1974 (10) TMI 85 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the Iron and Steel Controller was carrying on a business of selling goods within the meaning of section 2(c) of the Bengal Finance (Sales Tax) Act, 1941.
2. Whether the Iron and Steel Controller was a dealer under the Bengal Finance (Sales Tax) Act, 1941.

Issue-wise Detailed Analysis:

1. Business of Selling Goods:
The primary issue was whether the Iron and Steel Controller's activities constituted the business of selling goods under section 2(c) of the Bengal Finance (Sales Tax) Act, 1941. The Iron and Steel Controller, acting on behalf of the Government of India, disposed of surplus steel and T.C.A. steel, as well as leaflets, under the Technical Co-operation Aid Scheme (T.C.A.). The goods were sold at or below cost price, and the Controller did not have a profit motive. The court examined whether these activities could be considered as carrying on a business of selling goods.

The court referred to the definition of "dealer" in section 2(c) and the definition of "business" in section 2(1a) of the Act. The amendment to section 2(1a) stated that business includes any trade, commerce, or manufacture, whether or not carried on with the motive to make a profit. The court noted that the Iron and Steel Controller was not engaged in a commercial activity but was implementing a government project aimed at increasing food and agricultural production.

2. Dealer under the Act:
The court considered whether the Iron and Steel Controller could be classified as a dealer under the Act. The Controller's activities were not carried out with a profit motive, and the sales were incidental to the implementation of the T.C.A. project. The court referred to previous judgments, including Director of Supplies and Disposals, Calcutta v. Member, Board of Revenue, West Bengal, Calcutta, where it was held that the Directorate was not carrying on the business of selling goods but was merely disposing of surplus materials.

The court also referred to the case of Indian Iron and Steel Co. Ltd. v. Member, Board of Revenue, West Bengal, where it was held that a person could not be a dealer unless they carried on the business of selling goods in a commercial sense. The court noted that the Iron and Steel Controller was a statutory authority discharging its obligations pursuant to government directions and was not engaged in any commercial activity.

Conclusion:
The court concluded that the Iron and Steel Controller was not carrying on the business of selling goods and, therefore, could not be considered a dealer under the Bengal Finance (Sales Tax) Act, 1941. The court answered the reference in the negative and in favor of the petitioner, stating that the Controller's activities did not fall within the mischief of the amended definition of business. Each party was ordered to bear its own costs.