TMI Blog2017 (11) TMI 529X X X X Extracts X X X X X X X X Extracts X X X X ..... 1) of the said Act and Section 2(8) of the MVAT which is pari materia. It was held in the case of Controller of Stores that the Explanation to Section 2(11) of the said Act which had included “Railway Administration” in “dealer” has been held to be clarificatory and that Indian Railways represented by the Controller of Stores is a dealer. - It is clear from the deeming fiction brought in by the explanation that all these entities are now within the definition of “dealer” irrespective of whether they carry on business. - the Port Trust falls within the definition of dealer and is liable to sales tax under the said Act. The judgment of the Supreme Court in M/s Cochin Port Trust Versus State of Kerala [2015 (4) TMI 936 - SUPREME COURT] holds the field, where it was held that the activities of the assessee in respect 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, whether in course of business or not, would fall within the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods under Section 62 of the Port Trusts Act. Sections 61 and 62 of the said Act read thus:- 61. Sale of goods after two months if rates or rent are not paid or lien for freight is not discharged.- (1) A Board may, after the expiry of two months from the time when any goods have passed into its custody, or in the case of animals and perishable or hazardous goods after the expiry of such shorter period not being less than twenty-four hours after the landing of the animals or goods as the Board may think fit, sell by public auction 1[or in such cases as the Board considers it necessary so to do, for reasons to be recorded in writing, sell by tender, private agreement or in any other manner] such goods or so much thereof as, in the opinion of the Board, may be necessary- (1) A Board may, after the expiry of two months from the time when any goods have passed into its custody, or in the case of animals and perishable or hazardous goods after the expiry of such shorter period not being less than twenty-four hours after the landing of the animals or goods as the Board may think fit, sell by public auction 1[or in such cases as the Board considers it necessary so to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the date on which such goods were placed in their custody, the Board may, if the address of such owner or person is known, cause a notice to be served upon him by letter delivered at such address or sent by post, or if the notice cannot be so served upon him or his address is not known, cause a notice to be published in 1[the Port Gazette or where there is no Port Gazette, in the Official Gazette] and also in at least one of the principal local daily newspapers, requiring him to remove the goods forthwith and stating that in default of compliance therewith the goods are liable to be sold by public auction 2[or by tender, private agreement or in any other manner]:- (1) anything contained in this Act, where any goods placed in the custody of the Board upon the landing thereof are not removed by the owner or other person entitled thereto from the premises of the Board within one month from the date on which such goods were placed in their custody, the Board may, if the address of such owner or person is known, cause a notice to be served upon him by letter delivered at such address or sent by post, or if the notice cannot be so served upon him or his address is not known, cause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercial enterprise but by way of administering and managing the port of Bombay. The Petitioner has accordingly submitted that they are not carrying on any business of buying or selling goods. The Petitioner has accordingly contended in the Petition that they are not entitled to pay tax on the sale of goods effected by them under the said Act. 5. Mr. Makhija the learned counsel appearing for the Petitioners has drawn this Court's attention to Section 2(5a) of the Said Act, which reads thus :- 5A) business includes 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 gain or profit accrues from such trade, commerce, manufacture, adventure or concern, and any transaction in connection with, or incidental or ancillary to the commencement or closure of such trade, commerce, manufacture, adventure or concern. He has also drawn this Court's attention to Section 2(11) of the said Act and the explanation thereto, which reads thus:- 2(11) dealer means any person wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that Section 22 of the said Act provides for registration and that no dealer is liable to pay tax for carrying on business as a dealer unless he possesses a valid certificate of registration as provided by the said Act. Mr. Makhija has relied upon the judgment of the Supreme Court in the case of State of T. N. Vs. Board of Trustees of the Port of Madras in support of his contention that the Port Trust is not involved in any activity of carrying on business . The Supreme Court had in that decision held that port trust is not involved in any activity of carrying on business and held in paragraph 45 that, the conclusions of the Madras High Court in State of Madras Vs. Trustees of the Port of Madras reported in (1974) 34 STC 135 (Mad.) and the decision of Andhra Pradesh High Court in Board of Trustees