1988 (8) TMI 406 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the Royal Calcutta Turf Club (RCTC) is carrying on business and qualifies as a "dealer" under section 2(c) of the Bengal Finance (Sales Tax) Act, 1941.
2. Whether the transactions involving the supply of refreshments and drinks to the members of the club constitute sales subject to sales tax.
3. Whether the sales of old assets of the club are subject to sales tax.
4. The procedural propriety of the remand order by the Assistant Commissioner of Commercial Taxes and its affirmation by the West Bengal Commercial Taxes Tribunal.

Detailed Analysis:

Issue 1: Whether the RCTC is carrying on business and qualifies as a "dealer" under section 2(c) of the Bengal Finance (Sales Tax) Act, 1941.
The court examined whether the RCTC's activities constituted "business" within the meaning of section 2(c) of the Bengal Finance (Sales Tax) Act, 1941. The petitioners argued that the RCTC did not engage in the business of selling goods and thus should not be classified as a "dealer." They cited the case of Chief Commercial Superintendent v. Member, Board of Revenue, where incidental or ancillary transactions were not considered within the ambit of "dealer" if the primary function was not selling goods. However, the Tribunal and appellate authority concluded that the RCTC's activities, including the sale of refreshments and old assets, were carried out regularly and systematically, thereby qualifying it as a "dealer." The court upheld this finding, noting that the activities were not merely incidental but part of regular business operations.

Issue 2: Whether the transactions involving the supply of refreshments and drinks to the members of the club constitute sales subject to sales tax.
The petitioners contended that the supply of refreshments to members was not a sale but a release of rights in the consumed items. However, the Assistant Commissioner and the Tribunal held that these transactions were sales exigible to tax, except for supplies made to club members (qua members). The court agreed with this assessment, emphasizing that supplies to stand members and non-members were taxable sales.

Issue 3: Whether the sales of old assets of the club are subject to sales tax.
The petitioners argued that sales of old assets were casual and not made with a profit motive, thus not subject to sales tax. The Assistant Commissioner and the Tribunal disagreed, stating that such sales, though not on a commercial scale, were incidental and ancillary to the club's activities, making them taxable. The court upheld this view, noting that the regular and systematic nature of these transactions warranted their inclusion under taxable sales.

Issue 4: The procedural propriety of the remand order by the Assistant Commissioner of Commercial Taxes and its affirmation by the West Bengal Commercial Taxes Tribunal.
The Assistant Commissioner had remanded the matter back to the Commercial Tax Officer for further assessment, specifically to exclude supplies to club members from taxable sales. The petitioners challenged this remand order. The court found the remand appropriate, as it allowed for a detailed examination of the extent of taxable sales. The court dismissed the writ petition, stating that no final assessment had been made, and thus no prejudice had been caused to the petitioners. The court also noted that the petitioners had alternative remedies available under section 21 of the Bengal Finance (Sales Tax) Act, 1941, for determining whether they were "dealers."

Conclusion:
The court dismissed the writ petition, upholding the findings of the Assistant Commissioner and the Tribunal that the RCTC is a "dealer" under the Bengal Finance (Sales Tax) Act, 1941. The court also affirmed that the supply of refreshments and the sale of old assets were taxable transactions. The remand order was deemed procedurally proper, and the petitioners were advised to seek alternative remedies. The Commercial Tax Officer was directed to expedite the reassessment process.