing the security interest to realise the outstanding loan dues. The accounts of the borrowers had been classified as non-performing assets ( NPA ). The movable assets of such borrowers were put to auction sale under Rule 6 of the Security Interest (Enforcement) Rules 2002 and the sale proceeds were appropriated to the loan account of the borrowers. When the said sale was brought to tax by the Sales Tax Officer, SBI challenged the assessment order contending that it is not a dealer under the Orissa Value Added Tax Act 2004 ( OVAT Act ) and that there was no legal element of sale . Reference has been made to the decision in State of Tamil Nadu v. Board of Trustees of the Port of Madras (supra) as well as Federal Bank Limited v. State of Kerala (2007) 6 VST 736 (SC). After analysing the provision of OVAT Act, it was held that the definition of dealer under the OVAT Act did not exclude the bank when the bank is selling the goods as part of its business of banking. This was inconsonance with the decision of the Supreme Court in Federal Bank Limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction or by private negotiation without even involving the owner of the vehicle. 19. Under the expanded definition of dealer under Clause 2 (15) of TNVAT Act read with Explanation III thereof, any person who is disposing the goods by auction or otherwise is also deemed to be a dealer. Therefore, this did not require the seller must be in a position to itself pass on title in order to considered as a 'dealer' under Section 2 (15) of TNVAT Act. Further it was held that in view of the Explanation III, no distinction could be drawn between a statutory right of sale or a contractual right to bring a hypothecated property to sale. 20. Turning to the case on hand, the definition of dealer under Section 2 (e) has both exhaustive part as well as inclusive part. In the exhaustive part it means that any person who carries on business of selling goods and in the inclusive part which includes any mercantile agent , by whatever name called , who sells goods belonging to any principal whether disclosed or not. It also includes an auctioneer who sells or auctions goods belonging to any principal, whether disclosed or not ....... 21. Going by the above broad definiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effect from 29th March 1996 the motor vehicle has been subsequently identified as the type of goods which qualify for a single point sale read with Section 5 which would be exempted from any further tax. It is accordingly submitted that even if the Petitioner-bank was held to be a dealer, the sale of motor vehicles by it which has already suffered first point sales tax cannot be subjected to any further sales tax. 24. Apart from the fact that this issue has not been urged by the Appellant Bank when its appeal was considered by the Tribunal, the Court finds that none of the questions urged for reference to this Court by the Bank include such an issue. In any event, as of date it appears that no demand as such has been raised against the Bank for any period prior to 29th March 1996. Therefore, a question that has not been raised in this appeal is not required to be considered by the Court. 25. With Questions (i) and (ii) not having been pressed, Questions (iii) to (vi) referred to this Court as set out in para 1 are answered thus: 26. Question (iii) is answered by holding that in the facts and circumstances of the case the Tribunal was correct in holding that the disposal of ..... 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