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PETITIONER: STATE OF ORISSA

       Vs.

RESPONDENT: M/S. ORISSA ROAD TRANSPORT CO. LTD., CHIEF ACCOUNTS OFFICER,

DATE OF JUDGMENT:       28/08/1997

BENCH: S. C. SEN, B. N. KIRPAL, K. T. THOMAS

ACT:

HEADNOTE:

JUDGMENT:                 THE 28TH DAY OF AUGUST, 1997 Present:                 Hon’ble Mr. Justice S.C. Sen                 Hon’ble Mr. Justice B.N. Kirpal                 Hon’ble Mr. Justice K.T. Thomas (Raj Kumar  Mehta,) Adv.  for  G.S.  Chatterjee,  Raj  Kumar Mehta,  P.N.   Misra,  Mrs.  Kirti  Mishra,  Advs.  for  the appearing Parties.                       J U D G M E N T The following Judgment of the Court was delivered:                           W I T H              CIVIL APPEAL NOS. 6579-80 of 1995                             AND                 Civil Appeal No.6582 of 1995 KIRPAL, J.      In these  appeals by  special  leave  what  arises  for consideration is  whether the  respondent is  liable to  pay sales tax  and to  be  registered  as  a  dealer  under  the relevant provisions  of  the  Orissa  Sales  Tax  Act,  1947 (hereinafter referred to as the ’said Act’).      The respondent’s  main business  is of running of buses and providing transport facilities to the travelling public. Along with  these services the respondent has been disposing of unserviceable,  old, obsolete  and unutilised  parts from its stores.  These parts  used to  be disposed  of at yearly intervals. The respondent did not get itself registered as a dealer under  the said Act. According to it, no business was being carried  on in  respect of  which any  sales tax could have been levied.      The Sales  Tax Officer  considered that  the respondent was liable  to pay  tax. He  accordingly made  an  order  of assessment under  Section 12  [5] of the said Act seeking to tax respondent’s  turn-over on the sale of unserviceable old parts, obsolete  parts, spare  parts, sale  of fuel, oil and supply of  material utilised  in body  building to the State Transport  service.  The  Assessing  Authority  also  levied penalty inasmuch  as the respondent had failed to get itself registered under the Act.      The respondent  filed an  appeal against  the aforesaid decision before  the Assistant  Commissioner, Sales Tax, but

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was not  successful. Second appeal was then preferred to the Additional  Sales   Tax  Tribunal,   Cuttack.  The  Tribunal accepted the  contention of  the respondent  and came to the conclusion that  the respondent  could not  be regarded as a dealer within  the scope  of the said Act for the purpose of levying tax.      On an application being filed the Tribunal referred the following three questions of law to the High Court:      "[a] Whether on  the facts  and  in      the circumstances  of the case, the      Member, Addl.  Sales Tax  Tribunal,      was legally correct in holding that      in respect  of the  transactions in      spare parts  and sale  of fuel, oil      etc. at  cost the assessee is not a      dealer as  per Section 2 [c] of the      Orissa Sales Tax Act, 1947?      [b]  Whether on  the facts  and  in      the circumstances  of the case, the      Member, Addl. Sales Tax Tribunal is      correct to  hold that  purchases of      new spare  parts and accessories of      such vehicles  as Ford,  Chevrolet,      Despot, Dodge,  etc. were  not made      with  an   intention  to  carry  on      business of selling the same?      [c]  Whether on  the facts  and  in      the  circumstances   of  the  case,      Member, Addl.  Sales Tax  Tribunal,      is legally correct to hold that the      assessee is  not a  dealer  as  per      Section 2  [c] of  the Orissa Sales      Tax Act,  1947 in  respect  of  the      sale  turnover  of  unutilised  new      spare parts?"      The High  Court vide  its  judgment  answered  all  the aforesaid questions  in favour  of the  respondent and  held that it  had not  carried on  any business  as a dealer and, therefore, was not liable to payment of sales tax.      On behalf  of the appellant it is contended that though the  main   business  of  the  respondent  was  of  carrying passengers by  the sale  of spare parts and other items must be regarded  as  being  incidental  to  that  business  and, therefore, the  turn-over in  respect of  the said sales was liable to tax.      Mr. P.N.  Misra, learned  counsel for  the  respondent, however, submitted  that respondent  was not in the business of selling  goods and,  therefore, such sales could not form part of  its taxable  turn-over and  the respondent  was not obliged to  register itself  as a dealer under the said Act. Our attention  was drawn  to a few decisions in an effort to show that  the respondent  could not be regarded as carrying on business  of selling  the spare parts etc. The first case which was  relied upon  was that  of State  of  Gujarat  Vs. Raipur Manufacturing  Co. Ltd.  [(1967) 19  STC 1 ]. In that the company  was carrying  in the  business of manufacturing cotton textiles,  sale of  old discarded  goods,  coal,  by- products and subsidiary products. In determining with regard to such sales the company could be considered as carrying on business, this  Court held  that whether a person carries on business in  a particular  commodity must  depend  upon  the volume, frequency,  continuity and regularity of transaction of  purchase   and  sale   in  a  class  of  goods  and  the transactions must  ordinarily be  entered into with a profit motive. In  other words  irregular sales of small quantities

