CHELLARAM KISHANDAS Vs. STATE OF MAHARASHTRA

JUDGEMENT

(1.) This is a reference under sub-section (1) of section 34 of the Bombay Sales Tax Act, 1953 (hereinafter referred to as the Act). We are here concerned with the period 1st April, 1954, to 31st March, 1955. During this period the applicant Chellaram Kishandas submitted certain tenders to the Regional Director of Food, Government of India, for purchase of sugar, which, at the material time, Government of India was supplying to the traders on a quota basis. The applicant's tenders were accepted, and a certain quota of sugar was allotted to the applicant, and was in due course purchased by the applicant during the aforesaid period. On or about the 15th June, 1957, the Sales Tax Officer, Enforcement Branch, issued a notice under sub-section (6) of section 14, calling upon the applicant to show cause why he should not be assessed to tax under the Act in respect of the aforesaid transactions of purchase of sugar. It appears that various contentions were raised by the applicant before the Sales Tax Officer, inter alia, contending that the applicant was an employee of a firm carrying on business in the name of M/s. Parasaram Parumal, and the tenders submitted by the applicant were submitted by him at the instance of his employer as its nominee or agent. In the alternative, it was contended that after the allotment was made in favour of the applicant, the applicant had assigned the rights to obtained by him under the quota to his employer M/s. Parasaram Parumal, and they were responsible for payment of the tax, and has, in fact, shown all the transactions in their books of account. These contentions were not accepted by the Sales Tax Officer, and the Sales Tax Officer held that the applicant was not liable to pay any sales tax, but he was liable to pay general sales tax amounting to Rs. 1,000-6-0 and purchase tax amounting to Rs. 1,037-14-0 and also a penalty of Rs. 500 was imposed on the applicant under sub-section (7) of section 14 of the Act for failure on his part to get himself registered as a dealer under the Sales Tax Act. Against this decision of the Sales Tax Officer, the applicant preferred an appeal to the Assistant Collector of Sales Tax, but the same was dismissed. Against that order, the applicant preferred a revision before the Deputy Commissioner of Sales Tax. Before the Deputy Commissioner, it was contended that the purchases were in the course of import, and, therefore the applicant was not liable to pay tax. The Deputy Commissioner held that the purchases were effected after the goods were cleared from the customs authorities by the Government of India, and therefore, they were not purchases in the course of import. It was further contended that the applicant had assigned his rights obtained under the allotment order to his employer M/s. Parasaram Parumal, and delivery of the sugar was taken by M/s. Parasaram Parumal. The Deputy Commissioner held that that was not the correct position. According to the Deputy Commissioner, the conditions of the tender at the material time showed that the scheme was to allow one person to submit only one tender for 200 bags of sugar, and one single person was not allowed a quota of more than 200 bags; had the applicant assigned the rights obtained by him under the allotment order to his employer, M/s. Parasaram Parumal, the quota would have been cancelled. He further found that the purchase of sugar bags was by the applicant and delivery thereof was taken by the applicant. He therefore held that the applicant was a dealer who has purchased the goods and was liable to pay purchase tax in respect of the said purchases made by him. It was next argued on behalf of the applicant that the money for purchasing the sugar quota came from M/s. Parasaram Parumal. The sugar obtained by the applicant was handed over by him to M/s. Parasaram Parumal without obtaining any consideration therefor from them. In these circumstances, there was no sale of the sugar by the applicant to M/s. Parasaram Parumal, and therefore, he was not liable to pay sales tax. The Deputy Commissioner found that ultimately the property in the goods, namely, the sugar, was acquired by M/s. Parasaram Parumal, and they had paid no valuable consideration therefor to the applicant, and therefore, the necessary ingredients of a sale by the applicant to M/s. Parasaram Parumal were wanting in the transaction. In this view of the matter, the Deputy Commissioner held that the applicant was not liable to pay any sales tax. Lastly, it was argued on behalf of the applicant that no penalty should have been imposed on him for his failure to get himself registered as a dealer inasmuch as the default was not intentional. This contention also was accepted by the Deputy Commissioner, and the penalty imposed under section 14(7) was set aside. The Deputy Commissioner, however, held that the applicant was liable to pay penalty under section 16(4) for late payment of the balance of the tax. He thus held the applicant to be liable to pay purchase tax and penalty for late payment of that tax. Against this order of the Deputy Commissioner, the applicant filed a revision before the Sales Tax Tribunal.

