- (1.) All the three writ petitions were filed challenging a common judgment and order dated 16th April, 2010 passed by the learned West Bengal Taxation Tribunal. The learned Tribunal held as follows:- "In view of the discussions contained hereinabove we hold that ICICI Bank is a dealer and covered by main part of the definition of the 'dealer' in the VAT Act, as the disputed sales are in course of its banking business and such sales were/are effected in exercise of its statutory right under the Banking Companies Regulations Act. Judgment of the Supreme Court in Federal Bank has practically settled the issue. We also hold that other Non-Banking Financing Companies were/are dealers within the ambit of Clause (d) of Section - 2(11) as according to them, those were arranging sales of hypothecated vehicles on the strength and authority derived from the hypothecation agreements and the irrevocable power of attorneys executed by the borrowers. If these Non-banking Finance Companies were exercising hypothecatees' contractual right to sell pledged goods for realization of unpaid loan these Companies came within the scope of the main part of the definition of 'dealer'."
(2.) Mr. Khaitan, learned Senior Advocate appearing in support of all the writ petitions, made extensive arguments assailing the judgment of the learned Tribunal. He also submitted a written notes of argument. We deem it proper to set out the written arguments, in our judgement, in its entirety, which is as follows:- "BRIEF FACTS 1. The petitioner in WPTT No.24 of 2010 is a banking company and the petitioner in WPTT NO.6 of 2011 is non-banking finance company ("NBFC"). The petitioners grant loans to persons intending to purchase vehicles against hypothecation of the vehicles by way of security under loan-cum-hypothecation agreements. Irrevocable power of attorney is also obtained from the borrower nominating the lender to have the vehicle disposed of on behalf of the borrower in case of default in repayment of the loan. 2. It is not in dispute that the borrower is the owner of the vehicle at all times. Hypothecation of the vehicle in favour of the lender is specifically excluded from the definition of sale in section 2(39) of the West Bengal Value Added Tax Act, 2003 ("the Act"). The lender does not become the owner of the vehicle at any time. In case of sale of the vehicle for recovery of the loan, the transfer of ownership is from the borrower to the new owner and the statutory motor vehicle transfer forms 29 and 30 executed by the borrower are made over to the new owner. ISSUE 3. The question which arises for determination is as to whether in respect of disposal of the vehicle for recovery of the loan the petitioners are liable for tax as dealers as per the definition in Section 2(11) of the Act. PRINCIPLES OF INTERPRETATION 4. The section has to be construed strictly. If a person has not been brought within the ambit of the charging section by clear words, he cannot be taxed at all (Please see Commissioner of Wealth Tax -v- Ellis Bridge Gymkhana, 1998 1 SCC 384- Para 5 page 84 at 87 of compilation). 5.The definition commences with the expression " 'dealer' means .." and thereafter proceeds to expand its coverage by using the expression "and includes ." By certain inclusions vide sub-clauses (a), (b), (c) and (d), which would not have otherwise fallen within the opening part of the definition. The use of the expressions "means" "and includes" in the definition makes it exhaustive (Please see Bharat Co. op Bank (Mumbai) Ltd., -v- Coop. Bank Employees Union, 2007 4 SCC 685) - Para 23- page 72 at 82 compilation. And for the same view - (1989) 1 SCC 164 - para 11; 1995 SUPP (2) SCC 348 - para 19; (2007) 5 SCC 281 - para 33; (2007) 5 SCC 730 - para 8. The contra view in 1993 Supp (3) SCC 361 - para 12 was rendered without noticing the prior decision in (1989) 1 SCC 164). OPENING PART OF DEFINITION APPLIES ONLY TO OWNERS 6. The opening part of the definition only covers persons who deal with the goods as owners i.e. persons who purchase goods in their own right and sell them as owners. Non-owners have been brought in by way of expansion under the sub-clauses appearing after the expression "and includes". If non-owners were covered by the opening part, there was no reason to expand the definition. 