1961 (10) TMI 46 - SC - VAT and Sales Tax

Whether the petitioner is a dealer within the meaning of section 2(c) of the Bombay Sales Tax Act? Whether sub-section (5) of section 11 or section 11 A of the Act was the proper provision to be applied in this case? Held that - Appeal dismissed. The appellant had obtained exemption from sales tax in the State of Madhya Pradesh expressly on the ground that the sales were made directly at Bombay. In these circumstances, in our opinion, it has been rightly held that the appellant company is a dealer within the meaning of section 2(c) of the Act because it carried on the business of selling or supplying goods in the State of Bombay.

Summary

Issues: Sales tax assessments, definition of "dealer" under the Bombay Sales Tax Act, proper provision to be applied in the case.

Sales Tax Assessments: The case involved sales tax assessments against an assessee, a private limited company incorporated under the Indian Companies Act, for transactions where goods were delivered by clearing agents to parties in Bombay. The company was penalized for not registering itself in Bombay. The appeals against the assessments were taken to various authorities, including the Sales Tax Tribunal and the High Court, which raised questions of law regarding the company's status as a dealer and the applicable provisions under the Bombay Sales Tax Act.

Definition of "Dealer" under the Bombay Sales Tax Act: The appellant contended that it was engaged in importing and selling bicycles in Nagpur, with a clearing agent in Bombay handling deliveries to customers in Bombay or dispatching goods outside the state. The Sales Tax Tribunal rejected the appellant's argument that it did not qualify as a dealer since the sales contracts were initiated in Nagpur, not Bombay. The High Court upheld the Tribunal's finding, considering the appellant a dealer under section 2(c) of the Act due to its business activities in Bombay, including a registered office and a clearing warehouse.

Proper Provision to be Applied: The Sales Tax Tribunal and the High Court focused on whether the appellant's activities constituted carrying on business within the State of Bombay, as required under the Bombay Sales Tax Act. The appellant's reliance on legal precedents regarding the definition of "carrying on business" was dismissed by the Court, emphasizing the company's physical presence and operations in Bombay, including the approval of transactions by its director visiting the city. The Court affirmed that the appellant was rightly classified as a dealer under the Act and upheld the sales tax assessments against the company.

Conclusion: The Supreme Court dismissed the appeals with costs, affirming the lower authorities' decisions regarding the sales tax assessments against the appellant company. The Court found that the appellant's business activities in Bombay qualified it as a dealer under the Bombay Sales Tax Act, leading to the imposition of sales tax liabilities for transactions conducted in the state.