9911796707
TMI Blog1978 (12) TMI 169X X X X Extracts X X X X X X X X Extracts X X X X ..... mine the question whether they were dealers and, if so, whether they were manufacturers within the meaning of that expression as defined in section 2(17) of the said Act. The Deputy Commissioner of Sales Tax, who heard the said application, held that the respondents were dealers and manufacturers. Thereupon the respondents were registered as dealers under the said Act. The matter ultimately came before us and in Famous Cine Laboratory and Studio Ltd. v. State of Maharashtra[1975] 36 S.T.C. 104., we held that the respondents were not dealers in respect of the purchases of materials made by them for the maintenance of their studio or for making film sets which remained their own property which they hired out. We further held that in purchasing chemicals and other processing materials in order to process the films of their customers the respondents were carrying on the business of buying goods and were, therefore, dealers within the meaning of that expression as defined in section 2(11) of the said Act. The respondents process their customers' movie films on unexposed positive film supplied to them by their customers. For the purpose of processing such films, the respondents demand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one made by the respondents in the course of their business. It is from this judgment of the Tribunal that the question which we have set out earlier has been referred to us. Since both the Deputy Commissioner and the Tribunal have decided the matter on the basis of the said decision of the Supreme Court, we would first turn to this decision before dealing with the arguments advanced at the Bar. State of Gujarat v. Raipur Manufacturing Co. Ltd.[1967] 19 S.T.C. 1 at 56 (S.C.)., referred to earlier, was a case under the Bombay Sales Tax Act, 1953. The definition of "dealer" as given in the said Act is in pari materia with the definition given in the Bombay Sales Tax Act, 1959. In that case, the respondent-company carried on the business of manufacturing and selling cotton textiles. In the accounting year 1953-54, the respondent-company, besides selling cloth, also sold coal and 25 different items of discarded or unserviceable goods and waste products from their factory. These goods fell under three heads: (1) old containers such as cans, boxes, etc., discarded stores, machinery and iron scrap; miscellaneous discarded items such as cotton ropes, chindis (rags), etc., (2) kolsi (that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the course of the business, an inference that he desired to carry on the business of selling his fixed assets or discarded goods would not ordinarily arise." The Supreme Court further observed that the mere sale of a commodity which a dealer was required to do for the purpose of his business and which had been purchased for use in that business would not justify an inference that the business of selling that commodity was intended, unless there were circumstances existing at the time when the commodity was purchased or which had come into existence later which established such an intention. The Supreme Court further held that the burden of proving that the dealer was carrying on the business of selling the commodity in question lay upon the sales tax authorities. During the course of the judgment, the Supreme Court referred to some decisions given by different High Courts with approval. One of them was Commissioner of Sales Tax, Madhya Pradesh, Indore v. Ram Dulare Balkishan and Bros[1963] 14 S.T.C. 202. In that case, the assessees carried on the business of providing transport and operating buses. They sold unserviceable cars, trucks, tyres and other used motor accessories to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of such manufacture. The cotton waste which was not required for use in the factory was disposed of regularly. Cotton waste was regarded by the Bombay High Court as a subsidiary product or incident of the business of the assessee. So far as the sales of waste caustic liquor were concerned, the Supreme Court held that sales of this product could also be regarded as a by-product or a subsidiary product in the course of manufacture and the sale thereof was incidental to the business of the respondent-company. So far as the sales of coal were concerned, the Supreme Court observed that merely because coal of the value exceeding Rs. 16,000 was sold would not by itself make the respondent-company a dealer carrying on business in coal. It further pointed out that there was no evidence on the record of the total quantity of the coal purchased by the respondentcompany nor of the percentage thereof which was sold and that no investigation had been made as to the circumstances in which such coal was sold. The Supreme Court further observed that the sales tax authorities had come to the conclusion that these were sales made in the course of business merely because of the frequency and volume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmal course of the business of the assessees and whether the intention of the assessees was to effect the sale in the course of their business. The High Court pointed out that the circumstances clearly indicated that the assessees had purchased the ship in the course of their usual business activity of purchasing ships, breaking them up and selling separated parts thereof, though, in the case before it, an option was also reserved by the assessees to use the ship for trading purposes and that the circumstances further showed that soon after the purchase of the said ship the assessees found a purchaser who possibly was in need of separated parts of the ship and, therefore, instead of breaking up the ship and selling separated parts the assessees had sold the entire ship to the Costa Rica Company, giving it an option to break it up. The High Court held that in view of these circumstances the activity of the assessees in selling the ship to the Costa Rica Company had a very close connection with and akin to the normal course of business of the assessees and was, therefore, in the course of their business activity and the sale proceeds were, therefore, liable to be included in the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate of Gujarat v. Raipur Manufacturing Co. Ltd.[1967] 19 S.T.C. 1 (S.C.). We are bound by the decision of the Supreme Court. Since a decision of another High Court is a persuasive authority, no doubt entitled to respect, in view of the clear pronouncement of the Supreme Court, we do not find it necessary to discuss this case further or to consider it in any detail or to give any definite finding that it is no longer good law. Mr. Dhanuka next submitted that in the present case there was cogent evidence to show the intention of the assessees. According to Mr. Dhanuka, the Deputy Commissioner of Sales Tax had investigated and ascertained that in the year 1968-69 the assessees had effected four such transactions of sale aggregating to Rs. 21,092.29, in the year 1969-70 they had effected eleven such transactions for an aggregate sum of Rs. 81,148.90 and in the year 1970-71 they had effected five such transactions, including the transaction in question, for an aggregate sum of Rs. 10,261.39. According to Mr. Dhanuka, this showed that sales of this type were constant, frequent and large in number and were clear evidence of the intention of the respondents to carry on the business of s ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
