1996 (11) TMI 432 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Definition of "dealer" under the Himachal Pradesh General Sales Tax Act, 1968.
2. Applicability of sales tax to the Himachal Pradesh Road Transport Corporation's disposal of unserviceable articles.
3. Retrospective application of the amended definition of "dealer."

Issue-wise Detailed Analysis:

1. Definition of "dealer" under the Himachal Pradesh General Sales Tax Act, 1968:

The primary issue was whether the Himachal Pradesh Road Transport Corporation (HPRTC) could be considered a "dealer" under section 2(c) of the Himachal Pradesh General Sales Tax Act, 1968. The Court examined the definition of "business" under section 2(aa), which includes any trade, commerce, manufacture, or any adventure or concern in the nature of trade, commerce, or manufacture, regardless of profit motive. The Court referred to several precedents, including the Supreme Court's rulings in *State of Tamil Nadu v. Burmah Shell Oil Storage and Distributing Co. of India Ltd.*, *District Controller of Stores, Northern Railway, Jodhpur v. Assistant Commercial Taxation Officer*, and *Board of Revenue v. A.M. Ansari*. These cases established that activities incidental or ancillary to the main business, even without a profit motive, could constitute "business" under the Act.

2. Applicability of sales tax to the Himachal Pradesh Road Transport Corporation's disposal of unserviceable articles:

The Court noted that the HPRTC sold old vehicles and spare parts, which were unserviceable for public use but could be used by others after repair. The Supreme Court's decision in *District Controller of Stores, Northern Railway, Jodhpur v. Assistant Commercial Taxation Officer* was particularly relevant. The Court held that the sale of unserviceable materials and scrap by the Northern Railway was exigible to sales tax as it was incidental to the railway's business of transportation. Applying this principle, the Court concluded that the HPRTC's disposal of unserviceable articles was incidental to its main business of providing transport facilities and thus fell within the definition of "dealer" under the Act.

3. Retrospective application of the amended definition of "dealer":

The HPRTC contended that the amendment to the definition of "dealer," introduced by Act 7 of 1977, should not apply retrospectively to create a tax liability. The Court rejected this argument, noting that the amended Act explicitly stated that it shall always be deemed to have been part of the parent Act. The Court emphasized that there was no challenge to the Legislature's jurisdiction to enact fiscal laws with retrospective effect. Therefore, the amended definition of "dealer" applied retrospectively, making the HPRTC liable for sales tax on its transactions from the date specified in the amendment.

Conclusion:

The Court answered the reference in the affirmative, holding that the Himachal Pradesh Road Transport Corporation, dealing with the disposal of articles like chassis, tyres, tubes, spare parts, and vehicles, which it considers not useful for public use but can be used for other purposes after some repair, is a "dealer" within the definition of section 2(c) of the Himachal Pradesh General Sales Tax Act, 1968. The Court's analysis was grounded in established legal principles and precedents, ensuring a comprehensive and reasoned judgment.