1988 (7) TMI 400 - HC - VAT and Sales Tax

Summary

Issues Involved:

1. Whether the petitioner can be called a 'dealer' during the relevant assessment years 1973-74 and 1974-75.
2. Assuming the petitioner is a dealer, whether the transactions in question are exempt from tax.

Issue-wise Detailed Analysis:

1. Whether the petitioner can be called a 'dealer' during the relevant assessment years 1973-74 and 1974-75:

The petitioner, Fertilisers Corporation of India (now Rashtriya Chemicals Fertilisers Ltd.), filed returns for the assessment years 1973-74 and 1974-75, disclosing gross turnovers and claiming total exemptions. The assessing authority granted partial exemptions for 1973-74 but none for 1974-75. The appeals were partly allowed but dismissed concerning the main controversy. The Tribunal also dismissed the petitioner's case.

The term "dealer" was defined in clause (b) of section 2 of the Andhra Pradesh General Sales Tax Act as "any person who carries on the business of buying or selling goods, and includes a Government which carries on such business." The petitioner contended that carrying on business implies a "profit-motive," arguing that their distribution of fertilizers under the "seeding programme operations" lacked such a motive. The Tribunal's judgment indicated that the seeding programme involved the Government of India importing fertilizers and allotting them to State Governments, which in turn allotted them to domestic manufacturers like the petitioner for distribution. The petitioner was provided a margin up to 1st August 1974, indicating a profit-motive.

The court held that the petitioner was indeed receiving some profit until 1st August 1974, thus having a profit-motive. Even post-1st August 1974, the petitioner engaged in the activity to develop an infrastructure for future profit, which aligns with a profit-motive. The court emphasized that the motive, not the actual profit, is what matters. The main business of the petitioner was the distribution and sale of fertilizers, and the seeding programme was a part of this business. Therefore, the petitioner was considered to be carrying on business during the relevant assessment years.

2. Assuming the petitioner is a dealer, whether the transactions in question are exempt from tax:

This issue was agreed by counsel for both parties to be concluded against the petitioner by a prior decision of the court in T.R.C. No. 5 of 1985, dated 25th April 1988 (Jadhavjee Laljee v. State of Andhra Pradesh [1989] 74 STC 201). Hence, the court did not delve into this issue further.

Conclusion:

The court concluded that the petitioner was carrying on business with a profit-motive during the relevant assessment years and thus qualified as a "dealer" under the Act. The transactions in question were not exempt from tax based on the precedent set by the court's earlier decision. Consequently, the Tax Revision Case was dismissed, and no costs were awarded. Advocate's fee was set at Rs. 160.