TMI Blog2016 (12) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... he Constitution.The levy under the local Act being a single point tax and the appellant having suffered the same when it purchased the material in question and same material cannot be subjected to another levy on its transfer to the contractor. This argument requires consideration of factual matrix of the case concerned, whether the levy in question is a single point tax and material purchased by the appellants had suffered the levy at the point of purchase by appellants or not are matters to be decided by the authorities concerned and if the same is not already decided and has not become final, it will be open to the appellants to urge this question before the appropriate authorities. Petition dismissed - decided in favor of Department. - Writ Petition No. 3336, 3337, 3339, 3340/2009, 1586, 1587, 1588, 13385, 13386, 13387/2010, 8476, 8477, 8478/2012, 589, 592, 594, 6808, 6809, 6810/2014, 1116, 1119, 1124/2015, 1731, 1732, 1734/2016 - - - Dated:- 3-10-2016 - P. K. Jaiswal And Vivek Rusia, JJ. For the Petitioner : P.M. Choudhary, Advocate For the Respondent/State : Sunil Jain, A.A.G with Rohit Mangal, GA ORDER Vivek Rusia, J. Petitioner has filed the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01.04.10 to 31.03.11 16 W.P.No.6810/14 VAT 01.04.11 to 31.03.12 17 W.P.No.1116/15 CST 01.04.12 to 31.03.13 18 W.P.No.1119/15 VAT 01.04.12 to 31.03.13 19 W.P.no.1124/15 Entry Tax 01.04.12 to 31.03.13 20 W.P.No.1731/16 CST 01.04.13 to 31.03.14 21 W.P.No.1732/16 Entry Tax 01.04.13 to 31.03.14 22 W.P.No.1734/16 VAT 01.04.13 to 31.03.14 23 W.P.No.592/14 Entry Tax 10.02.10 to 31.03.11 24 W.P.No.6808/14 VAT 10.02.11 to 31.03.12 25 W.P.No.6809/14 CST 10.02.11 to 31.03.12 2. All these writ petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... papers, minting of papers, printing currency and bank notes, non judicial stamp paper, postage stamp, travel documents etc. to meet the requirement of Reserve Bank of India for currency notes, coins, for State Government non-judicial stamp papers, for postal department stationery, stamps etc, for the Ministry of External Affairs, passport, VISA, stickers and other travel documents. All the aforesaid nine units (four security press, one security paper mill and four India Govt. Mints) including the petitioner were functioning under the Ministry of Finance, Govt. of India till 09.02.2006. Thereafter on a Union Cabinet decision dated 2.09.2005 by which the Government of India has decided to corporatise the functions of all nine units under the name called Security Printing and Minting Corporation of India Limited. Office memorandum has been issued by the Ministry of Finance dated 10.2.2006 by which Govt. of Inida has decided to transfer the existing functions of these nine units in respect of production of security grade paper, coins and printing of currency notes, stamps and non-judicial stamp papers to the SPMCIL w.e.f 13.01.2006. According to the petitioner Bank Note Press, Dewas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cipal Secretary, Commercial Tax Department and the senior functionaries of the Ministry of Finance, Govt. of India. According to the petitioner the meeting was held but the issue could not be settled amicably. The Govt. of M.P maintained its view that the petitioner is a dealer engaged in the business of printing of notes and is liable to pay the taxes applicable in the State of Madhya Pradesh. During the pendency of that petition the final order of assessment was passed which has been challenged in the present writ petition by the petitioner. Instead of filing appeal under section 46 of the VAT Act, 2002 petitioner has filed these writ petitions raising the questions of law as mentioned above. In these writ petitions notices were issued and initially no stay was granted but later when the department started pressing demand stay was granted. Petitioner has challenged the order of assessment passed under section 27(6) of the Commercial Tax Act by the respondent on the ground that despite there is no change in the function and activities of the Bank Note Press. Petitioner is a Govt. of India undertaking and performing the sovereign function of the Govt. of India. The petitioner canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ign, security feature of currency and coin, administration, control and issue relating to counterfeiting etc. He further argued that the definition of dealer under section 2 (i) of the VAT Act, 2002 means any person who carries the business of buying, selling, supplying or distribution of goods directly or otherwise must carry the business of buying or selling or supplying goods. Petitioner company is not engaged in any business activity as defined under section 2 (c) and currency cannot be termed as goods, therefore, none of these three definitions bring the petitioner within the purview of the Act, therefore, petitioner is not liable to pay taxes to the respondent/department. In support of his contention petitioner has placed heavy reliance on the following judgments. (i) That in the case of Union of India vs. State of M.P and others reported in (1999) 32 VKN 192 the Division Bench of this Court has held that Union of India (Security Paper Mill, Hoshangabad) is not a dealer and there is no element of sale involved in whole transaction