1982 (10) TMI 202 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Estoppel from Contending Non-Dealer Status
2. Definition of 'Dealer' under Section 2(10) of the Gujarat Sales Tax Act, 1969
3. Tax Liability under Section 29(6) of the Gujarat Sales Tax Act, 1969

Issue-Wise Detailed Analysis:

1. Estoppel from Contending Non-Dealer Status
The Tribunal initially held that the assessee could not deny its status as a "dealer" due to its registration under the Gujarat Sales Tax Act, 1969, and the Central Sales Tax Act, 1956. The Tribunal reasoned that the assessee could not "blow hot and cold" by enjoying the benefits of registration without fulfilling the corresponding obligations. However, the High Court referenced the legal principle that the doctrine of estoppel cannot be invoked in tax assessment proceedings. The Court cited the case of State of Gujarat v. Premier Auto Electric Ltd. and concluded that the Tribunal erred in applying estoppel against the assessee. The Court held that under the relevant provisions, sales tax is recoverable from a "dealer," and the assessee's activity of printing was "mere service," not "business." Thus, the Tribunal's finding that the assessee was estopped from pleading it was not a dealer was erroneous. The first question was answered in the negative.

2. Definition of 'Dealer' under Section 2(10) of the Gujarat Sales Tax Act, 1969
The Tribunal found that the assessee was not a "dealer" within the meaning of Section 2(10) because its primary activity was rendering "mere service" by printing newspapers on a job-work basis. The High Court examined the definitions of "dealer" and "business" under Sections 2(10) and 2(4), respectively. The Court referred to its decision in Mehsana District Shanker-4 Seeds Produce and Sale Co-operative Society Ltd. v. State of Gujarat, which clarified that activities in the nature of "mere service" are excluded from the definition of "business." The Court concluded that the assessee's activity of printing newspapers was "mere service" and not "business." Therefore, the assessee was not a "dealer" within the meaning of Section 2(10). The second question was answered in the affirmative.

3. Tax Liability under Section 29(6) of the Gujarat Sales Tax Act, 1969
The Tribunal held that the assessee was liable to pay tax on the sale of printing machinery under Section 29(6), even if it was not a "dealer." The High Court analyzed the provisions of Section 29(6), which imposes tax liability on a person registered as a dealer, even if it is later found that the person ought not to have been registered. The Court noted that the language of Section 29(6) is broader than its predecessor under the Bombay Sales Tax Act, 1959, and includes cases where a person is not liable to pay tax under any provision of the Act. The Court found that the assessee, having been registered as a dealer, could not escape tax liability on the sale of machinery, even though it was not a "dealer" under Section 2(10). The third question was answered in the affirmative.

Conclusion
The High Court answered the questions as follows:
- Question No. (1): In the negative, in favor of the assessee and against the revenue.
- Question No. (2): In the affirmative, in favor of the assessee and against the revenue.
- Question No. (3): In the affirmative, in favor of the revenue and against the assessee.

Each party was directed to bear its own costs.