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PETITIONER: MEMBER BOARD OF REVENUE, WEST BENGAL

       Vs.

RESPONDENT: CONTROLLER  OF STORES EASTERN RAILWAY CALCUTTA, ETC.

DATE OF JUDGMENT28/04/1989

BENCH: PATHAK, R.S. (CJ) BENCH: PATHAK, R.S. (CJ) SHARMA, L.M. (J) OJHA, N.D. (J)

CITATION:  1989 AIR 1468            1989 SCR  (2) 777  1989 SCC  Supl.  (2) 236 JT 1989 (2)   215  1989 SCALE  (1)1145

ACT: Bengal Finance (Sales Tax) Act, 1941: Section 2(c).     "Dealer"--Railway--Effecting  sale of unclaimed,  uncon- nected goods for money consideration--Whether dealer. Indian Railways Act, 1890: Section 56.

HEADNOTE:     The assessee South Eastern Railway, a registered  dealer under the Bengal Finance (Sales Tax) Act, 1941, disposing of unclaimed  and  unconnected goods  for  money  consideration under  Section 56 of the Indian Railways Act, 1890,  applied to the Commercial Tax Officer for cancellation of  registra- tion as a "dealer".     The  Commercial Tax Officer rejected the application  on the ground that the disposal of unclaimed goods for valuable consideration was a regular feature of the assessee’s activ- ities, and, therefore, the assessee fell within the scope of the Bengal Finance (Sales Tax) Act, 1941.     Assessee’s  revision  application was  rejected  by  the Assistant  Commissioner  of Commercial Taxes on  the  ground that the sales effected by the assessee were sales under the Act and that the assessee was a "dealer". A second  revision of the assessee was also dismissed by the Additional Commis- sioner of Sales Tax.     On  a  further revision the Board of Revenue  also  con- firmed  the  status of the assessee as a  "dealer",  holding that  in the systematic and organised character of  business of  auctioning by the assessee, a transfer of  property  was involved and therefore a sale of goods took place.     At the instance of the assessee a reference was made  to the  High  Court. The High Court answered  the  question  in favour  of the assessee by holding that the disposal of  the goods did not indicate that the 778 Railway  was  carrying  on business as a  dealer  liable  to assessment under the Act.     The  assessee in the connected appeal, Eastern  Railway, was engaged in selling scrap and unserviceable material, and a similar order was passed by the High Court in its favour. Hence these appeals by the Revenue.

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   Allowing the appeals and setting aside the judgments  of the High Court, this Court,     HELD: 1. The assessee South Eastern Railway was a carri- er  of  the  goods and if at the stage  of  delivery,  goods remained unclaimed for a period, the Railway was entitled to dispose  them of. The activity of so disposing of the  goods was adjunctive to the principal activity of the carriage  of goods by the Railway. It is an activity which may be regard- ed as necessarily incidental or ancillary to its business as carrier of the goods. Therefore, the assessee South  Eastern Railway  was a "dealer" for the purposes of the  Bengal  Fi- nance (Sales Tax) Act, 1941. [780G-H]     2.  The assessee in the connected appeal, Eastern  Rail- way, who was disposing scrap and unserviceable material  was also  a  "dealer"  for the purposes of  the  Bengal  Finance (Sales Tax) Act, 1941. [780H; 781A]     District Controller of Stores, Northern Rly, Jodhpur  v. The Assistant Commercial Taxation Officer & Anr., [1976]  37 S.T.C. 423 applied.

JUDGMENT:     CIVIL  APPELLATE JURISDICTION: Civil Appeal No. 1069  of 1975.     From  the  Order dated 18.5.1973 of  the  Calcutta  High Court in Matter No. 586 of 1968. D.N. Mukharjee and G.S. Chatterjee for the Appellant. D.N. Dwivedi and C.V. Subba Rao for the Respondents. The Judgment of the Court was delivered by PATHAK, CJ, The question raised in these two appeals is 779 whether  the assessee Railway in each appeal is  a  "dealer" within  the meaning of the Bengal Finance (Sales  Tax)  Act, 194 1 and therefore liable to assessment under that Act. In C.A. No. 845 of 1974 the facts are these.     The assessee South Eastern Railway disposes of unclaimed and  unconnected goods for money consideration. On 1  April, 1952 the assessee applied for registration as a dealer under the Bengal Finance (Sales Tax) Act in respect of unconnected or  unclaimed  goods,  and was  accordingly  registered.  It submitted  returns of sales effected by it of unclaimed  and unconnected goods year after year and paid sales tax  pursu- ant  to  the assessments made by the Sales  Tax  department. However,  in  assessment proceedings for the  four  quarters ending  March, 1959 the assessee applied to  the  Commercial Tax  Officer  for cancellation of the  registration  of  the assessee  as  a "dealer" under the Act. The  Commercial  Tax Officer examined the case and did not accept the  contention that  the  assessee was not a "dealer". On 6 June,  1959  he made  an order rejecting the application on the  basis  that the  disposal of unclaimed goods for valuable  consideration was a regular feature of the assessee’s activities, and that therefore the assessee fell within the scope of the Act. The assessee  applied in revision before the  Assistant  Commis- sioner  of  Commercial Taxes. The only point raised  in  the revision  application  was  whether the  assessee  could  be treated as a "dealer" within the meaning of the Act. It  was stated  on behalf of the assessee that unclaimed  or  uncon- nected goods came into possession of the assessee but not as a  result of any activity of purchase or of manufacture  for sale.  It  was  pointed out that when such  good  came  into possession of the assessee it acquired rights over the  said goods  under Section 56 of the Railways Act enabling  it  tO sell  the  goods. The revision petition was rejected  on  27

