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TMI Blog1974 (10) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... ron and Steel Controller of the Government of India to various industries, development projects and artisans. There were also some sales of surplus war materials and leaflets by the Iron and Steel Controller. On the information that the Iron and Steel Controller was liable to pay tax under the Bengal Finance (Sales Tax) Act, 1941, in respect of the period commencing from 1st January, 1953, and ending with 31st December, 1958, but had failed to get himself registered under the said Act, the Commercial Tax Officer, Lyons Range Charge, issued a notice under section 11(2) and section 14(1) of the aforesaid Act to the said Iron and Steel Controller on 8th April, 1959. The said Commercial Tax Officer, Lyons Range Charge, while assessing the dealer for the aforesaid periods gave a hearing to the dealer's authorised representative and ultimately assessed the Iron and Steel Controller as a dealer as per statement of accounts produced by the dealer by his order dated 12th November, 1959, after having overruled the objection that the Iron and Steel Controller was not carrying on the business of selling goods within the meaning of section 2(c) of the Act and, as such, was not liable to pay any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Similarly, it was stated that the sales of forms, price lists, etc., were made for the benefit of the dealers in iron and steel and other interested persons and no profit was made through such sales. The counsel argued that the provision of the Bengal Finance (Sales Tax) Act, 1941, did not envisage that anybody making sales of goods should be treated as a dealer for the purpose of the Act. But, according to the definition of "dealer", the person selling the goods must be engaged in the business of selling goods and this should necessarily include a motive for making profit in the transactions. It was urged that unless it could be proved that while securing the goods sold and disposing of them the Iron and Steel Controller had the intention of making a profit, he could not be held to be a dealer for the purpose of the Act. These contentions were rejected. We are concerned, it appears, therefore, with three types of goods, namely, the goods sold which were under the T.C.A. agreement, secondly, surplus war materials and, thirdly, leaflets and price lists sold by the Iron and Steel Controller. So far as the goods under the T.C.A. agreement were concerned, the Iron and Steel Controller ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t refer for the purpose of this reference. The programme also dealt with the administration of the project. It was contemplated that the iron and steel would be distributed through commercial channels or the agency of the State Governments, either departmentally or through co-operative societies, according to the practice then prevalent in the various States or otherwise, as might be deemed to be the most effective method by the Government of India. The distribution of iron and steel materials, it was contemplated, should be under the general supervision of the Ministry of Food and Agriculture. It was then stated that the Iron and Steel Controller would arrange for the necessary allocation so as to assure that the quantity of approximately the same types of iron and steel imported under the project could readily reach the village blacksmiths and the farm machinery and the implement factories for the purposes intended by the agreement. The director and the representative might make additional provisions. Pursuant to this Aid Programme it appears that the Iron and Steel Controller was the authority chosen by the Government of India for implementation and distribution of these materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in goods for cash or deferred payment or other valuable consideration, including a transfer of property in goods involved in the execution of a contract, but does not include a mortgage, hypothecation, charge or pledge. Section 2(1a) was added by an Amendment Act, being the West Bengal Taxation Laws (Amendment) Act, 1969 (Act 25 of 1969), whereunder section 2(1a) was included and it is in the following terms "'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 with the motive to make profit and whether or not any profit accrues from such trade, commerce, manufacture, adventure or concern; and (ii) any transaction in connection with, or ancillary or incidental to, such trade, commerce, manufacture, adventure or concern." We have mentioned before that the said amendment came into effect in 1969 and was introduced with effect from 9th January, 1968, by an Ordinance prior to the Act. The amending Act was clearly retrospective in the sense that the clause introducing the amendment states that it should be and should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that the Director was not a dealer within the meaning of section 2(c). The Supreme Court also held that the expression "business", though extensively used in taxing statutes, was a word of indefinite import. In taxing statutes it was used in the sense of an occupation, or profession which occupied the time, attention and labour of a person normally with the object of making profit. To regard an activity as business there must be a course of dealings, either actually continued or contemplated to be continued with a profit-motive; there must be some real and systematic or organised course of activity or conduct with a set purpose of making profit. To infer from