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TMI Blog1972 (4) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with effect from 31st March, 1969. A show cause notice was issued proposing best judgment assessment on the turnover of Rs. 2,07,000. The notice was also served on all the partners of the firm. One of the partners, K. Venkataramaiah, appeared before the assessing authority on 23rd February, 1970. He, however, stated that he had no account books and expressed his inability to produce the same. Y. Narasimha Rao appeared on 2nd March, 1970. It is in his name that the auction was confirmed. He was also not in a position to produce the account books. Another set of notices were also issued to the partners. Since no one took interest, the assessing authority to the best of its judgment reached the conclusion that the assessee-firm had purchased the rights in the forest coupe for Rs. 60,000. They were assessed accordingly and a tax amounting to Rs. 3,600 was directed to be levied. The turnover related to a forest coupe. The writ petitioner is a partner of the firm, Tirumala Timber Depot, Rampachodavaram. The petitioner alleges that Y. Narasimha Rao, who had originally purchased the forest coupe for timber from the forest department, was a partner of the firm, Tirumala Timber Depot. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtment and any transaction of sale which the petitioner after cutting the timber enters into then amounts only to a second sale on which no sales tax can be levied. It is, therefore, argued that the assessment order as against the petitioner was without jurisdiction and, therefore, has to be quashed. In order to appreciate the implications of this contention it is necessary to read a few provisions of the Andhra Pradesh General Sales Tax Act, 1957 (hereinafter referred to as the Act). In section 2(bbb) the term "business" has been defined. It is an inclusive definition and reads: "'business' includes,- (i) any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce, or manufacture whether or not such trade, commerce, manufacture, adventure or concern is carried on or undertaken with a motive to make gain or profit and whether or not any gain or profit accrues therefrom; and (ii) any transaction in connection with, or incidental or ancillary to, such trade, commerce, manufacture, adventure or concern." The term "dealer" is then defined in clause (e) thus: "'dealer' means any person who carries on the business of buying, selling, supplyin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The contention was that since the Government sells its own property, it cannot be said that the Government is carrying on business in selling the timber by auction. In support of this contention reliance was placed on A.M. Ansari v. Board of Revenue[1969] 2 An. W.R. 171. No doubt at page 182 their Lordships posed the following question for consideration: "...Whether the sale of one's own goods can be said to be buying or selling or carrying on trade or commerce." The learned judges, however, did not expressly answer that question. But by necessary implication we think that the question has been answered in the affirmative. We find at page 184 an observation to the effect that sales tax is neither a part of the consideration of auction nor its levy is permissible under the Sales Tax Act. From the trend of the discussion and the abovesaid observation we understand the decision as if the question which earlier was posed for consideration has been answered affirmatively. This decision, however, in our judgment, cannot be considered to be a good law in view of the decision of the Supreme Court in State of Gujarat v. Raipur Manufacturing Co., Ltd.[1967] 19 S.T.C. 1 (S.C.). Their L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he definition, of course, would imply some kind of regularity and continuity in carrying on the trade or commerce. In State of Gujarat v. Raipur Manufacturing Co., Ltd.[1967] 19 S.T.C. 1 (S.C.)., the Supreme Court was concerned with that term, of course, in another context. Their Lordships observed that "whether a person carries on business in a particular commodity must depend upon the volume, frequency, continuity and regularity of transactions of purchase and sale in a class of goods and the transactions must ordinarily be entered into with a profit-motive". Since the definition of "business" excludes the consideration of profit motive, what remains, according to the abovesaid observation of the Supreme Court, is to see the volume, frequency, continuity and regularity of the transactions of sale and purchase. It could not be disputed that in organising auctions the Government periodically but regularly and frequently sells the forest timber. The volume of such transaction is quite considerable. The transaction thus entered into by the Government every year, in our view, amounts to carrying on business within the meaning of the term "business". Our attention, however, was drawn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gujarat v. Raipur Manufacturing Co. Ltd.[1967] 19 S.T.C. 1 (S.C.). , which was not a decision on those lines, was not brought to the notice of the learned Judges in A.M. Ansari v. Board of Revenue[1969] 2 An. W.R. 171. These two aspects clearly support the view we have taken as above. We were then referred to Raja Bhairabendra v. Superintendent of Taxes[1958] 9 S.T.C. 60. The facts have been brought out in the said decision, and we consider it unnecessary to detail them here. At page 65 the following observation appears: "The learned counsel contends that this does not in any sense amount to carrying on the business of 'selling' or 'supplying'. These expressions have been considered in various decisions, in all of which it has been laid down that the words 'carrying on business' connote a continuous trade or occupation involving time and labour as also some investments, which may be regarded as an independent trade or occupation by itself capable of being sold or transferred as such. Here, the trees which were sold had grown spontaneously upon the land of the petitioner and they were sold, not as an independent business, but as part of the rights which he had in the zamindari o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. The definition of "dealer", on the other hand, refutes any such submission, because it expressly includes Government provided of course it carries on business as referred to in the said definition. It was also contended before us by the learned Government Pleader that since the tax cannot be levied from the Government whatever sales are held by the petitioner subsequent to his purchase of the forest timber in favour of third parties would constitute first sale within the meaning of entries 63 and 64 of the First Schedule. We are not inclined to accept this argument. In our judgment, the transactions entered into by the Government with the petitioner constitute the first sale and the transactions which are entered into by the petitioner in favour of third parties after he cut the timber, obviously constitute the second sale. Since sales tax is leviable on the first sale, no tax can be levied on the second sale. No authority was brought to our notice and we are not aware of anywhere it is laid down that if the first sale cannot be taxed as the Government is a party, it is the second sale which must be treated as the first sale and taxed. This approach is also not correct because w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have taken although this decision neither considers the definition of "dealer" nor the definition of "business". In any case we do not think that this decision is contrary to the decision in A.M. Ansari v. Board of Revenue[1969] 2 An. W.R. 171. The later decision, as noticed earlier, can be said to be an authority only for the proposition that when the Government sells its own forest produce, it cannot be said to be carrying on business in that commodity, whereas the unreported decision, first referred to, can be said to be an authority for the proposition that sales tax having been paid to the Government and as it is taxable at one point only, no sales tax can be levied from the petitioner for selling the firewood to others. It is, however, plain that this unreported decision although in conclusion supports the view which we have taken does not deal with the definitions of "dealer" and "business" to which we have made elaborate reference. Since no other contention was raised we would allow the writ petition and quash the impugned assessment order by the issue of a writ of certiorari. The demand notice issued in pursuance of the said assessment order would automatically be quash ..... X X X X Extracts X X X X X X X X Extracts X X X X
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