Sabyasachi Mukherjee, J. -
(1.)This is an application by the Union of India through the General Manager, Gun and Shell Factory, Cossipore, Government of India. The Petitioner contends that the Petitioner has an Ordnance Factory under the name and style of Gun and Shell Factory, Cossipore, Calcutta, which is owned and controlled by the Government of India, Ministry of Defence. The said factory is mainly a manufacturer of defence service items and also distributes goods manufactured by it to other Central Government Departments, State Government Departments and various Undertakings, Projects and Institutions of the Central or State Governments and occasionally to a very limited number of private concerns as and when directed by the authorities. The Petitioner contends that these jobs of private concerns and civil indenters are undertaken by the said factory just to absorb surplus capacity, to keep the technique alive, to avoid or minimise imports and in other ways to assist them to execute Government orders. According to the Petitioner, these activities of manufactures, distributions and supplies are done in a non -trading manner mainly for the purpose of Defence of Indian Union. The Petitioner has sought to rely on priming of stores manufactured in the Petitioner's factory as well as other Ordnance Factories, instructions regarding production of civil goods in Ordnance Factories and instructions regarding utilisation of production capacities in Ordnance Factories for contending that the Petitioner does not carry on any trade, business or commerce to be liable to duty under the provisions' of Bengal Finance (Sales Tax) Act, 1941. In this application under Article 226 of the Constitution the Petitioner challenges the registration certificate No. SH/3264A dated September 13, 1962 and the assessment order dated March 12, 1969, for the period from April 1, 1964, to March 31, 1965 and the demand notice issued in respect thereof. The said assessment order and the registration relates to assessment under the provisions of the Bengal Finance (Sales Tax) Act, 1941. The Petitioner's contention as mentioned above is that the Petitioner does carry on any transaction which is liable to sales tax. The Petitioner is not a dealer in respect of the aforesaid non -trading and non -commercial activities. The Petitioner, however, has been directed to be registered under the provisions of Sec. 4(2) of the Bengal Finance (Sales Tax) Act, 1941.
(2.)Several questions arise in this application for consideration. It was contended, firstly, on behalf of the Respondents, that under Article 131 of the Constitution this application was not maintainable. Article 131 of the Constitution provides that the Supreme Court shall have to the exclusion of any other Court the original jurisdiction in any dispute between the Government of India and one or more of the States or between the Government of India and any State of States on one side and any one or more States on the other or between two or more States, if and insofar as the dispute involves any question, whether of law or fact, on which the existence or extent of a legal right depends. It was contended that in this case as the dispute was between the Government of India and the State of West Bengal about the liability of the Government of India to pay sales tax, the Supreme Court had exclusive jurisdiction to decide the dispute. In this connection reliance was placed on a decision of the Punjab and Haryana High Court in the case of Government Medical Store Dept. Karnal v/s. State of Haryana and Anr. : 29 S.T.C. 7. There the Petitioner had one of the deposits run by the Medical Stores Organisation functioning under the control of the Directorate General of Health Services, Ministry of Health, Government of India and the Petitioner had filed a petition under Article 226 of the Constitution impleading the State of Haryana as a Respondent and contended that it could not be registered as a 'dealer' under Sec. 7 of the Punjab General Sales Tax Act, 1948, as extended to the State of Haryana and was, therefore, not liable to be assessed to Sales tax. It was held that Article 131 of the Constitution was a bar to the maintainability of the petition in the High Court and that it was only the forum of the Supreme Court to which resort could be had by the Petitioner for the determination of the disputed questions raised by it against the State of Haryana. The Court observed that under Article 131 of the Constitution in order that Courts other than the Supreme Court be deprived of their jurisdiction and the matter be exclusively determinable by the Supreme Court, the following two conditions required to be satisfied - -(i) the dispute must be between the Government of India and one or more States, or else it may be between the Government of India and a State or States on the one side and one or more States on the other side or it may be a dispute inter se the States; (ii) the dispute must involve some question whether of law or fact on which the existence or extent of a legal right depended. If these two conditions were satisfied, the only exception for the exclusion of the jurisdiction of the Supreme Court was in respect of disputes arising out of any treaty agreement, covenant, engagement or similar instruments as referred to in Article 363 of the Constitution. In its scope Article 131 was sweepingly prohibitive against the exercise of jurisdiction by all Courts other than the Supreme Court and conferred exclusive jurisdiction on the Supreme Court, if the above conditions were satisfied. As I read Article 131 of the Constitution it appears to me that this Article was intended to cover the dispute between the Government of India and any one of the States or between the States inter se, if the dispute involved any question, whether of law or of fact, on which existence of a legal right depended. The dispute to be covered must involve question on the extent or existence of a legal right. Dispute may, however, be of law or fact. The dispute must involve question of existence or extent of a legal right between the Government of India qua Government of India and State or States as such. Therefore, if there was any question between the Government of India as such and the States on which there was a dispute which was dependent on the right of the Government of India qua Government of India or the right of the States qua States, in such a case, the Supreme Court would have jurisdiction. But, where the dispute does not involve any question on the existence or extent of any legal right of the Government of India qua Government of India and State or States, Article 131 is not attracted. In the instant case, if the dispute was as to the right of the Government of India to be liable to sales tax under the State law or to the right and extent of the State to impose sales tax on the Government of India, then the Article would have been attracted. Here the dispute does involve any question as to whether the Government of India, as such, can be taxed or, if so, to what extent under the provisions of the Bengal Finance (Sales Tax) Act, 1941, but the dispute is whether in view of the transactions carried on by the Government of India the transactions were such which were liable to be covered by the provisions of the said Act. In such a case, in my opinion, Article 131 is not attracted. Therefore, I am unable with respect to accept the ratio of the aforesaid decision of the Punjab and Haryana High Court.