(2.) The first contention raised on behalf the of the applicant before the Tribunal was that the Government of India, from whom the sugar was purchased was not a person within the meaning of section 10 of the Act, and, therefore, the applicant was not liable to pay any purchase tax for the purchase of sugar made by him from the Government of India. The Tribunal rejected this contention. The second contention urged was that the applicant had taken delivery of sugar while the goods were in the course of import, inasmuch as delivery was obtained before the goods crossed the customs barrier. The Tribunal accepted the finding of the department that it was the Regional Director who had taken delivery of the sugar from the ships, and had later distributed outside the customs barrier the individual quotas to the individual allottees. In this view of the matter, the Tribunal rejected the second contention also. It was next argued that the applicant had not purchased the sugar in the course of business, and, therefore, no purchase tax was liable to be paid on these purchases. The Tribunal, having regard to the number of tenders submitted by the applicant during the period, the total price paid by him for the sugar, and the fact that the sugar was not obtained for consumption, held that the sugar was purchased in the course of the business, and in this view of the matter, this contention also was rejected. It was then contended on behalf of the applicant that the applicant was merely a dummy of M/s. Parasaram Parumal. The Tribunal held that it was the applicant who had submitted the tender; it was the applicant who had paid the purchase price, and it was the applicant who had taken delivery of the sugar, and this conduct on the part of the applicant estopped him from contending that he was not the purchaser but was merely a dummy of M/s. Parasaram Parumal. The Tribunal, however, did not rest its decision on this ground. It further considered as a question of fact the applicant's contention that he was merely a dummy and M/s. Parasaram Parumal were the real purchasers, as well as the alternative contention raised on behalf of the applicant that the purchase was made by him merely in his capacity as the agent of M/s. Parasaram Parumal. After considering the material on record, the Tribunal held that the applicant was the purchaser of sugar. Lastly, it was contended that the applicant was an employee of M/s. Parasaram Parumal. He was, therefore, precluded from doing any business which was of the same nature as that of his employer, and even if he has conducted any business of purchasing sugar, it must be treated as a business for his master M/s. Parasaram Parumal. This contention also was not accepted by the Tribunal. On the view taken by it, the Tribunal dismissed the revision application filed by the applicant. On an application made under section 34 of the Act, the Tribunal has drawn up the statement of the case and referred to us the following three questions of law :

(3.) Turning to the first question, on the question as it is framed, there appears to be hardly any room for argument, and the answer will have to be in favour of the department. The question framed is whether the Regional Director (Food), Bombay, is a person within the meaning of the Act. There cannot be any doubt that the Regional Director (Food) is an individual and necessarily a person. Mr. Joshi, however, submitted that the contention raised before the Tribunal was not that the Regional Director (Food), Bombay, was not a person, but the contention raised was as to whether the Government of India is a person within the meaning of the Act. The seller was not the Regional Director (Food), Bombay, but the seller was the Government of India. The Regional Director (Food), Bombay, was only an officer of the Government of India dealing with the tenders submitted and making allotments of the sugar quota. The question, therefore, is whether the Government of India is a person within the meaning of the Act. Mr. Joshi is right in his contention. Paragraph 7 of the order of the Tribunal in revision clearly shows that the contention raised was whether the Government of India is a person within the meaning of the Act. The first question will, therefore, have to be modified by substituting "Government of India" in place of "the Regional Director (Food), Bombay" in the first question, and we proceed to answer the question so amended.