TMI Blog2017 (9) TMI 593X X X X Extracts X X X X X X X X Extracts X X X X ..... h Mr. Urvi Mohan, Mr. Rhishabh Jetley, Advocates. ORDER 1. The Petitioner, Air India Ltd. (hereafter Air India ) is involved in offering air transportation services. As part of running its business, it sells scrap, depleted parts and sometimes even out-dated or unused aircraft. The question that arises is whether it is liable to pay sales tax on such sales, under the Delhi Sales Tax Act, 1975 ( DST Act ). 2. The judgment of this Court in Commissioner of Sales Tax vs. DTC, 1996 III AD (Delhi) 462 (hereafter DTC ) is heavily relied upon by the Petitioner to submit that the Petitioner's services are no different from that of the Delhi Transport Corporation ( DTC ) and hence it is not liable to pay sales tax. The Respondent relies upon several judgments of various High Courts and the Supreme Court, passed in relation to the Railways to argue that the Petitioner is liable to pay sales tax on the sales effected by it. 3. Initially the Petitioner had challenged the assessment made for Assessment Year ( AY ) 1994-95 which resulted in ST. Ref. 4/2004. Thereafter the Petitioner challenged the assessments made for AYs 1995-96, 1996-97 and 1997-98 which resulted in ST. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bad III [1971] 27 STC 42 (hereafter AP Road Transport Corporation ). The Tribunal also held that the said transactions of sales are incidental and ancillary to or in connection with the Petitioner's 'business' as an airline as established in DTC (supra) and AP Road Transport Corporation (supra). The Tribunal concluded that the Petitioner is a dealer `qua the sale of old aircrafts/scraps . 9. The Tribunal, on an application by the Petitioner, by order dated21st May, 2003 referred the following questions to this Court for AY 1994-95: (1) Whether in the facts and under the circumstances of the case, the Tribunal was right in holding that the activity of the Indian Airlines Limited is commerce covered under the definition of business in clause (i) of Section 2(c) of the Delhi Sales Tax Act, 1975? (2) If the answer to question No.1 is in the affirmative, whether in the facts and under the circumstances of the case, the Tribunal was right in holding that the transactions of sale of scrap, spare parts, other material and old aircrafts are business falling under clause (ii) of Section 2(c) of the Act being incidental or ancillary to or in connection with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection with, or incidental or ancillary to, such trade, commerce, manufacture, adventure or concern; (e) dealer means any person who carries on business of selling goods in Delhi and includes (i) the Central Government or a State Government carrying on such business; (ii) an incorporated society (including a cooperative society), club or association which sells or supplies goods, whether or not in the course of business, to its members for cash or for deferred payment or for commission, remuneration or other valuable consideration; (iii) a manager, factor broker, commission agent, del credere agent or any mercantile agent, by whatever name called, and whether of the same description as hereinbefore mentioned or not, who sells goods belonging to any principal whether disclosed or not; and (iv) an auctioner who sells or auctions goods belonging to any principal, whether disclosed or not and whether the offer of the intending purchaser is accepted by him or by the principal or a nominee of the principal. Petitioner s Submissions 13. Mr. Mukul Gupta, learned Senior Counsel appearing for the Petitioner, relies heavily on the judgment of this Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recent judgment of this Court in Citi Bank vs. Commissioner of Sales Tax, 2015 SCC Online Del 14023 . He submitted that the activity sought to be taxed in the said case was part of the business of the bank. He urges this Court to apply and follow Raipur Manufacturing Co. Ltd. (supra) and Burma Shell Oil Co. Ltd. (supra) which are judgments followed by this Court in DTC (supra). He further urges that a similar view has also been taken by the Supreme Court in State of Tamil Nadu vs. Board of Trustee of the Port of Madras, AIR 1999 SC 1647 (hereafter Port of Madras ). He thus submits that both DTC (supra) and Port of Madras (supra) apply squarely to the facts of the present case and hence no sales tax would be payable by the Petitioner. Respondent s Submissions 18. On the other hand, Mr. Sanjoy Ghose, learned Additional Standing Counsel appearing for the Respondents, submits that the present case is clearly distinguishable from the case of DTC (supra) inasmuch as DTC is a statutory corporation which is statutorily barred from selling spare parts, equipments or accessories. He relies upon Section 19(3) of the Road Transport Corporation Act, 1950. He further re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h High Court . 21. The decision in DTC (supra) is in the context of road transport. It was related to the context of the DTC being a statutory corporation. Here we are clearly with a company, which has ceased to be a statutory corporation. The activity of operating aircrafts to carry passengers and cargo is no doubt a commercial activity but it is not the business for which the petitioner is registered as a dealer under the DST Act. However, the sale of scrap is not merely occasional but a regular and routine activity which will continue so long as the Petitioner continues to provide air transportation services. The important question thus, is whether the dominant activity test would be a relevant criteria for determining whether under Section 2 (c) (ii) the sale of scrap constitutes business ? This question does not appear to have arisen in the context of air transport earlier. It appears to the Court that the decision in DTC (supra) will need to be reconsidered. In the light of the above discussion, the following question of law ought to be decided by a Full Bench of this Court. Whether the sale of unserviceable (rejected) aircraft and unserviceable stores, scrap and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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