TATA AIRCRAFT LIMITED Vs. STATE OF WEST BENGAL

JUDGEMENT

(1.) This is a reference under Section 21(1) of the Bengal Finance (Sales Tax) Act, 1941 (hereinafter referred to as the Act), at the instance of Tata Aircraft Ltd., the applicant. The facts found and/or admitted in the proceedings are shortly as follows: Tata Aircraft Ltd. was registered as a dealer under the Act on 19th November, 1946. The accounting year followed by it was from 1st April to 31st March. For the assessment periods, respectively, from 19th November, 1946, till 31st March, 1947; 1st April, 1949, till 31st March, 1950; and 1st April, 1950, to 31st March, 1951, the applicant failed to submit return of sales tax within the time as prescribed under the Act. In answer to the notices served by the successive Commercial Tax Officers, 24-Parganas, the applicant claimed that no sales tax was payable by it as it was not a dealer within the meaning of Section 2(c) of the Act. The applicant claimed further that it was engaged in disposing of surplus stores of the Government of India pursuant to and in terms of an agreement entered into by it with the Government. The Commercial Tax Officers concerned rejected the above contentions and completed the assessments for the said periods on the turnover of sales of such surplus stores of the Government of India effected by the applicant and the sales tax was levied accordingly.

(2.) The applicant preferred appeals against the assessments before the Assistant Commissioner of Commercial Taxes, who upheld the orders of the Commercial Tax Officers. Thereafter, the petitions of revision filed before the Commissioner of Commercial Taxes, West Bengal, were rejected and the orders of the Assistant Commissioner were upheld. Ultimately, revision petitions were filed before the Board of Revenue. By its order dated 22nd December, 1954, the Board rejected the contentions of the applicant and held that it was a dealer within the meaning of the said Act. At the instance of the applicant, the following question has been referred by the Board to this Court as a question of law arising out of its order: Whether, on the facts and in the circumstances of the case, the petitioner carried on the business of selling goods in West Bengal and was therefore a dealer as defined in Section 2(c) of the Bengal Finance (Sales Tax) Act, 1941.

(3.) Mr. Bhagawati Banerjee, the Learned Counsel for the applicant, contended at the hearing that Tata Aircraft Ltd. was not engaged in the business of selling or supplying goods at the relevant time and, therefore, it was not a dealer within the meaning of the said Act. He submitted that under the agreement dated 29th May, 1947, entered into by and between the applicant and the Government of India, the former acted as the agent of the Government and, in the course of such agency, took part in the disposal of surplus stores belonging to the Government of India. This activity of the dealer was not a business activity of selling or supplying goods. In support of his contentions, Mr. Banerjee cited a decision of the Supreme Court in Director of Supplies and Disposals, Calcutta v. Member, Board of Revenue, West Bengal, Calcutta A.I.R. 1967 S.C. 1826. The facts in this case were, inter alia, that the Government of India set up an organisation known as the Directorate of Disposals (United States Transfer Directorate) to dispose of war equipments taken over from the American forces after the Second World War. A part of such equipments was appropriated by the Government itself for their own use. Some equipments were sold to the State Governments and other autonomous bodies and the balance was sold to the public. The authorities under the Bengal Finance (Sales Tax) Act, 1941, held that the Directorate was a dealer within the meaning of the Act. On a reference, this Court upheld the finding of the sales tax authorities. The matter finally went up to the Supreme Court on appeal. The Supreme Court took due note of the following facts: (a) The Government of India had paid no consideration for acquiring the equipments but had merely set up an organisation to dispose of the equipments. (b) The sales effected by the Government through the Directorate were not casual, but had been spread over a number of years. (c) The equipments disposed of included diverse types of goods and they were so disposed of after frequent advertisements.