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TMI Blog2002 (12) TMI 572X X X X Extracts X X X X X X X X Extracts X X X X ..... xports out of the country and contain different incentive schemes and subsidies to build up foreign exchange resources of the country. Prior to July 4, 1991 there was provision for issuance of Replenishment Licences which were referred to as "REP Licences". The objective behind the grant of such licences was to provide to registered exporters the facility of importing essential goods required for the manufacture of the products to be exported. Such licences were made freely transferable and such transfer did not require any endorsement or permission from the licensing authority. The only requirement was a letter from the transferor recording and evidencing the transfer. On that basis, the transferee became the lawful holder of the licence and was entitled to either import the goods for which the licence had been issued or sell the licence to someone else. 3.. This policy remained in force till July 3, 1991, when it was substituted by a new policy. With effect from July 4, 1991, the nomenclature of the REP Licence was changed to "Exim scrip" (Export Import Licence). The provisions governing Exim Scrips were more or less the same as those governing REP licences with certain minor v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of India for the purpose of purchasing the Exim scrips as directed by the Reserve Bank of India. 6.. On the basis of the aforesaid decision and the circular published pursuant thereto, various holders of Exim Scrips sold and/ or surrendered their Exim scrips to the writ petitioner No. 1 and received a premium of 20 per cent of the face value of the scrips in compliance with the direction contained in the letter of the Reserve Bank of India dated March 18, 1992. 7.. In the course of assessment proceedings of the writ petitioner No. 1 under the 1941 Act for the four quarters ending on March 31, 1993, the Commercial Tax Officer, Park Street Charge informed the writ petitioner No. 1 that apart from payment of sales tax on the sale of gold and silver, it would also be liable to pay purchase tax in respect of purchase of Exim scrips from the holders thereof at a premium of 20 per cent of the face value. During the assessment proceedings it was contended on behalf of the writ petitioner No. 1 before the Commercial Tax Officer, Park Street Charge, that the Exim scrips had not actually been purchased by the writ petitioner No. 1 but the same had been surrendered by their holders to the wr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner herein then moved an application before the West Bengal Taxation Tribunal* under section 8 of the West Bengal Taxation Tribunal Act, 1987. On January 27, 1997, while admitting the said application the learned Tribunal passed an interim order directing the respondents not to give effect to the demand notice and the impugned orders of assessment and appeal for recovery of the amount calculated as "purchase tax " unconditionally for a period of two weeks and directed further that if within the said period of two weeks the writ petitioner No. 1 submitted an undertaking in writing that it would pay the demanded amount within a period of six weeks from the date of the final judgment, if the same went against the petitioner, the interim order would continue till the final disposal of the application and in case the petitioners failed to give such undertaking the interim order would stand vacated. 12.. The writ petitioner's application came up for hearing before the learned Tribunal on 20th August, 1997, 21st August, 1997 and 22nd August, 1997. During the hearing it was contended on behalf of the writ petitioners that the writ petitioner No. 1 could not be considered to be a "d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xim scrips. Mr. Ghosh urged that having regard to the definition of the expression "business" in section 2(1a) of the aforesaid Act, it could not also be contended that the Bank was carrying on business as a dealer in respect of such Exim scrips. 17.. In support of his aforesaid contention, Mr. Ghosh referred to the decision of the honourable Supreme Court in (1) State of Gujarat v. Raipur Manufacturing Co. Ltd. reported in [1967] 19 STC 1 and (2) Board of Revenue v. A.M. Ansari, reported in [1976] 38 STC 577. 18.. In the first of the said two cases the honourable Supreme Court while considering the expression "business" in relation to certain provisions of the Bombay Sales Tax Act, 1953, inter alia, observed as follows: "Whether a person carries on business in a particular commodity must depend upon the volume, frequency, continuity and regularity of transactions and purchase or sale in a class of goods and the transactions must ordinarily be entered into with a profit-motive. By the use of expression 'profit-motive' does not intend that profit must in fact, be earned. Nor does the expression cover a mere desire to make some monetary gain out of a transaction or even a series ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estic", which according to Mr. Ghosh indicated that the purpose should be related to the business. Mr. Ghosh repeated his earlier submission that if it is accepted that the Bank was not carrying on business of buying and selling Exim scrips, the purchase of such scrips by the Bank must be treated to be a surrender of such scrips which would not attract the provisions of section 4(6)(iii) of the 1941 Act, since such purchase was not in connection with a purpose related to the business of the Bank. 24.. In support of his aforesaid submissions Mr. Ghosh referred to the decision of the honourable Supreme Court in the case of Govind Saran Ganga Saran v. Commissioner of Sales Tax reported in [1985] 60 STC 1, wherein while considering the provisions of the 1941 Act, it was observed that if the components which entered into the concept of a tax are not clearly and definitely ascertainable, it is difficult to say that the levy exists in point of law, and uncertainty or vagueness in the legislative scheme defining any of such components of the levy will be fatal to its validity. 