and the mill is discharging a sovereign function of Union of India, hence not liable to pay any entry tax on raw materials brought within local ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of State of Andhra Pradesh vs. A.P. Housing Board reported in 70 STC 203 (AP) the High Court of Andhra Pradesh has considered the definition of business dealer in the context of sale by Housing Board of unused application forms, iron scrap etc. and treated as not dealer because the Andhra Pradesh Housing Board was a Corporation statutorily established by the State Government. The Housing Board was not treated as dealer as well as its activities are not treated as business. Shri Choudhary submits that the main activities of the Board is not treated as dealer and business, hence selling of scrap material has also not been treated as business. He submits that in the present case when the Bank Note Press is not doing the business for printing of currency notes then its incidental activities like selling of scrap material cannot be termed as business. (viii) In the case of Commissioner of Sales Tax v. SAI Publication Fund reported in 126 STC 288 the Supreme Court has considered the definition of dealer in the matter of business of Sai Publication. The Supreme Court has found that the sole object of the Trust was to spread the message of Sai Baba Shirdi, books, literature free of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ught and sold. (xiv) In the case of Vikas Sales Corporation and another vs. Commissioner of Commercial Taxes and another reported in 1996 (102) STC 106 again the Supreme Court has considered the definition of goods means that constitute anything to be goods and it must have value of their own and are transferable openly in the market. (xv) In the case of Bharat Sanchar Nigam Ltd. And others vs. Union of India and others reported in (2006) 145 STC 91 the Supreme Court has considered whether sim card comes under the definition of goods. The electromagnetic waves are neither abstracted nor consumed. they are not delivered, stored or possessed and are not marketable, therefore, they cannot constitute as goods. (xvi) In the case of Sunrise Associates vs. Govt. of NCT of Delhi others reported in (2006) 9 STJ 85 (SC) the Supreme Court has not treated lottery as a good because lottery ticket has no value in itself and is a mere piece of paper and represents a chance or a right to win a prize. Lottery tickets are actionable claims and are excluded from the definition of goods (xvii) In the case of State of Tamil Nadu and another vs. Board of Trustees of the Port of Madras the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P is exclusively entitled to recover the same. He has placed reliance over the definition of direct taxes as referred in Black's Law Dictionary, Eighth Edition that a tax that is imposed on property, as distinguished from a tax on a right or privilege. A direct tax is presumed to be borne by the person upon whom it is assessed, and no passed on to some other person. In support of his contention he has placed reliance over the judgment of the Supreme Court in the case of Karya Palak Engineer, CPWD, Bikaner vs. Rajasthan Taxation Board, Ajmer and others reported in (2004) 7 SCC 195 where the Supreme Court has held that exemption on Union property under Article 285 of the Constitution of India from State taxes does not apply to levy of indirect taxes and the judgment of this Court in the case of Union of India and another Vs. State of M.P and others reported in 2004 SCC OnLine MP 607 and the judgment passed by the High Court of Patna in the case of Customs Department vs. State of Bihar reported in 2016 SCC OnLine Pat 2021 and prayed for dismissal of the writ petitions. 8. We have heard learned counsel for the parties at length. 9. SPMCIL was formed after of nine units incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d held that the security paper mill is not engaged in any business activity of selling papers of currency notes to any individual, the same are being used by other government presses for printing of currency notes of various denominations. There is no element of sale involved in the activities of the Union as papers of currency notes so manufactured are passed on to its other presses, not sold to public after printing of notes and have got no commercial value. Petitioner is discharging the sovereign function of the Union, therefore, entitled for protection under Article 285 of the Constitution of India and set aside the demand issued by the Commercial Tax Department pertaining to Entry Tax of raw material brought within the area of its premises. Shri Choudhary placed heavy reliance over this decision of the Division Bench with the submission that nature of working activities and functioning of printing of currency notes have not been changed and the same still remains the sovereign function of the Union, hence entitled for impunity from levy of taxes by virtue of Article 285 of the Constitution of India. Although there is Corporatization, change of administration and structure but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioneer or any other mercantile agent, by whatever name called, who carries on the business of buying, selling, supplying or distributing goods on behalf of the principal; (iv) any person who transfers the right to