1960 (9) TMI 88 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the assessee-company is considered a dealer under the C.P. and Berar Sales Tax Act for purchasing and selling building materials during two assessment periods.
2. Whether the assessee is liable to pay sales tax on the sales of building materials.
3. Whether oral submissions on questions of fact can be considered by the Board of Revenue when there is a clear finding by the Sales Tax Commissioner.

Analysis:

Issue 1: The case involved a reference under section 23(1) of the Central Provinces and Berar Sales Tax Act, 1947, regarding the assessee-company's status as a dealer. The assessee purchased building materials and sold them to contractors constructing buildings for the assessee-dealer. The key consideration was whether these transactions qualified the assessee as a dealer under the Act. The Court analyzed the definitions of "dealer" and "sale" under the Act. It was emphasized that not every seller is automatically a dealer; the person must be engaged in the business of selling or supplying goods. The Court concluded that the assessee's primary business was textile manufacturing, not selling building materials. The supply of materials to contractors for building construction did not constitute the assessee as a dealer in the context of the Act.

Issue 2: The question of the assessee's liability to pay sales tax on the transactions in question was also addressed. The Sales Tax Authority had assessed the mills for sales tax on the supply of materials to contractors, which was challenged by the assessee. The Court determined that since the assessee was not considered a dealer for the sale of building materials, they were not liable to pay sales tax on these transactions. The Court highlighted that the crucial factor was whether the assessee carried on the business of selling or supplying the specific commodity in question, which was not the case here.

Issue 3: The third issue pertained to whether oral submissions on questions of fact could be considered by the Board of Revenue despite a clear finding by the Sales Tax Commissioner. The Court found this question not very intelligible and stated that it did not require an answer since there was no evidence to suggest that the assessee bought the materials with the intention of trading them for profit. The Court emphasized the importance of the profit motive in determining whether an activity constitutes a business under the Act.

In conclusion, the Court answered the first two questions in the negative, indicating that the assessee was not a dealer and, therefore, not liable to pay sales tax on the transactions in question. The third question was deemed unnecessary for an answer. The judgment did not award costs for the reference.