1988 (2) TMI 440 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the A.P. Housing Board can be regarded as a "dealer" under section 2(1)(e) of the A.P. General Sales Tax Act.
2. Whether the sales of old, unused forms, papers, and unserviceable materials by the A.P. Housing Board constitute "business" under section 2(1)(bbb) of the Act.
3. Applicability of Supreme Court and High Court precedents to the case at hand.

Issue-wise Detailed Analysis:

1. Whether the A.P. Housing Board can be regarded as a "dealer" under section 2(1)(e) of the A.P. General Sales Tax Act:

The Commercial Tax Officer assessed the A.P. Housing Board as a "dealer" for selling unused application forms, iron scrap, etc., under section 2(1)(e) of the Act. The assessment orders, however, lacked detailed reasoning. The first appellate authority supported this view, citing the Supreme Court decision in *District Controller of Stores, Northern Railway v. Assistant Commercial Taxation Officer, Jodhpur [1976] 37 STC 423*. The Sales Tax Appellate Tribunal, however, disagreed, concluding that the Housing Board does not carry on business in old, unused forms, papers, and unserviceable material, and thus cannot be regarded as a "dealer."

2. Whether the sales of old, unused forms, papers, and unserviceable materials by the A.P. Housing Board constitute "business" under section 2(1)(bbb) of the Act:

The Government Pleader argued that the Housing Board should be considered as carrying on business, relying on definitions of "business" and "dealer" in the Act, and cited several precedents, including the Supreme Court decision in *District Controller of Stores v. Assistant Commercial Taxation Officer [1976] 37 STC 423*. However, the Tribunal found that the sales were of old, unused forms and unserviceable materials, which were disposed of to create more office space. The Tribunal's view was that these activities do not amount to carrying on business. The High Court agreed, noting that the Housing Board is a statutory corporation controlled by the State Government and established to execute housing schemes, not to engage in trade or commerce.

3. Applicability of Supreme Court and High Court precedents to the case at hand:

The Government Pleader cited several cases, including *District Controller of Stores v. Assistant Commercial Taxation Officer [1976] 37 STC 423* and *State of Tamil Nadu v. The Hindu [1978] 41 STC 105*, to support the argument that the Housing Board's activities constituted business. However, the High Court distinguished these cases, noting that the Housing Board's activities were not akin to those of a commercial entity. The High Court referred to its own decisions in *Board of Trustees of the Visakhapatnam Port Trust v. Commercial Tax Officer [1979] 43 STC 36* and *Base Repair Organisation v. State of A.P. [1983] 53 STC 223*, which held that the sale of surplus or scrap materials by statutory bodies does not constitute business. The High Court emphasized that the Housing Board's primary function is to execute housing schemes, not to engage in trade or commerce.

Conclusion:

The High Court upheld the Tribunal's decision, concluding that the A.P. Housing Board is not a "dealer" under the Act and does not carry on business in the sale of old, unused forms, papers, and unserviceable materials. The sales in question were incidental to the Board's primary function of executing housing schemes. The tax revision cases were dismissed, and no costs were awarded. The High Court's analysis relied heavily on the statutory definitions and relevant case law, distinguishing the Housing Board's activities from those of commercial entities.