use any goods including leasing thereof for any purpose, (whether or not for a specified period) in the course of business to any other person; Explanation I - Every person who acts as an agent of a non- resident dealer, that is as an agent on behalf of a dealer residing outside the State and buys, sells, supplies or distributes goods in the State or acts on behalf of such dealer as - (i) a mercantile agent as defined in the Sale of Goods Act, 1930 (III of 1930); or (ii) an agent for handling goods or documents of title relating to goods; or (iii) an agent for the collection or the payment of the sale price of goods or as a guarantor for such collection or payment, and every local branch of a firm or company situated outside the State, shall be deemed to be a dealer for the purpose of this Act. Explanation II - The Central or a State Government or any of their departments or offices which, whether or not in the course of business, buy, sell, supply or d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be deemed to be a sale of those goods by the person making the transfer, delivery or supply and purchase of those goods by the person to whom such transfer, delivery or supply is made, but does not include a mortgage, hypothecation, charge or pledge; Explanation - (a) Notwithstanding anything contained in the Sale of Goods Act, 1930 (III of 1930), where a sale or purchase of goods takes place in pursuance of a contract of sale, such sale or purchase shall be deemed for the purposes of this Act to have taken place in the State of Madhya Pradesh irrespective of the place where the contract of sale or purchase might have been made, if the goods are within the State - (i) in the case of specific or ascertained goods, at the time the contract of sale or purchase is made; and (ii) in the case of unascertained or future goods, at the time of their appropriation to the contract of sale or purchase by the seller or by the purchaser, whether the assent of the other party is prior or subsequent to such appropriation; and (b) Where there is a single contract of sale or purchase of goods situated at more places than one, the provisions of clause (a) shall apply as if there were sepa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er deals in a good for the purpose of sale and manufacture constitute a business which is defined under section 2(d) and according to which any trade commerce, manufacture or any adventure or concern in the nature of trade, commerce or manufacture is carried on with a motive to make gain or profit or such trade would be a business. Any transaction of sale or purchase of goods in connection with or incidental or ancillary to the trade, commerce, manufacture like unserviceable goods, discarded goods, scrap, waste material would also be a business. Now we are required to examine in conjoint reading of these four definitions whether petitioner would be liable to pay the Entry Tax after 2006. As per the Memorandum of Association under the Companies Act, 1956 the main object of the company is to carry on the business of designing of currency notes and printing press for printing of currency notes for the RBI. The relevant part of the Memorandum of Association of SPMCIL is reproduced below: (I) The name of the company is Security Printing and Minting Corporation of India Limited. (II) The registered Office of the Company will be situated at NCT of Delhi. (III) The objects for whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... precious metals to be used in the minting of coins; and such other documents as may be required by the Central and/or State Governments, Public Sector Undertakings, municipal and local bodies, Financial Institutions, any other governmental/non-Governmental agency or authority or entity in/outside India approved by the Board and/or Government of India. (d) To carry on the business of dealing in plant, machinery and equipment required for developing, designing, making of bank/currency notes or security printing and such other materials and things that may be required for carrying on any or all the business of the Company as herein stated. (Emphasis supplied) 12. From the aforesaid Memorandum of Association of SPMCIL it is manifest that the main object of the company is to do the business of designing and printing of currency notes. When the company is engaged in the business as defined under section 2(d) of the VAT Act, 2002 then it acts as a dealer also as per section 2(i) of the Act because it is buying, selling and supplying of currency directly or otherwise and as the definition of the goods all kinds of movable property are goods. Though the word currency is not mentione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to any other person except in exchange for other bank notes or for such coin, bullion or securities as are permitted by this Act to form part of the Reserve. 26. Legal tender character of notes.-- (1) Subject to the provisions of sub section (2), every bank note shall be legal tender at any place in India in payment, or on account for the amount expressed therein, and shall be guaranteed by the Central Government. (2) On recommendation of the Central Board the Central Government may, by notification in the Gazette of India, declare that, with effect from such date as may be specified in the notification, any series of bank notes of any denomination shall cease to be legal tender (save at such office or agency of the Bank and to such extent as may be specified in the notification). 