(3.)The next question that arises for consideration in this case, is whether the Petitioner is a dealer liable to be assessed to tax. It was contended that the Petitioner was not liable. In this connection reliance was placed on Director of Supplies and Disposals, Calcutta v/s. Member Board of Revenue West Bengal Calcutta : 20 S.T.C. 398. The State of Madras v/s. K.C.P. Ltd. : 23 S.T.C. 173, The Joint Commercial Tax Officer, Harbour Division II, Madras v/s. Youngmen's Indian Association, Madras and Ors. : 26 S.T.C. 241, The Indian Iron and Steel Co. v/s. Member, Board of Revenue, West Bengal : 27 S.T.C. 373, State of Tamil Nadu v/s. Thirumagal Mills Ltd. : 29 S.T.C. 290, Chief Commercial Superintendent, South Eastern Railway v/s. Member, Board of Revenue, West Bengal : 32 S.T.C. 171. In Union of India v/s. Additional Member, Board of Revenue, West Bengal and Anr. : 36 S.T.C. 61. I had occasion to review many of these decisions. It was noted that the expression 'business' though extensively used in taxing Statutes, was a word of indefinite import. In taxing Statutes, it was used in the sense of an occupation or profession which occupied the time, attention and labour of a person normally with the object of making profit. To regard an activity as business there must be a course of dealings, either actually continued or contemplated to be continued or contemplated to be continued with profit motive, there must be some real and systematic or organised course of activity or conduct with a set purpose of making profit. In this connection, however, it may be mentioned that definition of business was amended by the West Bengal Taxation Laws (Amendment) Act, 1969, wherein Sec. 2(1a) was included and it is in the following terms;
(i) any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture, whether or not such trade, commerce or manufacture, adventure or concern is carried on with the motive to make profit and whether or not any profit accrues from such trade, commerce, manufacture, adventure or concern; and
(ii) any transaction in connection with, or ancillary or incidental to such trade, commerce, manufacture, adventure or concern.
It has been held in the case of Shew Bhagwan Goenka v/s. Commercial Tax Officer it Ors. : 32 S.T.C. 368 : 77 C.W.N. 1026 that the amendment was bad as it was violative of Articles 14 and 16 of the Constitution. In an appeal, I am told, that the said decision has been upheld. It was held that the amendment in so far as it had retrospective operation, the same was violative of Articles 14 and 16. This question, however, in my opinion, is now concluded by the decision of the Supreme Court in the case of The District Controller of Stores, Northern Railway, Jodhpur v/s. The Assistant Commercial Taxation Officer and Anr. Unreported decision of the Supreme Court dated December 9, 1975, in Civil Appeal No. 487 of 1971 wherein the Supreme Court has observed:
There can be no dispute that the Legislature was competent to give retrospective effect to the definition of 'business' introduced by the amending Act.
This observation of the Supreme Court was made in connection with the amendment to Clause (cc) of Sec. 2 of the Rajasthan Sales Tax Act, 1954, which was amended with retrospective effect by Rajasthan Taxation Laws (Amendment) Act, 1965. In view of the said pronouncement of the Supreme Court, in my opinion, it cannot be contended that the said amendment with retrospective effect was not valid notwithstanding the submission made on behalf of the Petitioner that the said decision was not given after due consideration as there was no argument on this point before the Supreme Court. In my opinion, I have to proceed on the basis that such amendment is valid. But, be that as it may, whether particular transactions amount to business as defined under the provisions of the Act, must depend on the facts and circumstances of the case. Where diversification of activities are made by an institution or a Government and that diversification is carried on in such a manner as amount to doing business, in my opinion, the activities of such diversification would, come within the mischief of the provisions of the Act. In this connection the counsel for the Respondents drew my attention to the manner in which the transactions are carried on by or on behalf of the Petitioner as alleged in the affidavit -in -opposition.
But there is one difficulty. The assessment in this case is dependent on registration which was granted to the Petitioner by a separate order under Sec. 4(2) of the Act. That was done by the Commercial Tax Officer without proper delegation. Indeed, in view of Rule 71 such delegation could not be made. That is the effect of the Bench decision of this Court in the case of Sudhir Chandra Mukherjee v/s. Additional Commissioner of Commercial Taxes, West Bengal and Ors. Civil Revision No. 855 of 1968, decided on January 20, 1976. In that view of the matter, as the assessment was based on determination of liability under Sec. 4(2) of the Act which was done without proper authority by the Commercial Tax Officer concerned, in view of the aforesaid decision, in my opinion, the Petitioner is entitled to succeed and the impugned registration and the assessment order and the demand notice passed are set aside and quashed, but the Respondents would be at liberty to proceed afresh in accordance with law.