http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 3  

PETITIONER: STATE OF PUNJAB & ANR.

       Vs.

RESPONDENT: M/S.  BAJAJ ELECTRICALS LTD.

DATE OF JUDGMENT: 05/12/1967

BENCH: SHAH, J.C. BENCH: SHAH, J.C. RAMASWAMI, V. BHARGAVA, VISHISHTHA

CITATION:  1968 AIR  739            1968 SCR  (2) 636

ACT: Punjab Professions, Trades, Callings and Employment Taxation Act,  (Punj. 7 of 1956), s. 7-Supplying goods  within  State against  orders outside State--Supplier has no shop,  branch or agent within State-Liability to tax-"Trade", Meaning of.

HEADNOTE: The  respondent  a Joint Stock Company, having  no  shop  or office  or agent within the State of Punjab, used to  supply goods  within  the  State pursuant to  orders  received  and accepted  at New Delhi, and also used to receive  the  price for  the goods within the State.  The  Assessing  Authority, Kamal,  assessed the respondent to profession tax under  the Punjab   Professions,  Trades,  Callings   and   Employments Taxation  Act,  1956.   The order was quashed  by  the  High Court. In appeal to this Court, HELD  : The activities of the respondent in the  State  were mere ancillary activities and did not amount to carrying  on trade within the State. [538 C-D] The  expression "trade" is not defined in the Act.   "Trade" in its primary meaning is the exchanging of goods for  goods or goods for money; in its secondary meaning it is  repeated activity in the nature of business carried oh with a  profit motive,   the  activity  being  manual  or  mercantile,   as distinguished  from the liberal arts or learned  professions or agriculture.  The question whether trade is carried on by a person at a given place, though one of mixed law and fact, must  in each case be determined on a consideration  of  the nature of the trade, the various steps taken for carrying on the trade and other relevant facts. [537 H-538 E] Grainger  and Son v. Gough (Surveyor of Taxes) 3  T.C.  464, F.L. Smith & Co. v. F. Greenwood (Survevor of Taxes), 8 T.C. 193  and Firestone Tyre Co. Ltd. v. Lewellin, 37  T.C.  111. distinguished.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 287 of 1967.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 3  

Appeal from the judgment and order dated May 29, 1964 of the Punjab High Court in Civil Writ No. 1609 of 1961. Harbans Singh and R. N. Sachthey, for the appellants. The  Judgment  of the Court was delivered by  Shah,  J.  The respondents  Joint Stock Company-has its principal place  of business  in Bombay, and a branch office in New Delhi.   The Assessing  Authority,  Karnal, exercising  power  under  the Punjab   Professions,  Trades,  Callings   and   Employments Taxation  Act  7  of  1956,  assessed  the  respondent   to, profession tax 537 for  the  years 1960-61 and 1961-62 and issued a  notice  of demand for the amount so assessed.  The High Court of Punjab quashed  the  notices of demand and  the  assessment  orders holding  that the respondent did not carry on  trade  within the State of Punjab and was not liable to be assessed to tax under  the  Act.  The State of Punjab has appealed  to  this Court against the order of the High Court. Section 3 of Act 7 of 1956 provides "Every person who carries on trade, either by himself or  by an  agent or representative, or who follows a profession  or calling  or who is in employment, either wholly or in  part, within the State of Punjab, shall be liable to pay for  each financial  year or a part thereof a tax in respect  of  such profession, trade, calling or employment. Provided ........... The respondent, it is common ground, has no branch office or any other place of business in the State of Punjab.  It  has also  not appointed any agent or representative to carry  on business  on  its behalf within the State.   The  respondent supplies  goods  to  the Government of  Punjab  and  certain "semi-Government bodies" in the State in execution of orders received  at  its  branch office at Delhi.   The  goods  are despatched from Delhi by rail or by public motor  transport. Pursuant to the terms and conditions of the "Rate  Contract" between the respondent and the Controller of Stores for  the State  of Punjab, the respondent consigns the goods sold  by it  to  the appropriate Government  Department  F.O.R.  des- tination.  Inspection of the goods is made within the  State of  Punjab.   The price for the goods sold is  collected  by presenting  bills or railway receipts through Banks  to  the consignees. The  Assessing Authority held that the respondent "may  rea- sonably  be regarded as selling goods within" the  State  of Punjab  because it was supplying goods  F.O.R.  destination. The High Court held that the respondent could not in law  be regarded  as  carrying, on trade at the place at  which  the goods  were  supplied, merely because the railway  or  other receipts  were taken out in the name of the  respondent  and presented to the purchasers duly endorsed in their favour to secure realization of the price of the goods. Liability to pay tax under Act 7 of 1956 arises if a  person carries  on  trade  by himself, or  through  his  agent,  or follows  a profession or is in employment within the  State, and not otherwise.  The expression "trade" is not defined in the  Act.  "Trade" in its primary meaning is the  exchanging of  goods  for goods or goods for money;  in  its  secondary meaning it is repeated activity in the 538 nature  of  business carried on with a  profit  motive,  the activity  being manual or mercantile, as distinguished  from the liberal arts or learned professions or agriculture.  The question whether trade is carried on by a person at a  given place  must  be  determined on a consideration  of  all  the circumstances.   No  test or set of tests which  is  or  are

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 3  

decisive  for  all  cases can  be  evolved  for  determining whether  a person carries on trade at a  particular,  place. The question, though one of mixed law and fact, must in each case  be determined on a consideration of the nature of  the trade, the various steps taken for carrying on the trade and other relevant facts. In  the present case, the respondent has no shop  or  office within  the State of Punjab.  The respondent supplies  goods within the State pursuant to orders received and accepted at New Delhi, and also receives price for the goods within  the State.  But these are ancillary activities and do not in our judgment  amount  to carrying on trade within the  State  of Punjab.   We  need  not refer in detail  to  cases  such  as Grainger  and  Son v. Gough (Surveyor of Taxes) (1);  F.  L. Smith  &  Co. v. F. Greenwood (Surveyor  of  Taxes)(2);  and Firestone Tyre Co. Ltd v. Lewellin, (3) which interpret -the expression  "trade exercised within the United  Kingdom"  in the  English Income Tax Acts, for they merely lay down  that for the purpose of the Income Tax Acts, there is no  single, decisive  or  "crucial" test to determine whether  the  tax- payer exercises trade at a given place. The  appeal fails and is dismissed.  The respondent has  not appeared at the hearing.  There will, therefore, be no order as to ,costs. Y.P.                                                  Appeal dismissed (1)  3 T.C. 464. (2)  8 T.C. 193. (3)  37 T.C. 111. 539