1975 (1) TMI 67 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the respondents were dealers within the meaning of section 2(11) of the Bombay Sales Tax Act, 1959.
2. Whether the respondents were liable to be registered as dealers under the said Act.
3. Whether the respondents were liable to pay purchase tax on goods and materials purchased from unregistered dealers.

Issue-wise Detailed Analysis:

1. Whether the respondents were dealers within the meaning of section 2(11) of the Bombay Sales Tax Act, 1959:
The respondents, building contractors, applied to the Commissioner of Sales Tax to determine if they were dealers under section 2(11) of the Act. The Deputy Commissioner affirmed their status as dealers, but the Sales Tax Tribunal reversed this, stating that their purchases were not made in the course of business as defined by the Act. The High Court examined the definition of "dealer" and relevant case law, including the Supreme Court's decision in State of Andhra Pradesh v. H. Abdul Bakshi and Bros., which emphasized that to be a dealer, a person must be engaged in the business of buying or selling goods with a profit motive. The High Court concluded that the respondents' purchase of building materials for use in construction and repairs constituted carrying on the business of buying goods, thus making them dealers under section 2(11).

2. Whether the respondents were liable to be registered as dealers under the said Act:
Given the High Court's determination that the respondents were dealers, they were consequently liable to be registered as dealers under the Act. The Act mandates registration for any dealer whose turnover exceeds the specified limit. Since the respondents' activities met the criteria for being classified as dealers, their registration obligation followed.

3. Whether the respondents were liable to pay purchase tax on goods and materials purchased from unregistered dealers:
The High Court analyzed sections 13, 14, and 15 of the Act, which outline the conditions under which purchase tax is levied. Since the respondents purchased building materials from unregistered dealers and did not resell these materials, they were liable to pay purchase tax. The High Court referenced the Supreme Court's decision in Ganesh Prasad Dixit v. Commissioner of Sales Tax, which held that materials used in construction, even if resulting in immovable property, were subject to purchase tax if consumed in the business activity.

Conclusion:
The High Court concluded that the respondents were indeed dealers within the meaning of section 2(11) of the Bombay Sales Tax Act, 1959, and were therefore liable to be registered and to pay purchase tax on materials bought from unregistered dealers. The Tribunal's decision was overturned, and the reference was answered in the negative, affirming the respondents' tax liabilities.