of the Visakhapatnam Port Trust Vs. CTO reported in (1979) 43 STC 36 (AP) holding that sales by the port trust are not eligible to tax, are correct, for the reasons given by the Supreme Court in the said decision. He has submitted that in the said decision of the Supreme Court, it has been held that if the main activity carried on by the port trust was not a busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by exercise of a statutory right. He has contended that Article 366(29A) of the Constitution of India which provides for tax on sale or purchase of goods include the tax on the transfer otherwise than in pursuance of a contract of property in any goods for cash, deferred payment or other valuable consideration cannot contemplate such sale by the Port Trust under Sections 61 and 62 of the Port Trusts Act. He has placed reliance upon the statement of objections and reasons to the Constitution (Forty-Sixth Amendment) Act, 1982 and in particular paragraphs 7 and 13 which read thus:- 7. There were reports from State Governments to whom revenues from sales tax have been assigned, as to large scale avoidance of Central Sales Tax leviable on inter-State sales of goods through the device of consignment of goods from one State to another and as to the leakage of local sales tax in works contracts, hire-purchase transactions, lease of films, etc. Though Parliament could levy a tax on these transactions, as tax on sales has all along been treated as an item or revenue to be assigned to the States, in regard to these transactions which resemble sale also, it is considered that the same p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said goods. This decision was in the context of a Lottery Tickets and it was held that a sale of lottery ticket did not involve the sale of goods under the said Act. He has relied upon the judgment of the Supreme Court in M.P. Cement Manufacturers' Association Vs. State of M.P. Ors. in support of his contention that an explanation cannot be read as changing or interfering with the incidence of the levy. He has submitted that by virtue of the explanation 2(11) of the said Act port trust has been included in as dealer despite the port trust not carrying on any business which is an essential ingredient in the definition of dealer . Mr. Makhija has also relied upon Section 63(2) of the Maharashtra Major Port Trust Act which provides for the application of the proceeds of sale under Section 61 or 62 of the Major Port Trust Act and in the event there being a surplus in the proceeds, the surplus shall be paid to the importers, owner or consignee of the goods or his agent on application made by the concerned persons within six months from the date of the sale of the goods. He has contended that since the port trust does not retain the proceeds of sale, one of the elements of sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nter alia, the port trust is deemed to be a dealer, notwithstanding anything contend in Clause (5A) or any other provisions of the said Act. This would, therefore, imply that, the port trust would be deemed to be a dealer despite the port trust not carrying on business. The judgment in Madras Port (Supra) has accordingly been held by the Supreme Court in Cochin Port Trust (Supra) to have lost its substratum. The learned APP has relied upon the judgment of this Court in the Controller of Stores, Central Railway, Bombay Vs. The Commissioner of Sales Tax, Maharashtra State wherein the Explanation to Section 2(11) of the said Act which had included Railway Administration in dealer has been held to be clarificatory and that Indian Railways represented by the Controller of Stores is a dealer. The learned APP has also relied upon the decision of the Supreme Court in the case of Federal Bank Ltd Ors. Vs. State of Kerela Ors. wherein it has been held that a sale of pledged ornament for consideration falls in the course of business of the bank and banks are dealers by virtue of amendment and liable to pay service tax. The learned APP has also relied upon the decision of the Supre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation to Section 2 (11) of the said Act is resultant from the 46th amendment to the Constitution of India by which the Bombay Port Trust has been included in the definition of dealer. We are, therefore, of the view that the definition of dealer in Section 2(11) has been made wider by virtue of the deeming fiction brought about by the explanation and which has resulted in various entities mentioned in the explanation, being included in the definition of dealer. These entities include: (a) Port Trust: (b) Municipal Corporation, and Municipal Councils, and other local authorities; (c) Railway administration as defined under the Indian Railway Act, 1890; (d) Shipping and construction companies; (e) Air transport Companies and Airlines; (f) 7[***]; (g) Maharashtra State Road Transport Corporation constituted under the Road Transport Corporation Act, 1950; (h) Customs Department of the Government of India administering the Customs Act, 1962; (i) Insurance and financial corporations or Companies and Banks included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934); (j) Advertising agencies; (k) any other co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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