K J LINGAM Vs. STATE OF MADRAS

JUDGEMENT

(1.) THIS revision case is filed against the order of the Sales Tax Appellate Tribunal in T.A. No. 294 of 1962. The assessees are dealers in motor vehicles and spare parts. We are now concerned in the present revision case with motor vehicles which the assessees purchased at Avadi within the Madras State from the Director-General of Supplies and Disposals, subsequently broke them into parts and sold them. These spare parts are assessable under the Madras General Sales Tax Act at the point of the first sale in this State. Treating the assessees as dealers effecting the first sale of the aforesaid articles, the department assessed them to sales tax. THIS part of the turnover comes to Rs. 1, 51, 589. The contention of the assessees before the department as well as before the Tribunal was that the first seller in regard to the above turnover was the Director-General of Supplies and Disposals. It is common ground that these motor vehicles, which were sold by the Director-General of Supplies and Disposals, were vehicles belonging to the Military Department, which were found unusable or condemned and were entrusted to the Director-General of Supplies and Disposals for disposal to the best advantage. The Assessing Authority as well as the Sales Tax Appellate Tribunal rejected the contention of the assessees that the Director-General of Supplies and Disposals, whose services were requisitioned by the Military Department for effecting these sales, was a dealer within the definition of section 2(g) of the Madras Sales Tax Act, 1959 [before the addition of explanation (2) by Act 5 of 1962], so far as the disputed turnover was concerned. The assessees were, therefore, held liable to be taxed. They have appealed to us from the above decision.

(2.) LEARNED counsel appearing for the petitioners has submitted that the Director-General of Supplies and Disposals charges 2% as departmental charges for such sales and also that the office of the Director-General of Supplies and Disposals maintains a commercial intelligence cell and a statistics department whose advice he takes for effecting sales. But this kind of activity of the Director-General of Supplies and Disposals will not make him a dealer within the definition of that term in the General Sales Tax Act. In a recent decision of the Supreme Court in State of Andhra Pradesh v. Abdul Bakshi & Bros. it has been observed at page 647 :