25.. Reference was also made to a decision of the Bombay High Court in Commissioner of Sales Tax, Maharashtra St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act while disposing of securities for realisation of loans advanced. 29.. Mr. Ghosh urged that whatever may be the nature of the transaction, the writ petitioner Bank had only acted as an agent of the Reserve Bank of India in the transaction relating to Exim scrips and would not therefore, come within the definition of the expression "dealer" as defined in section 2(c) of the 1941 Act. 30.. Mr. Ghosh's next contention was that the transaction involving the acquisition of Exim scrips by the writ petitioner Bank could not be said to be a case of purchase but a case of surrender. Mr. Ghosh referred to Black's Law Dictionary (5th Edition) wherein the expression "surrender" has been, inter alia, defined as follows: "Surrender to give back; yield; render up; restore; and in law, the giving up of an estate to the person who has it in reversion or remainder, so as to merge it in the larger estate." 31.. Mr. Ghosh then referred to Earl Jowitt's Dictionary of English Law and Aiyar's Law Lexicon (1997 Edition), wherein the expression "surrender" has been similarly defined. 32.. Mr. Ghosh also referred to the provisions of section III of the Transfer of Property Act which refers to det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nactments of Tamil Nadu, Karnataka and Kerala. 36.. Mr. Ghosh urged that the learned Tribunal had failed to appreciate the distinction and had erroneously dismissed the petitioner's application challenging the assessment made by the Commercial Tax Officer, Park Street Charge, on June 30, 1995. 37.. Mr. Ghosh submitted that the impugned order being erroneous was liable to be set aside. 38.. Appearing for the Revenue, Mr. S.N. Bose contended that the issues raised by Mr. Ghosh, both before the learned Tribunal as well as in the instant writ application, have been set at rest by the honourable Supreme Court in Vikas Sales Corporation's case [1996] 102 STC 106, referred to by Mr. Ghosh, wherein the view expressed by the Madras High Court in P.S. Apparels case [1994] 94 STC 139 had been affirmed. 39.. Mr. Bose contended that in P.S. Apparels case [1994] 94 STC 139 (Mad.) the very same direction of the Reserve Bank of India for purchase of the Exim scrips from its holders between March 23, 1992 to May 30, 1992, at a premium of 20 per cent of the face value, was under consideration of the Madras High Court. The same question as to whether the said purchase amounted to "surrender" or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, in respect of goods other than gold, rice and wheat intended for a purpose other than those specified in clause (i). Mr. Bose submitted that the learned Tribunal had rightly held that the transaction involving the purchase of Exim scrips by the writ petitioner-Bank amounted to sale which attracted the provisions of section 6(4)(iii) of the 1941 Act and had rightly dismissed the application filed by the writ petitioner under section 8 of the West Bengal Taxation Tribunal Act, 1987. 43.. Mr. Bose urged that it was well-established that a statutory enactment must ordinarily be considered in keeping with the plain and natural meaning thereof, and no word should be added, altered or modified unless it became necessary to do so for the purpose of preventing a provision from becoming unintelligible, absurd, unreasonable, unworkable or totally irreconcilable with the rest of the statute. 44.. In support of his aforesaid submission Mr. Bose firstly referred to and relied on a decision of the honourable Supreme Court in the case of Polestar Electronic (Pvt.) Ltd. v. Additional Commissioner, Sales Tax reported in [1978] 41 STC 409. Certain other decisions on the same lines were al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and sold in the market. Treating the REP Licences/Exim scrips to be goods the honourable Supreme Court negated the contention of the appellants-petitioners that the said licence and Exim scrips were not goods and hence any transaction in respect thereof did not attract the sales tax enactments of Tamil Nadu, Karnataka and Kerala. 50.. As has been pointed out by Mr. Ghosh appearing for the writ petitioner-Bank, the honourable Supreme Court did not have occasion in the aforesaid case to consider the effect of purchase of Exim scrips having been made by the writ petitioner-Bank, not as part of the business regularly carried on by it, but as a chance transaction on the direction of the Reserve Bank of India. The said decision is also distinguishable on the ground that the purpose of such purchase by the writ petitioner-Bank had not been considered. While it is no doubt true that REP licences/Exim scrips constitute "goods" for the purposes of commercial transactions, the purchases effected by the writ petitioner-Bank was not for commercial profit, nor was it the intention of the writ petitioner-Bank to utilise the Exim scrips for the purposes for which it had been issued. 51.. Althou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e original grantor. 54.. The purchases effected by the designated branches of the State Bank of India also supports Mr. Ghosh's submission that such purchases were not effected in the usual course of business of the Bank. Such purchases were an one-time affair, while the concept of business as explained by the honourable Supreme Court in the Raipur Manufacturing Co. Ltd. case [1967] 19 STC 1 and in A.M. Ansari's case [1976] 38 STC 577 referred to by Mr. Ghosh, explained that whether a person carries on business in a particular commodity must depend upon volume, frequency, continuity and regularity of transactions. It was also held that purchase or sale of a class of goods and the transactions must ordinarily be entered into with a profit-motive. Admittedly, the business of the writ petitioner-Bank was mainly confined to purchase and sale of gold and silver and not the buying and selling of Exim scrips. Such transactions were for a brief period from March 23, 1992 to May 31, 1992, and, as such, there was no continuity and/or regularity involved in such transactions so as to bring the same within the concept of business. 55.. Although, it has been strenuously urged on behalf of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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