14. Petitioner is only engaged in printing and selling of bank notes to the Reserve Bank of India, therefore, there is a sale transaction between petitioner and the Reserve Bank of India and after sale the said goods become Bank Note or currency and before such transaction it is merely goods under the definition of VAT Act, 2002. 15. Now we shall consider the judgments of the Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provide as essential commodity like cement, cotton, coal or iron. They are required to supply the commodity to the dealers and in such a situation it was argued that the dealer who is asked to supply limited quantity to a particular permit holder has no option but to supply the limited quantity at the controlled price. The question was whether such transaction amounts to sale in the language of law and the Apex Court has answered that such a transaction also comes within the meaning of sale under section 2(g) of the Bengal Finance (Sales Tax) Act and Andhra Pradesh General Sales Tax Act, hence this judgment of the Supreme Court nowhere helps the petitioner. (v) In the case of Bhor Industries (supra) according to the petitioner the jute mattings and PVC tapes which are not marketable are not treated as goods. The Apex Court has considered the definition of goods under the provisions of Central Excise where certain articles within the schedule are not dutiable, therefore, they were not treated as goods. The concept of Sales Tax is entirely different with Excise. (vi) That in the case of Collector of Central Excise, Baroda vs. Ambalal Sarabhai Enterprises (P) Ltd. (supra) the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed meal vouchers to its customers who transfers the same to other employees who is called users and they use them from affiliates. The issue came for consideration whether these vouchers can be treated as goods for the purpose of levy of octroi or local body tax. The Sodex was licensed to do this activity by the RBI under the provisions of Payment and Settlement Systems Act, 2007 which provides for regulation and supervision of payment system in India as designated by the RBI. The vouchers are not sold to its customers and they are printed for particular customers which are used by the said customers for distribution to its employees and these vouchers are not transferable at all and these transactions are regulated by the RBI guidelines and it was found that it is a facility to the employees by the employer, therefore, the Supreme Court has held that these vouchers are not goods but in the present case the printed material are sold to the RBI by the petitioner which is a company registered under the Companies Act. 16. In all above cases issue traveled up to the Supreme Court after adjudication by the appellate authority or Tax Tribunal but here petitioner approached this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Profit/(Loss) after Extraordinary Items (Net) 281.77 346.72 Less: Tax Expense Provision for Current Tax 164.21 Provision for Deferred Tax 70.3 34.20 Taxes of Earlier Year 2.08 Profit/(Loss) After Taxation 352.07 214.63 Proposed Dividend Tax 50.22 Transferred to General Reserve 21.46 Balance transferred to P L A/c 142.9 (from the official website of SPMCIL) 17. The Bank Note Press, Dewas has produced 2582 pieces of bank notes in the year 2014- 15 and sold to RBI. That the petitioner has also manufactured 524.88 MT. Inks during this financial year. The company is maintaining books of accounts under subsection (1) of section 148 of the Companies Act and the company is regularly depositing sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hopal SPM, Hoshangabad -- VAT, CST and Entry Tax 171046862 Additional Commissioner of Commercial Tax, Bhopal SPM, Hoshangabad 2010-11 to 2012-13 VAT, CST and Entry Tax 92163627 Appellate Tribunal (Commercial Tax) SPM, Hoshangabad 2006-07 to 2009-10 Entry Tax 82240971 High Court Indore BNP, Dewas -- Property Tax 15000000 High Court Jabalpur BNP, Dewas -- VAT 145947 High Court Indore BNP, Dewas -- CST 33697529 High Court Indore BNP, Dewas -- VATm ET CT 268293345 High Court Indore BNP, Dewas Sales Tax 1064912612 At High court T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... definition of the term 'dealer' in Section 2(f) of the above Act, so far as it is material, runs: Dealer means any person who carried 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-- (i) the Central or a State Government or any of their departments, a local authority, a company, an individed Hindu Family or any society (including a cooperative society) club, firm or association which carries on such business. 3. As already indicated by Section 2 of the Rajasthan Taxation Laws (Amendment) Act, 1965 (Act No.9 of 1965), Section 2 of the Rajasthan Sales Tax Act, 1954 (Rajasthan Act No.9 of 1954), was amended. Clause (cc) of Section 2 provides: 'Business includes-- (i) 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 with a motive to make gain or profit and whether or not any profit accrues from such trade, commerce, manufacture, adventure or concern ..... X X X X Extracts X X X X X X X X Extracts X X X X
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