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January, 1960 on the finding that the sales effected by  the assessee were sales under the Act and that the assessee  was a  "dealer". The assessee proceeded in further  revision  to the Commissioner of Commercial Taxes, West Bengal and  simi- lar  contentions  were raised before him  but  the  revision application was dismissed by the Additional Commissioner  of Commercial Taxes, who dealt with the case, by order dated 17 June,  1960. The assessee then proceeded in revision  before the  Board  of Revenue, West Bengal. The Board held  that  a transfer of property was involved in the auction held by the assessee and that therefore a sale of goods took place.  The Board further held that the systematic and organised charac- ter of business carried on by the assessee clothed him  with the  status of a "dealer" under the Act. At the instance  of the assessee the Board of Revenue 780 referred the following question to the High Court at Calcut- ta for its opinion:               "Whether  the petitioner Railway in so far  as               it effects sales of unclaimed and  unconnected               goods  under the provisions of Section  56  of               the  Indian Railways Act, is a  dealer  within               the  meaning  of Section 2(c)  of  the  Bengal               Finance (Sales Tax) Act, 1941?"     The  facts  and circumstances in the case out  of  which Civil  Appeal  No.  1069 of 1975  arises  are  substantially similar  to those narrated in the earlier case, except  that the  assessee here is the Eastern Railway and it is  engaged in  selling scrap and unserviceable material.  The  question referred  at the instance of the assessee to the High  Court at Calcutta is as follows:               "Whether on the facts and in the circumstances               of the case the Controller of Stores,  Eastern               Railways  is a dealer engaged in the  business               of  selling scrap and unserviceable  materials               within  the meaning of cl. (c) read  with  C1.               (g) of Section 2 of the Bengal Finance  (Sales               Tax) Act, 1941."     The High Court delivered judgment setting forth detailed reasons therefore in the case relating to the assessee South Eastern Railway. It held that the disposal of the goods  did not  indicate  that the Railway concerned  was  carrying  on business as a dealer liable to assessment under the Act.     The  High Court disposed of the other case on  the  same basis  as  found  favour with it in the  earlier  case,  and answered the question in favour of the assessee.     In  these appeals the question is whether  the  assessee Railway  in each case is a "dealer" for the purpose  of  as- sessment under the Bengal Finance (Sales Tax) Act, 1941.  In the  case of the assessee South Eastern Railway,  what  were sold were unclaimed goods. The Railway was a carrier of  the goods  and  if at the stage of delivery goods  remained  un- claimed  for  a period the Railway was entitled  to  dispose them  of.  There  can be no doubt that the  activity  of  so disposing  of  the  goods was adjunctive  to  the  principal activity  of the carriage of goods by the Railway. It is  an activity which may be regarded as necessarily incidental  or ancillary to its business as carrier of the goods. It  seems to South Eastern Railway was a "dealer" for the 781 purposes of the Bengal Finance (Sales Tax) Act, 1941.     In the other case, the assessee Eastern Railway disposed of scrap and unserviceable material lying with it. The  case is  covered  directly by the decision of this Court  in  the District Controller of Stores, Northern Railway, Jodhpur  v.

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The  Assistant  Commercial  Taxation  Officer  and  Another, [1976] 37 S.T.C. 423.     In  the circumstances the appeals are allowed,  the  im- pugned judgment of the High Court in each case is set  aside and the questions referred to the High Court are answered in each  case in the affirmative, in favour of the revenue  and against the assessee. The appellant is entitled to his costs in each case. T.N.A.                            Appeals allowed. 782