[2003] 131 STC 0252- - Assistant Commissioner (Assessment) Special Circle-II, Ernakulam Vs. Hindustan Vidyut Products Ltd. and others
In section 2(viii) of the Kerala General Sales Tax Act, 1963, which defines "dealer", the expression "carries on the business of buying, selling" qualifies the expression "dealer". The words "carrying on business" require something more than merely selling or buying, etc. The primary and dominant activity of the person or concern has to be looked into in order to determine whether they would fall within the meaning of dealer. If the main activity was not business, then the connected, incidental or ancillary activities of sales would not normally amount to business unless independent intention to conduct business in these connected, incidental or ancillary activities is established by the Revenue. (see paras 6 and 7)
While discharging his statutory duties, the official liquidator may sell properties in the course of winding proceedings in accordance with the directions of the company court. Considering the nature of the duties of the official liquidator it cannot be said that the official liquidator is conducting any business or that his main activity is sale of the properties. The official liquidator while discharging his statutory duties would dispose of the assets movable or immovable and realise the maximum amount so as to disburse the amount among the creditors of the company, secured creditors, workmen creditors and other creditors. As far as an industrial company is concerned, the only amount to be realised by the official liquidator is the sale proceeds from the assets charged to its secured creditors. The official liquidator conducts sale of the properties with the sanction of the company court and is not conducting any profit making business. (see para 8)
The sale of movable or immovable properties by the official liquidator is only ancillary and connected with his statutory duties which is not carrying in any business. The factum of appointment of the official liquidator by the Central Government is not the criteria but the nature of the functions he discharges. The official liquidator is not bound to collect any sales tax in respect of the sale of assets belonging to the company in liquidation conducted by him with the sanction of the court and he would not come within the expression "dealer" under section 2(viii) of the Kerala General Sales Tax Act, 1963. (see paras 8 and 10)
State of Tamil Nadu v. Board of Trustees of the Port of Madras [1999] 114 STC 520 (SC) and Commissioner of Sales Tax v. Sai Publication Fund [2002] 126 STC 288 (SC) applied.
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[1999] 114 STC 0520- - State of Tamil Nadu and Another Vs. Board of Trustees of the Port of Madras (SC)
In taxing statutes, the word "business" is normally used in the sense of an occupation, a profession which occupies time, attention and labour of a person, normally with a profit-motive; and there must be a course of dealings, either actually continued or contemplated to be continued with a profit-motive and not for sport or pleasure. Even if such profit-motive is statutorily excluded from the definition of "business" yet the person could be doing "business". (see para 13)
The expression "carrying on business" requires something more than mere selling or buying. Whether a person "carries on business" in a particular commodity must depend upon the volume, frequency, continuity and regularity of transactions of purchase and sale in a class of goods and the transactions must ordinarily be entered into with a profit-motive, which may, however, be statutorily excluded. (see para 14)
It is not merely the act of selling or buying, etc., that constitutes a person a "dealer", but the "object" of the person who carries on the activity is important. It is not every activity or any repeated activity seriously undertaken which results in sale or supply of goods that would attract sales tax. If it was the intention of the Legislature to tax every sale or purchase irrespective of the object of the activities out of which the transactions arose, then it was unnecessary to state that the person must "carry on the business" of selling, buying, etc. (see para 30)
Where the main activity is not "business", then the connected, incidental or ancillary activities of sales would not normally amount to "business" unless an independent intention to conduct "business" in these connected, incidental or ancillary activities is established by the Revenue. It will then be necessary to find out whether the transactions which are connected, incidental or ancillary are only an infinitesimal or small part of the main activities. In other words, the presumption will be that these connected, incidental or ancillary activities of sales are also not "business" and the onus of proof of an independent intention to do "business" in these connected, incidental and ancillary sales will rest on the department. (see para 28)
Principle in State of Bombay v. Ahmedabad Education Society [1956] 7 STC 497 (Bom) approved and adopted.
Base Repair Organisation v. State of Andhra Pradesh [1983] 53 STC 223 (AP) explained and modified.
The Madras Port Trust, a major port trust (now) governed by the provisions of the Major Port Trusts Act, 1963, provides services of landing, shipping or trans-shipping, receiving, shifting, transporting, storing or delivery of goods brought into the premises of the Port Trust. Goods are brought into the Port Trust and delivered to the importees/consignees or their clearing agents, etc. Goods are also exported through the Port Trust by means of its services. Uncleared or abandoned goods are brought to sale by the Port Trust in public auction after the approval of the customs authorities. The list of activities and services of the Port Trust as given in section 35 of that Act shows how infinitesimal are the sales of unserviceable or unclaimed goods as compared to the very large range of activities and services it has to render. Sections 58 to 65 deal with the Board’s lien for rates on goods and their seizure and detention till the rates are fully paid. Section 61 provides for sale of goods if rates or rent are not paid or lien for freight is not discharged, section 62 provides for disposal of goods not removed from the premises, and section 63 indicates how the sale proceeds are to be dealt with in payment of liens, claims, charges, demurrage, penalties, etc. From these provisions it is clear that the Port Trust is not involved in any activity of "carrying on business" and that unclaimed and unserviceable goods are sold in discharge of various statutory charges, etc. and that the sales of these items are also an infinitesimal part of the Port Trust’s main activities or services. The sales of goods are in connection with, or incidental or ancillary to the main "non-business" activities and they cannot be treated as "business". The Port Trust cannot, therefore, be treated as a "dealer" under the Tamil Nadu General Sales Tax Act, 1959. (see paras 2, 39, 41 and 42)
Trustees of the Port of Madras v. Aminchand Pyarelal [1976] 1 SCR 721 followed.
State of Madras v. Trustees of the Port of Madras [1974] 34 STC 135 (Mad.) and Board of Trustees of the Visakhapatnam Port Trust v. Commercial Tax Officer [1979] 43 STC 36 (AP) approved.
Decision of the Madras High Court in Board of Trustees of the Port of Madras v. State of Tamil Nadu [1998] 108 STC 66 affirmed.
Held also, (i) that this was not the stage to direct the Port Trust to go by the alternative remedy under the Sales Tax Act; and (see para 43)
(ii) that the Port Trusts in other States, who had applied for intervention, were not entitled to submit arguments in regard to the leviability of sales tax under their respective State laws, as the concerned Governments were not before the Supreme Court. (see para 6)
[1992] 086 STC 0083- - Shankar Vittal Motor Co. Ltd. Vs. State of Karnataka
The appellant-company carried on the business of operating stage carriages for carrying passengers. In order to maintain its reputation as an efficient stage carriage operator, the company sold vehicles occasionally to keep its fleet up-to-date.
Held, (i) that the act of replacement of vehicles used in the business would be incidental and having a direct nexus to the carrying on of the business of a stage carriage operator. The frequency and volume of such replacement was not material, on the facts of the present case. Moreover, there was no material to show that the buses in question had been sold as scrap. The buses must, therefore, be taken to have been sold as motor vehicles. The sale of the buses in question was taxable notwithstanding the low price obtained for them; and
(ii) that the sale of an autorickshaw as unserviceable was not in the course of business, and was, therefore, exempt.
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