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TMI Blog1964 (11) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... Later the Supply and Disposal wings of the Government of India were merged and was redesignated as the Directorate of Supplies and Disposals. The functions of this Directorate were: (a) to dispose of surplus goods; (b) to purchase goods on behalf of the Government of India, various State Governments and approved autonomous bodies. The Director of Disposals (United States Transfer Directorate) refused to get registered under the Bengal Finance (Sales Tax) Act, 1941, on the ground that he was not a dealer. On 9th November, 1955, the Commercial Tax Officer, Esplanade Charge of the Directorate of Commercial Taxes, Government of West Bengal, issued a notice under sections 11(2) and 14(1) of the said Act to the Director directing him to produce the books of account and other documents for the purpose of assessment of the tax payable under the Act in respect of the period from 1st April, 1949, to 30th May, 1949. After hearing the representative of the Directorate, the Commercial Tax Officer made an assessment on 23rd February, 1956. The assessee filed an appeal from the said assessment to the Assistant Commissioner of Commercial Taxes. The point urged was that the Directorate of the Gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be how many such sale transactions took place and during how long a period. Another point of importance would be if there was a profit motive behind those sale transactions. In these cases, goods of the value of several lakhs had been sold in a series of transactions. It is not the case of the petitioner that there had been one or two sale transactions only." In my opinion, the Member, Board of Revenue, correctly assessed the position. In order to find whether a person is carrying on a business of selling goods his entire activities must be considered. One must consider the magnitude of the transactions, their frequency and also see whether there was a profit motive behind the operations. The system of sale must also not be left out of account. If a person sets up an organisation with ramifications and branches at various places and centres for disposing of goods these would be elements to be noted in arriving at a conclusion as to whether he was carrying on a business of selling or not. Various cases were cited at the bar where transactions by which the goods were disposed of were held not to constitute a business of selling goods because they were not commercial in nature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rement he sold the balance of the produce during the three periods under assessment. The Court found that he was principally an agriculturist who only sold surplus agricultural produce not required by himself and as such was not a dealer. In State of Bombay v. Ahmedabad Education Society[1956] 7 S.T.C. 497., it was found that the assessee had to put up buildings for residential quarters for the staff of colleges and hostels for students. It gave a contract for the construction of these buildings to Gannon Dunkerly Ltd. Realising that it would be cheaper and more economical to have a brick factory of its own for manufacturing bricks, it set up such a factory as also some lime kilns. It supplied bricks to Gannon Dunkerley Co. Ltd. and disposed of bricks manufactured in excess of their requirements. It did so to a sister educational institution and also to certain individuals without making any profit. It was found by the Bombay High Court that the object of the assessee in setting up the brick factory and the lime kilns was to use bricks for its own use and the disposal of the surplus was not make with an eye to profit and as such it could not be said to be carrying on a business o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if the activity pursued by the assessees of selling cotton waste has a reasonable relation to the normal activity pursued by them, it must be regarded as an allied business activity." In the result, it was held that the assessee should be regarded as dealers in cotton. In Gosri Dairy Vytilla v. The State of Kerala [1961] 12 S.T.C. 683. the assessee was a registered dealer only for its dairy products. It was found that the assessee had been regularly selling its unserviceable cows in such numbers that the annual proceeds thereof ran to the tune of Rs. 11,000 to Rs. 16,000. A Full Bench of the Kerala High Court came to the conclusion that this activity must be regarded as one in the course of the business of the assessee in view of the frequency, regularity and the volume of sales of cattle by it. In Madras Electricity Department Canteen, Madras v. The State of Madras [1962] 13 S.T.C. 288., the assessee's main object was serving the members of the canteen with lunch and tiffin. There was no prohibition in the byelaws governing the canteen of sale of lunch and tiffin to non-members. During the period of assessment the assessee was found to have sold lunch and tiffin to outsiders a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of with the help of a wide-spread organisation it is impossible to take the view that the disposal did not amount to a business of selling goods. It is common knowledge that the goods which were offered for sale were largely advertised in the newspapers and auctions of them used to be held from time to time. Is it possible to urge that there was no motive of making profit behind the sales? The answer is clearly in the negative. All these considerations impel us to hold that the Directorate of Disposals was engaged in a business of disposing of surplus American war material and the Director was a dealer within the meaning of the expression in the Bengal Sales Tax Act. Our attention was drawn to the case of Commissioner of Taxes v. British Australian Wool Realization Association Ltd. [1931] A.C. 224., where the question was whether profits were made by the sale of undisposed surplus wool acquired for the war at the conclusion thereof so as to attract the levy of income-tax. It was contended on behalf of the Revenue that the sale proceeds less expenses was taxable income and was gain made in the operation of business in carrying out a scheme for profit-making. On behalf of the respo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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