1977 (6) TMI 97 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the Board of Trustees is a dealer under section 2(1)(e) of the Andhra Pradesh General Sales Tax Act, 1957.
2. Whether the Board of Trustees carries on business in the specific commodities for which sales tax is sought to be levied.

Detailed Analysis:

Issue 1: Whether the Board of Trustees is a dealer under section 2(1)(e) of the Andhra Pradesh General Sales Tax Act, 1957.
The primary question is whether the Board of Trustees of the Visakhapatnam Port Trust qualifies as a "dealer" under section 2(1)(e) of the Act. The sales tax authorities have classified the Board as a dealer, thus assessing sales tax on various commodities for the assessment years 1969-70 to 1974-75.

The petitioners argue that they are not dealers and, therefore, should not be subject to sales tax. The revenue countered that the determination of whether a transaction amounts to a taxable sale is a factual question for the sales tax authorities and not suitable for writ petitions.

The court examined several precedents, including the Supreme Court's observation in Tata Engineering and Locomotive Company Ltd. v. Assistant Commissioner of Commercial Taxes, which emphasized that the High Court can intervene if an action is taken under an invalid law or arbitrarily without the sanction of law.

The court also referenced Andhra Pradesh State Road Transport Corporation v. Commercial Tax Officer, where it was held that the Corporation was not a dealer. The court concluded that the High Court has jurisdiction to examine whether the Board of Trustees is a dealer, as the liability to pay sales tax arises only if the transactions are of a dealer.

Issue 2: Whether the Board of Trustees carries on business in the specific commodities for which sales tax is sought to be levied.
The court reviewed the statutory framework governing the Board of Trustees, including the Indian Ports Act, 1908, and the Major Port Trusts Act, 1963. These acts outline the Board's responsibilities, including services like supplying water and bunkering vessels with liquid fuel, which are statutory obligations rather than business activities.

The court noted that the Board's activities, such as supplying water and fuel to vessels, offering tender documents, supplying water and stores to contractors and staff, and disposing of unserviceable material, do not constitute business activities. The court emphasized that these activities are services facilitating port operations and are not carried out with a profit motive.

The definition of "dealer" under section 2(1)(e) and "business" under section 2(1)(bbb) was scrutinized. The court found that the Board of Trustees does not fit these definitions, as it does not engage in trade, commerce, or manufacture.

The court referenced the Supreme Court's decisions in State of Gujarat v. Raipur Manufacturing Co. Ltd. and State of Tamil Nadu v. Burmah Shell Co. Ltd., which held that disposing of scrap and unserviceable materials does not constitute carrying on a business.

The court concluded that the Board of Trustees is not a dealer and does not carry on business in any of the commodities in question. Therefore, the sales tax authorities do not have jurisdiction to assess or collect sales tax from the Board of Trustees.

Conclusion:
The court allowed the writ petitions, holding that the Board of Trustees is not a dealer and does not carry on business in the specified commodities. Consequently, the sales tax authorities cannot proceed against the Board of Trustees for the transactions in question. The respondent was ordered to pay the costs of the petitioner in each writ petition, and the rule nisi was made absolute.