9911796707
TMI Blog1973 (5) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... Railways required sleepers. Forests within the State of Orissa are exploited either by contractors or the Government owned corporation (Orissa Forest Corporation). The railway is interested in buying good sleepers in a convenient way. The forest department of the State of Orissa is interested in seeing that its products are marketed. The Government of Orissa and the railway administration entered into an arrangement by which Divisional Forest Officers in the employment of the State of Orissa within their respective jurisdictions were allowed to obtain sleepers from contractors within their respective areas, pay for them on behalf of the railways from out of the advances received and supply the same in turn to the railway administration. The Divisional Forest Officers of Karanjia, Keonjhar, and the District Forest Officer of Balliguda were held to be dealers carrying on business of buying and selling sleepers. Assessments were made under the Orissa Sales Tax Act (hereinafter called the Orissa Act) in respect of the intra-State sales between the contractors on the one side and the respective forest officers on the other, treating the contractors as dealers. Assessments were also ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct are impugned. The Divisional Forest Officer was contended to be the agent of the Indian Railways. The railways and the forest department did not place all their papers in an attitude of co-operation with the taxing department. From time to time disclosures of documents had been made and a reference to them would clearly indicate that a consistent stand has not always been taken. In view of the questions referred to us, it is not necessary to examine the various other aspects of the matter. We think it appropriate to confine our consideration to the question of the Divisional Forest Officer being a "dealer". 6.. The scheme under which the forest department of the Government of Orissa agreed to enter into the arrangement with the railways in the matter of supply of sleepers is available from a letter of the co-operation and forest department bearing number 5830 dated 2nd April, 1963, which has been sumptuously referred to by the Tribunal in its second appellate order and a copy of which is also a part of the record made available to this court. In paragraph 1 of the said letter, it is stated: "The department gets back the cost of sleepers from the railways together with a certai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also taken into account. A review at the end of the year was contemplated to find out that the State of Orissa sustained no loss on that account. It would not be improper to conclude from these undisputed materials that the parties had entered into the adventure with an avowed intention of "no profit and no loss" basis. We cannot lose sight of the fact that the contracting parties were not ordinary tradesmen but were two limbs of Government-one of the Central Government and the other of the State Government. The avowed purpose was to serve the cause of the railways by making good and timely supplies of sleepers. The forest department had an interest in the matter because, marketing of its commodity was facilitated. 8.. There is possibly no scope for doubt that there was a sale. In the case of State of Madras v. Gannon Dunkerley Co. (Madras) Ltd.[1958] 9 S.T.C. 353 at 365 (S.C.)., the Supreme Court said: "Thus, according to the law both of England and of India, in order to constitute a sale it is necessary that there should be an agreement between the parties for the purpose of transferring title to goods, which of course presupposes capacity to contract, that it must be supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions of such transaction at regular intervals and though time may be spent, attention and labour may be devoted, yet, such sales would not amount to "business" in the absence of a profit-motive and if the transactions would not amount to "business", a person carrying on such transactions would not become a "dealer". 9.. The learned standing counsel relied upon a decision of this court in the case of Indal Employees' Co-operative Society Ltd. v. State of Orissa and Two Others[1968] 22 S.T.C. 460., in support of the stand of the taxing department that profit-motive is not an essential ingredient to constitute business. This court in that case stated: "For the petitioner, it was contended that in the Madras Act, the expression 'business' had been defined as meaning any trade, commerce or manufacture whether or not any profit accrued from such trade, etc., but in the absence of such definition in the Orissa Act, the observations of the Supreme Court will not govern the present case. Here also we are unable to agree with the petitioner's contention. It is true that the expression 'business' has not been defined in the Orissa Act, but the question is whether to satisfy the definitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision. We hold that profitmotive is an essential ingredient to constitute a course of dealings to be "business". If the dealings are for sport or pleasure or for any other consideration not being profit-motive, they would not be "business". The Divisional Forest Officers were not carrying on the business of buying and/or selling sleepers to the railway administration. As we have quoted already from the Government letter, the true intention was to carry on the transaction on no profit no gain basis, more for fulfilling an obligation to the Central Government for the better interest of the country. Our conclusion to the first question referred to us, therefore, shall be: On the facts and in the circumstances of the case, it is correct for the Tribunal to hold that the assessee does not become a "dealer" under the Central Sales Tax Act. 10.. The other question is as to what is the effect of issue of 'D' forms. It is well-known that if there is no liability under the Act, merely because a party had acted under an erroneous basis, from his conduct statutory liability for tax cannot be inferred. Once the assessee is not a "dealer", merely because, under an arrangement entered int ..... X X X X Extracts X X X X X X X X Extracts X X X X
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