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of old  discarded goods could not be regarded as carrying on of a  business activity.  Volume, frequency, continuity etc. of purchase  and sales  in those  items was  the determining factor. This  principle has  been  followed  by  the  Andhra Pradesh High  Court in  Andhra Pradesh  State Road Transport Corporation,  Hyderabad   Vs.  The  Commercial  Tax  Officer [(1971) 27  STC 42  ] and  the State  of Andhra  Pradesh Vs. Andhra Pradesh  Road Transport  Corporation [(1989)  74  STC 336].      The relevant  provisions of  the Orissa  Act are  first required  to  be  examined  in  order  to  see  whether  the aforesaid   decisions    can   support    the   respondent’s contentions. Section  4  of  the  said  Act  is  a  charging section. It,  inter alia,  provides that  every dealer whose gross turn-over  during the year exceeds the specified limit shall be  liable to  pay tax under the said Act on the sales and purchases  effected by  it. The  expression ’dealer’ has been defined  in Section  2 [c]  of the  Act.  The  relevant portion of the said definition is as follows:      "[c] ’Dealer’ means  any person who      carries   on    the   business   of      purchasing, selling,  supplying  or      distributing goods (including goods      used or  involved in  the execution      of works contract, whether as goods      or in some other form), directly or      otherwise, whether  for cash or for      deferred payment or for commission,      remuneration  or   other   valuable      consideration and includes,-      [I]  ..................      [ii] ..................      [iii]..................      [iv] a casual dealer;"      The expression  ’casual dealer’  has  been  defined  in Section 2[bb] and is as follows:      "[bb]  ’Casual   dealer’  means   a      person,   who   has,   whether   as      principal, agent  or in  any of the      capacity occasional transactions of      a   business    nature    involving      purchasing, selling,  supplying  or      distributing  goods  in  the  State      whether       for       commission,      remuneration or otherwise."      The expression  ’business’ has  been defined in Section 2[b] and is as follows:      "[b] "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 a motive to make      gain or  profit and  whether or not      any gain  or  profit  accrues  form      such trade,  commerce, manufacture,      adventure or concern; and      [ii] any transaction  in connection      with or  incidental or ancillary to      such trade  commerce,  manufacture,      adventure or concern."      The decision  of this Court in Raipur Manufacturing Co. Ltd. case  cannot be made applicable here. In that case this