7. The Tribunal fell into error in holding that the petitioners were covered by the opening part of the definition if the vehicle was caused to be sold by the petitioner NBFC in exercise of the hypothecatee's contractual right to sell pledged goods for realization of unpaid loan and by the petitioner bank in exercise of statutory right in course of banking business. The petitioners not being the owners of the vehicles, the opening part of the definition cannot cover them. EXPANDED DEFINITION IN SUB-CLAUSE (b) HAS NO APPLICATION 8. Sub-clause (b) ropes in specified bodies/organizations which sell, supply or distribute goods but not in the course of business. Sale of goods by such bodies/organizations in the course of business would be covered by the opening part of the definition. 9. The general phrase "other body corporate" in sub-clause (b) occurs after the words "Government", "local authority", "statutory body" and "trust". On the principle of ejusdem generis, the said general phrase includes only an entity of the same type as those specified earlier. The entities specified earlier do not normally carry on business or commercial activity. "Other body corporate" must be of the same type. The petitioners carry on business (of advancing loans) and are not "other body corporate" within the meaning of Section 2(11). 10. It is also a requirement of sub-clause (b) that the sale, supply or distribution must be for cash or for deferred payment or for commission, remuneration or other valuable consideration. Thus, a body corporate must sell its own goods for valuable consideration. If the goods sold do not belong to the body corporate, it must receive valuable consideration for making the sale such as commission or remuneration. The petitioners are not the owners of the vehicles. The petitioners by causing sale of the vehicles belonging to their constituents do not render any service for commission, remuneration or other valuable consideration. The petitioners are not covered by sub-clause (b) as "other body corporate". NBFC IS NOT FACTOR OR MERCANTILE AGENT UNDER SUB-CLAUSE (d) 11. The Tribunal fell into error in holding that the petitioner NBFC fell within the ambit of sub-clause (d) as factor or mercantile agent since the sales of the vehicles were arranged on the strength and authority derived from the hypothecation agreement and the irrevocable power of attorney executed by the borrower. 12. A factor only buys or sells for a commission (Please see Black's Law Dictionary, 9th Edition - page 30 at 31 of compilation and Words and Phrases Legally Defined, 4th Edition - page 32 at 33 of compilation). The petitioner NBFC does not receive any commission and is not a factor. 13. A mercantile agent to fall within the ambit of sub-clause (d) must be one- (i) who carries on the business of selling goods and (ii) who has in the customary course of business, authority to sell goods belonging to principals. 14. For the purposes of sub-clause (d), the business of the mercantile agent, evidenced by volume, frequency, continuity and regularity of transactions, must be that of selling goods belonging to principals, such that it must be customary in the course of such business that the mercantile agent has authority to sell goods belonging to principals. 15. The main activity of the petitioner NBFC, evidenced by volume, frequency, continuity and regularity of transactions is that of granting loans. The borrowers are not principals of the petitioner. It is not the business of the petitioner to sell goods belonging to the borrowers. The incident of sale of the vehicle arises only in the event of default by the borrower. Sale in case of default is caused by the petitioner NBFC not for any commission or remuneration but for recovery of the amount due to it. In the petitioner NBFC's first year of business there was no sale of any vehicle on account of borrower's default. In the next year the disposal proceeds constituted only 0.21% of the total loan disbursements. Such incidental activity is not evidenced by any volume, frequency, continuity or regularity so as to constitute business of selling of goods within the meaning of sub-clause (d). The context of sub-clause (d) does not permit the application of the definition of "business" in section 2(5) (Please see Whirlpool Corporation -v- Registrar of Trade Marks, 1998 8 SCC 1- paras 28 and 30 - page 34 at 45 of compiltion and Printers (Mysore) Ltd. -v- Assistant Commercial Tax Officer, 1994 2 SCC 434- para 18 - page 60 at 70 of compilation). 