a course of transactions that it was intended thereby to carry on business, ordinarily there must exist the characteristics of volume, frequency, continuity and system indicating an intention to continue the activity of carrying on the transactions for a profit. But no single test or group of tests was decisive, according to the Supreme Court, of the intention to carry on a business. It must be decided in the circumstances of each particular case whether an inference could be raised that the assessee was carrying on the bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and it was held that even after the amendment of section 2 of the Bengal Finance (Sales Tax) Act, 1941, by the West Bengal Taxation Laws (Amendment) Act, 1969, business, trade, commerce, manufacture or adventure or concern must be understood in a commercial sense, carrying a commercial meaning and the dealer according to section 2(c) of that Act must be a person who carried on "business" of selling goods. The whole context was that of a business in the commercial sense. All that the amendment had succeeded in doing and what it intended to do was that once there was a business, then, whether it had profit-motive or not or whether it actually made profit or not became immaterial. There the assessee-company, a registered dealer under the Bengal Finance (Sales Tax) Act, 1941, who was carrying on the business of manufacturing and selling jute, ran a canteen for the benefit of its workers. The assessee's articles and memorandum of association did not authorise it to run a canteen, but it had been obliged to do so under section 46 of the Factories Act, 1948. On the question whether the proceeds of sale through the canteen formed any part of the assessee's turnover, a reference was made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only to pose the problem but not to express any opinion on that. We have decided to answer the reference on either view of the matter. The essence of the question is whether the Iron and Steel Controller was carrying on the business of selling goods in respect of the three types of transactions with which we are concerned. If we take the amending Act to be in operation, then it has to be accepted that whether in respect of those transactions profit accrued or not and whether there was profit-motive or not is immaterial. It has, however, to be borne in mind that unlike most of the decisions, which have been referred, the Iron and Steel Controller was not at all a dealer or was not a person who was carrying on any business at all. It is not like Fort Gloster Industries Ltd.[1970] 26 S.T.C. 141. or Burmah Shell Distributing Co. Ltd.[1973] 31 S.T.C. 426 (S.C.). , which were carrying on the business of selling goods of one kind and diversified their activities for certain welfare purposes or to dispose of their surplus materials carried on the operation of sale. It is a case of a statutory authority discharging its obligation pursuant to the direction of the Government in pursuance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to ensure that purpose it was the machinery for implementation. It was not to carry on any occupation as such that the Iron and Steel Controller indulged in these sales. In this view of the matter, we are of the opinion that the Iron and Steel Controller was not carrying on the business as a dealer even under the amended definition in respect of the goods sold under the T.C.A. agreement. In this connection we may refer to a decision of this court in the case of Chief Commercial Superintendent, South Eastern Railway v. Member, Board of Revenue, West Bengal[1973] 32 S.T.C. 171. , where it was held that if no trade, commerce or manufacture or adventure or concern in the nature of trade, commerce or manufacture was carried on in respect of selling goods, then any transaction which was incidental or ancillary to such trade, commerce or manufacture or concern cannot come within the ambit of the definition of "dealer" in section 2(c) of the Bengal Finance (Sales Tax) Act, 1941, as amended by the West Bengal Taxation Laws (Amendment) Act, 1969. When a person carried on composite operations, the true character of the essential operation had to be found out. If the essential operation was t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... methods to the dealer of iron and steel materials in accordance with the Control Order. In order to discharge again the statutory function, the Iron and Steel Controller had to carry on this operation, not with the object of carrying on the business of selling goods but with the object of making known the purpose, so that the Order might be fully implemented. In the premises, none of these three types of operations of sale, in our opinion, can be considered to come within the mischief of the amended definition. If we proceed on the unamended definition, then, in the facts and circumstances of this case, and where there was no profit-motive in any of these operations and on the principles of Director of Supplies and Disposals, Calcutta v. Member, Board of Revenue[1967] 20 S.T.C. 398 (S.C.). and Indian Iron and Steel Co. Ltd. v. Member, Board of Revenue[1971] 27 S.T.C. 373., the Iron and Steel Controller cannot be considered to be a dealer. Before we conclude we must observe that the counsel for the Government tried to point out, with reference to certain contentions raised before the revenue authorities below, that it was not contended below that the Iron and Steel Controller w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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