1966 (1) TMI 73 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of the definition of "dealer" under the Bihar Sales Tax Act, 1947 in relation to a single transaction of sale of machineries not in the course of business.

Analysis:
The judgment pertains to a reference made by the Board of Revenue under section 25(1) of the Bihar Sales Tax Act, 1947, regarding the inclusion of a single transaction of sale of machineries in the turnover of the assessee, who is a dealer in coal. The definition of "dealer" was crucial in determining whether the sale should be taxed. The original definition included persons carrying on the "business of selling or supplying goods," while the amended definition omitted the word "business" and substituted it with "sells or supplies any goods." The court analyzed the legislative intent behind the amendment and concluded that the purpose was not to widen the definition to tax all kinds of sales but to include specific types of sales like those executed under a contract or by the Government. The judgment emphasized that the essence of the original definition should be maintained in interpreting the amended provision.

The court highlighted the importance of harmonious construction of statutes and noted that interpreting "any person who sells or supplies goods" in isolation would lead to anomalies within the Act. References to "business" in various sections, forms, and rules of the Act indicated that only sales connected with a business were intended to be taxed. The court also pointed out a new provision in the Finance Act, 1950, which imposed tax on sales from the commencement of a newly started business, further supporting the interpretation that the term "any person who sells" should be confined to a "business of selling."

Moreover, the judgment focused on the concept of turnover, emphasizing that the notion of "aggregate" in relation to sale prices received or receivable by a dealer is linked to the frequency of sales characteristic of a business of selling. Therefore, the court concluded that the amended definition of "dealer" should be understood to include only those who sell goods in connection with their business. As the sale of machineries in the present case was not part of the assessee's business and was a casual sale, the assessee was not liable to pay sales tax on that transaction. The reference was answered in favor of the assessee, and the department was not liable for costs.

In a concurring opinion, the other judge agreed with the analysis and conclusion, thereby affirming that the single transaction of sale of machineries not in the course of business did not make the assessee a "dealer" liable for sales tax.