16. The customary authority adverted to in subclause (d) must be an implied authority in accordance with the usages and customs of the business of selling gods (Please see P. Ramanatha Aiyar's Advanced Law Lexicon, 3rd Edition - page 26 at 29 of the compilation). If such implied authority exists, it will not make any difference if the same is also expressly granted by a written document. 17. The petitioner NBFC does not have any implied authority to have the vehicle purchased by the borrower with the loan funds sold. The petitioner NBFC has a limited authority under the power of attorney specifically authorizing it to have the vehicle sold in case of default in repayment of the loan. The implied authority to sell as an agent referred to in Sub-clause (d) is altogether distinct and different from a pawnee's right to sell the thing pledged on giving the pawnor reasonable notice of sale under Section 176 of the Indian Contract Act, 1872. 18. The judgment of the Supreme Court in State of West Bengal -v- O. P. Lodha, 1997 105 STC 561, is not an authority for the proposition that any and every agent is liable to be treated as a dealer irrespective of the requirements of sub-clause (d) of Section 2(11). 19. The judgment of the Supreme Court in Federal Bank Ltd. -v- State of Kerala, 2007 6 VST 36, dealt with the amended definition of dealer in Section 2(viii) of the Kerala Act which included a bank or a financing institution. The only controversy before the Supreme Court in that case was as to whether the sale of pledged assets by the bank was in the course of banking business. 20. The Supreme Court in Government of Andhra Pradesh -v- Corporation Bank, 2007 6 VST 755, held that a bank selling gold pledged as security for the loan was not a dealer prior to the amendment of the definition in Section 2(1)(e) of the Andhra Act with effect from August 1, 1996 whereby banks were included." Mr. Kar, learned advocate appearing for the department disputed the submissions of Mr. Khaitan. He also relied upon the judgment in the case of Federal Bank Ltd. -v- State of Kerala, 2007 6 VST 36 for the proposition that the sale of the vehicles by the bank is in course of its business under the Banking Regulation Act, 1949. The question which falls for determination has been indicated in the written notes in paragraph 3 noticed above. Therefore, the question really is, as regards the true meaning and scope of the definition of the term 'dealer' provided in Sub-section 11 of Section 2 of the West Bengal Value Added Tax Act, 2003 (hereinafter referred to as the said Act) which reads as follows:- " 'dealer' means any person who carries on the business of selling or purchasing goods in West Bengal or any person making sales under section 14, and includes - (a) an occupier of a jute-mill or shipper of jute, (b) Government, a local authority, a statutory body, a trust or other body corporate which, or a liquidator or receiver appointed by a court in respect of a person, being a dealer as defined in this clause, who, whether or not in the course of business, sells, supplies or distributes directly or otherwise goods for cash or for deferred payment or for commission, remuneration or other valuable consideration, (c) A society including a co-operative society, club or any association which sells goods to its members or others for cash, or for deferred payment, or for commission, or for remuneration, or for other valuable consideration, (d) A factor, a broker, a commission agent, a del credere agent, an auctioneer, an agent for handling or transporting of goods or handling of document of title to goods, or any other mercantile agent, by whatever name called, and whether of the same description as hereinbefore mentioned or not, who carries on the business of selling goods and who has, in the customary course of business, authority to sell goods belonging to principals;"
(3.) The submissions appearing from paragraphs 4 and 5 of the written notes of argument are deemed to be correct for the purpose of disposal of these petitions. The submission in paragraph 6 of the written notes does not, however, appear to us to be a correct approach. We are of the opinion that the section has to be construed as a whole and not piecemeal. We are unable to agree with Mr. Khaitan that the definition of the word 'dealer' intended to cover only the owners of the goods. No such intention can be attributed to the legislature on a plain reading of the section quoted above. The finding of the Tribunal has been quoted above by us. Whether the finding is correct in the light of the submissions of Mr. Khaitan has to be examined herein.;