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TMI Blog2013 (10) TMI 1166X X X X Extracts X X X X X X X X Extracts X X X X ..... ra) has practically settled the issue. We also hold that other Non-Banking Financing Companies were/are dealers within the ambit of Clause (d) of Section - 2(11) as according to them, those were arranging sales of hypothecated vehicles on the strength and authority derived from the hypothecation agreements and the irrevocable power of attorneys executed by the borrowers. If these Non-banking Finance Companies were exercising hypothecatees' contractual right to sell pledged goods for realization of unpaid loan these Companies came within the scope of the main part of the definition of 'dealer'." Mr. Khaitan, learned Senior Advocate appearing in support of all the writ petitions, made extensive arguments assailing the judgment of the learned Tribunal. He also submitted a written notes of argument. We deem it proper to set out the written arguments, in our judgement, in its entirety, which is as follows:- "BRIEF FACTS 1. The petitioner in WPTT No.24 of 2010 is a banking company and the petitioner in WPTT NO.6 of 2011 is non-banking finance company ("NBFC"). The petitioners grant loans to persons intending to purchase vehicles against hypothecation of the vehicles by way of securit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of expansion under the sub-clauses appearing after the expression "and includes". If non-owners were covered by the opening part, there was no reason to expand the definition. 7. The Tribunal fell into error in holding that the petitioners were covered by the opening part of the definition if the vehicle was caused to be sold by the petitioner NBFC in exercise of the hypothecatee's contractual right to sell pledged goods for realization of unpaid loan and by the petitioner bank in exercise of statutory right in course of banking business. The petitioners not being the owners of the vehicles, the opening part of the definition cannot cover them. EXPANDED DEFINITION IN SUB-CLAUSE (b) HAS NO APPLICATION 8. Sub-clause (b) ropes in specified bodies/organizations which sell, supply or distribute goods but not in the course of business. Sale of goods by such bodies/organizations in the course of business would be covered by the opening part of the definition. 9. The general phrase "other body corporate" in sub-clause (b) occurs after the words "Government", "local authority", "statutory body" and "trust". On the principle of ejusdem generis, the said general phrase includes only an e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns is that of granting loans. The borrowers are not principals of the petitioner. It is not the business of the petitioner to sell goods belonging to the borrowers. The incident of sale of the vehicle arises only in the event of default by the borrower. Sale in case of default is caused by the petitioner NBFC not for any commission or remuneration but for recovery of the amount due to it. In the petitioner NBFC's first year of business there was no sale of any vehicle on account of borrower's default. In the next year the disposal proceeds constituted only 0.21% of the total loan disbursements. Such incidental activity is not evidenced by any volume, frequency, continuity or regularity so as to constitute business of selling of goods within the meaning of sub-clause (d). The context of sub-clause (d) does not permit the application of the definition of "business" in section 2(5) (Please see Whirlpool Corporation -v- Registrar of Trade Marks, (1998) 8 SCC 1 - paras 28 and 30 - page 34 at 45 of compiltion and Printers (Mysore) Ltd. -v- Assistant Commercial Tax Officer, (19940 2 SCC 434 - para 18 - page 60 at 70 of compilation). 16. The customary authority adverted to in subclause (d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning and scope of the definition of the term 'dealer' provided in Sub-section 11 of Section 2 of the West Bengal Value Added Tax Act, 2003 (hereinafter referred to as the said Act) which reads as follows:- " 'dealer' means any person who carries on the business of selling or purchasing goods in West Bengal or any person making sales under section 14, and includes - (a) an occupier of a jute-mill or shipper of jute, (b) Government, a local authority, a statutory body, a trust or other body corporate which, or a liquidator or receiver appointed by a court in respect of a person, being a dealer as defined in this clause, who, whether or not in the course of business, sells, supplies or distributes directly or otherwise goods for cash or for deferred payment or for commission, remuneration or other valuable consideration, (c) A society including a co-operative society, club or any association which sells goods to its members or others for cash, or for deferred payment, or for commission, or for remuneration, or for other valuable consideration, (d) A factor, a broker, a commission agent, a del credere agent, an auctioneer, an agent for handling or transporting of goods or handling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined in paragraph 9 of the notes that the government or a local authority or a statutory body or a trust do not normally carry on business. Article 289 of the Constitution of India contemplates both trading and business activities by the government. The local authority or a statutory body or a trust cannot as such be under any disability from carrying on business. We are unable to agree with Mr. Khaitan that the banking or nonbanking financial companies were not sought to be roped in by Clause - (b) of Sub-section 11 of the aforesaid Act. The submissions contained in paragraph 10 of the written notes of argument are equally fallacious, according to us. We already have indicated above that, in our opinion, the act does not make any distinction between a seller of its own goods or a seller of goods belonging to someone else. Mr. Khaitan cannot be expected to seriously argue that the vehicles are sold either by the bank or by the non-banking financing company otherwise than for valuable consideration. It may be true that the banking or non-banking financial corporations do not charge any commission or remuneration for sale of the hypothecated goods though we have no evidence in that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the borrower when he exercises his right to sell the vehicle. The word 'mercantile agent' has been used in Clause - (d) in an ordinary sense of the term. The word 'mercantile' according to Oxford Dictionary means 'relating to trade or commerce'. Therefore, the word 'mercantile agent' cannot but be construed to mean an agent relating to trade or commerce. We do not think, it can seriously be contended that the lenders in this case obtained the Power of Attorney for the purpose of an agency not related to trade or commerce. The word 'mercantile agent' has been succeeded in Clause - (d) by the expression 'by whatever name called'. The hypothecatees indisputably have a greater right to sell the vehicle than the right of a mere agent. But the fact that the lender in this case is also an agent cannot be denied considering the facts and circumstances of the case and the submission contained in paragraph 11 that "the sales of the vehicles were arranged on the strength and authority derived from the hypothecation agreement and the irrevocable Power of Attorney executed by the borrower". We are, as such of the opinion that the laborious submissions to contend that the petitioners are not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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