G.K.Mitter, J. - (1.) This is a reference under Section 21(3) of the Bengal Finance (Sales Tax) Act, 1941. The question referred to this Court is: Whether the Director of Supplies and Disposals, United States Transfer Directorate, having his office situated at No. 6, Esplanade East, Calcutta, carries on the business of selling goods in West Bengal and is, therefore, a 'dealer' within the meaning of Section 2(c) of the Bengal Finance (Sales Tax) Act, 1941?
(2.) The facts of this case are as follows: The Directorate of Disposals (United States Transfer Directorate) was an organisation of the Government of India. The said Directorate with various branches under its control were responsible for the disposal of surplus American war equipment which had been taken over by the Government of India. When the said equipment was substantially disposed of the work of the said Directorate dwindled and had merged with that of the Regional Commissioner (Disposals) on nth January, 1950. Later the Supply and Disposal wings of the Government of India were merged and was redesignated as the Directorate of Supplies and Disposals. The functions of this Directorate were:--(a) to dispose of surplus goods; (b) to purchase goods on behalf of the Government of India, various State Governments and approved autonomous bodies. The Director of Disposals (United States Transfer Directorate) refused to get registered under the Bengal Finance (Sales Tax) Act, 1941, on the ground that he was not a dealer. On 9th November, 1955, the Commercial Tax Officer, Esplanade Charge of the Directorate of Commercial Taxes, Government of West Bengal, issued a notice under Sections 11(2) and 14(1) of the said Act to the Director directing him to produce the books of account and other documents for the purpose of assessment of the tax payable under the Act in respect of the period from 1st April, 1949, to 30th May, 1949. After hearing the representative of the Directorate, the Commercial Tax Officer made an assessment on 23rd February, 1956. The assessee filed an appeal from the said assessment to the Assistant Commissioner of Commercial Taxes. The point urged was that the Directorate of the Government of India was not working to earn a profit and was not carrying on the business of selling goods in West Bengal and as such was not a dealer. This contention was turned down and a revision petition was filed before the Commissioner of Commercial Taxes. On the refusal of the petition a further revision petition was made before the Board of Revenue, West Bengal, which too was rejected.
(3.) The whole question is whether the Directorate can be said to be a dealer within the meaning of the expression used in the Sales Tax Act. Under Section 2(c) of the Act a dealer is a person who carries on the business of selling goods in West Bengal and includes the Government. The question before us is whether in the matter of disposal of surplus American war material the Director was carrying on a business of selling goods. It is not disputed that he was selling goods but it is urged that his activity did not savour of a business. It was argued that the " business " implies a motive of making profit and a person who carries on a business of selling goods must be one who manufactures or procures them, inter alia, by purchasing them and then selling them. It was contended that the goods were left in India at the conclusion of the war by the American Government to be dealt with by the Government of India just as it pleased. Government could have used the goods themselves or made a gift of them to others who required them or thrown them away as scrap. As a matter of fact a considerable portion of the goods was used up by the Government itself and the balance instead of being thrown away was sold to the public. It was argued that such selling did not involve a business inasmuch as the whole stock came to the Government of India as a windfall but as its volume was considerable an organisation had to be set up so that the disposal could take place smoothly.;