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Court  considered  the  volume,  frequency,  continuity  and regularity of  transactions of  purchase and  sales being an important element  in determining  whether  a  business  was being carried  out apart  from the  element of profit making being there. Hence in the Orissa Act the expression ’dealer’ includes a casual dealer. A casual dealer defined in Section 2[bb] is  one who  has occasional transactions of a business nature   involving   purchasing,   selling,   supplying   or distribution or  goods, whether for commission, remuneration or otherwise.  This means that even if a person did not have a systematic  or an  organised  business  involving  regular transactions of  purchases  and  sales  he  could  still  be regarded as  a casual  dealer if  he entered into occasional transactions of a business nature involving purchases, sales etc. of the goods. In the cases cited by Mr. Misra there was no consideration of this aspect at all.      It cannot  be denied  that the respondent is a business organisation  whose  activity  is  that  of  providing  road transport. In  the course  of its  carrying on  of the  said business some  obsolete parts,  spare  parts  etc.  are  not required by  it. As a prudent business organisation the said items, which  were obviously used or intended for use in its business, are sold when there is no requirement for them. We find it  difficult to  accept that such sales cannot even be regarded as  occasional sales  of a  business  nature  which would make the respondent a casual dealer within the meaning of that  expression occurring  in Section  2[bb] of the said Act. In the case of State of Tamil Nadu Vs. Burmah Shell Oil Storage and Distributing Co. of India Ltd. and Anr. [ (1973) 31 STC  426 ] this Court was concerned, inter alia, with the sale of  scrap where  the definition of the word business in the Madras  General Sales  Tax Act had done away with motive for making  profit as  being  a  relevant  consideration  in determining whether the assessee carried on business or not. Section 2(d)  of the  Madras Act  was similar to the present definition in Section 2(b) of the Orissa Act and it included the words "whether or not such trade, commerce, manufacture, adventure or  concern is  carried on  with a  motive to make gain or  profit and  whether or  not any profit accrues from such trade, commerce, manufacture, adventure or concern". In connection with  the sale  of scrap  it was observed at page 433 as follows:           "In the view we hold the scrap      sold is  certainly  connected  with      the business of the company and the      turnover   in   respect   of   this      commodity  is  liable  to  tax.  It      cannot  also   be   said   of   the      assessee’s advertisement  materials      at cost  price or  less  than  cost      price is  not  connected  with  the      business    of     the    assessee.      Calendars, wallets  and key  chains      are all given by the dealers to its      customers    for     purposes    of      maintaining  and   increasing   the      sales  of   the  products   of  the      assessee    and    is    therefore,      connected with  the business.  What      the  assessee   is  doing   is   to      facilitate the  dealers to  acquire      at their  cost such  advertising by      the assessee-company which, instead      of allowing  each of  them to  have      these   separately    printed    or

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    manufactured, itself  undertook  to      do go  and  supplied  them  to  its      dealers.   The   supply   of   such      material  is   in  our  view  being      connected  with   the  business  is      liable  to   be  included   in  the      turnover of the assessee."      In the District Controller of Stores, Northern Railway, Jodhpur Vs.  The Assistant  commercial Taxation  Officer and Anr. [  (1976) 37 STC 423, ] this Court was concerned with a question whether  the sales  of unserviceable  material  and scrap by  the Northern  Railway, Jodhpur,  was  exigible  to sales tax. the Rajasthan Sales Tax Act had been amended and, like the  Madras Sales  Tax Act and the Orissa Sales Tax Act the definition  of business had eliminated the profit making element and  keeping this  in view  this Court held that the activity of  the appellant in selling unserviceable material and  scrap   would  be  business  within  clause  1  of  the definition of the word ’business’ introduced by the amending Act. This Court held even if it be assumed that the activity involved in  selling unserviceable  material and  scrap-iron etc. may  not amount  to carrying  on business in the normal connotation of  that term, it would still be business within the meaning of the expression business occurring in the said Act. Such  sales were,  therefore, to be held to exigible to sales tax.      The definition of the word ’business’ in the Orissa Act being perimateria  with the definition of such expression in the Madras  Act as  well as  the Rajasthan Act, the ratio of the decision  in Burmah  Shell case (supra) and the District Controller’s case (supra) would be clearly applicable in the instant case  and, therefore, the respondent will have to be regarded as  a dealer  carrying on  the business  of selling spare parts  etc. and thereby become liable to pay sales tax on the sale of such items.      It was  submitted by  Mr. Misra  that neither  the High Court nor  the other  authorities had gone into the question as to  whether the  respondent could be regarded as a casual dealer. It is true that apparently the attention of the High Court was  not drawn to Section 2[bb]. This, however, can be of no  assistance to  the respondent because on the facts as found by  the Tribunal  it is evident that the provisions of Section 2[bb]  are clearly attracted to the instant case. If the High  Court has  ignored a  relevant statutory provision and then  come to a wrong conclusion that cannot be a ground for the  respondent to  contend that  Court should  also not refer  to  the  said  sub-section.  The  contention  of  the respondent would  have been  correct if the applicability of Section 2  [bb] depended  on the  investigation of facts and that had  not been  done. However,  the facts  as found here clearly disclose  that the  respondent has to be regarded at least as  a casual dealer. The mere fact that the High Court over-looked the  said provision  cannot be  a ground for the respondent to  contend that  this Court  should not  go into that question.      In  our  opinion  the  High  Court  was  not  right  in concluding that  the respondent  was not  a dealer  who  was liable to pay sales tax on the sales of the spare parts etc. made by  it. We  accordingly allow  these appeals and answer the questions  of  law  in  the  negative  and  against  the respondent. There will be no order as to costs.