1990 (2) TMI 282 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Competence and maintainability of the writ application based on the notices.
2. Whether the applicant could be termed as a dealer within the meaning of section 2(b) of the West Bengal Sales Tax Act, 1954.

Issue-wise Detailed Analysis:

1. Competence and Maintainability of the Writ Application:

The preliminary objection raised by the respondents argued that the application was premature since the applicant had not exhausted the remedial measures provided by the sales tax laws. The respondents contended that the notices issued were merely show cause notices and that the applicant should have approached the appropriate authority to contest the assessment.

In opposition, it was argued that the sales tax laws did not provide for any remedial measure concerning the notice itself. The applicant contended that the notice was not merely tentative but indicated that the authorities had already formed an opinion regarding the liability for assessment. The court found that the notice was not just a show cause notice but indicated a pre-formed opinion on the applicant's liability, making it necessary to challenge the notice via a writ application. The court distinguished this case from others cited by the respondents, noting that there was no statutory remedy available against the notice itself, and thus, the writ application was maintainable.

2. Whether the Applicant Could Be Termed as a Dealer:

The applicant argued that it did not fall within the definition of a "dealer" under section 2(b) of the 1954 Act. The applicant contended that it never carried on the business of buying or selling goods, and the sale of ships was incidental to its primary business of navigation and merchant shipping. The applicant further argued that the amendment to the definition of "dealer" in 1987 could not be applied retrospectively to include sales made prior to the amendment.

The respondents countered that the applicant, by selling worn-out ships, fell within the definition of a "dealer" even before the 1987 amendment. They argued that the applicant brought condemned ships into West Bengal for sale, making it liable under the Act.

The court examined the definition of "dealer" and noted that the applicant, being a company, fell within the category of "any person" as defined under the Bengal General Clauses Act. However, the court found that the ships were brought to West Bengal primarily for carrying cargo, and their sale was necessitated by intervening circumstances such as unseaworthiness. Therefore, the court concluded that the ships were not brought into West Bengal "for the purpose of sale," and the applicant could not be deemed a dealer under the second limb of the definition.

The court also rejected the applicant's argument that the buyer should be deemed to have brought the ships into West Bengal under the explanation to section 2(b). The court clarified that the explanation contemplated a situation where the consignor and consignee are the same, and the ultimate purchaser could not be deemed to have brought the commodity into the state.

Conclusion:
The court overruled the preliminary objection regarding the maintainability of the writ application and concluded that the applicant could not be termed a dealer under section 2(b) of the 1954 Act for the sales in question. Consequently, the notices issued were quashed. The court, however, noted that if any ship was imported into West Bengal for the purpose of sale, it could be considered a sale by a dealer within the meaning of section 2(b). The case was disposed of with no order for costs.