D S NORTHERN RAILWAY JODHPUR Vs. STATE

JUDGEMENT

(1.) THIS revision application is directed against the order of the learned Dy. Commissioner, Sales Tax, Jodhpur dated 10. 2. 61, whereby he upheld the assessment order passed by the learned Sales Tax Officer, Jodhpur dated 18. 2. 60. By the latter order the Divisional Superintendent, Northern Railway was assessed to Sales Tax in respect of sale of coal ash of the value of Rs. 71,242/- for the year 1955-56. Under the Rajasthan Sales Tax Act, I954. (hereinafter referred to as the Act) every dealer whose turnover in respect of sales or supplies of goods exceeds certain limits is liable to pay tax. Admittedly, the turn-over exceeds the limits laid down in Sec. 3 of the Act. It is, however the contention of the learned counsel for the applicant that the Northern Railway is not a "dealer" within the meaning of Sec. 2 (f) of the Act, and that it does not carry on the business of selling coal ash regularly. He has also stated that the coal ash in question being the property of the Union Government cannot be taxed by an Act of the Rajasthan State in view of Art. 285 of the Constitution, but has not pressed this argument realising its weakness. There is no doubt that a tax on the sale or purchase of goods within the meaning of Art. 289 of the Constitution is quite distinct from a tax on property within the meaning of Art. 285 thereof. We now proceed to deal with the question whether the Northern Railway is a 'dealer' within the ambit of the Act and liable as such to pay sales tax on the sale of coal-ash. The expression 'dealer' has been defined in the Act as a person who carries on "the business of selling or supplying goods in the State". According to the learned counsel for the applicant the activity of the Northern Railway consisting in the disposal of coal-ash cannot be styled as a business of buying or selling coal-ash and that the business of the Northern Railway is merely transportation of persons and goods. He has even suggested that though coal-ash is sold for a consideration, it is a waste product, which must anyhow be disposed of by the Northern Railway in order to keep the railway track clear. He has explained that coal-ash is nothing but the end product of coal consumed by Railway engines which is not subject to any further processing before disposal through contractors by inviting annual tenders. In support of his contention, he has cited A. I. R. 1953 Madras page 954, A. I. R. 1956 Bombay page 673 and A. I. R. 1957 Assam page 179. In A. I. R. 1956 Bombay page 673, it was held that the Ahmadabad Education Society, which had manufactured bricks and obtained supplies of steel for the construction of educational buildings could not be said to have been carrying on the business of buying and selling merely because it disposed of its surplus stock of bricks and steel. The ratio decidendi was that in the absence of any intention to sell the goods at the time when the bricks were manufactured or the steel was obtained it cannot be said that the Society was carrying on the business of buying and selling these goods. In A. I. R. 1954, Madras 954 it was held that a transport company which sold its buses that became unserviceable was not a dealer carrying on the business of buying or selling buses. The ratio in this case was that the selling of buses by the company were isolated transactions which did not tantamount to a business. In AIR 1957 Assam 179 it was held that a Zamindar who sold his forest growth was not dealer carrying on the business of buying and selling. The principles laid down in this case were that "carrying on business" connotes continuous trade or occupation involving time and labour as also some investments, which may be regarded as an independent trade or occupation by itself capable of being sold or transferred as such. In our opinion, these three rulings do not help the applicant. On the other hand, we find that a ruling directly apposite to the present case before us is A. I. R. 1962 Kerala 4. In that case the question that arose for determination was whether a firm dealing in daily products was liable to pay tax on the sale of cattle that became unserviceable, and it was held that the liability could not be denied. The ratio was that considering the frequency, regularity and volume of sales of cattle by the assessee, these sales could be regarded as an activity in the course of the business of the assessee. Their Lordships agreed with the observation made in 11 S. T. C. 141 Bombay that in certain circumstances an intention to carry on the business of selling the subsidiary product as a part or an incident of the business of the assesse might readily be inferred, and the transaction of sale might be regarded as an activity in the course of the business of the assessee. THIS observation was made in a case where the assessees who were manufacturers of cotton textiles and yarn were selling cotton waste regularly and were held liable to pay sales tax on such sales. In the present case before us, undoubtedly, the main business of the Northern Railway is the transportation of persons and goods, and in the course of this business coal-ash accrues. The accrual of this by-conduct is a regular, recurrent feature, and its sale is likewise a recurrent and not a chance or fortuitous activity. Surely, the intention to sell coal-ash must always be present in the commercial calculation of the costs or investment that the Northern Railway or, any other Railway for that matter makes or has to make in carrying on its existing business or extending its business to areas not yet covered by it. It must, therefore, be held that the sale of the subsidiary product, namely, coal-ash is a part or an incident of the business of the Northern Railway and that this sale is an activity in the course of its business. In that view the Northern Railway is a "dealer" within the meaning of Sec. 2 (f) of the Act, and as such liable to pay tax on its sales of coal-ashes. THIS revision application is accordingly dismissed. .