V. K. SINGHAL, J. - (1.) THE Board of Revenue for Rajasthan has referred the following three questions of law arising out of its order dated June 17, 1983, in respect of the assessment year 1971-72. THE said reference has now been converted into revision in accordance with the amended provisions of the Rajasthan Sales Tax Act, 1954. THE questions referred are as under : " 1. Whether, in view of the prohibition contained in article 285 (1) of the Constitution of India, tax can be levied on the sale of the property belonging to the Government of India made through them ? 2. Whether, under the facts and circumstances of their case, the tax liability, if any, should have been of the auctioneers, who had conducted the auctions of the property of the Government of India ? 3. Whether, under the facts and circumstances of their case, the advance required to be deposited under section 7 (2a) of the Rajasthan Sales Tax Act was 'tax' as such, as defined in section 2 (r) of the said Act and whether for delayed payment of such advance towards the tax, interest under section 11b of the RST Act could have been levied, at the relevant time ?" Learned counsel for the assessee has submitted that the Director-General of Supplies and Disposals is a Government of India department and is effecting sale of such condemned articles, which are no longer required by the Government. It is submitted that the sales of the goods would not attract liability of sales tax because of the prohibition in article 285 (1) of the Constitution of India.
(2.) ARTICLE 285 (1) provides that the property of the Union shall, save in so far as Parliament may by law otherwise provide, be exempt from all taxes imposed by a State or by any authority within the State. In re, Sea Customs Act, 1878, AIR 1963 SC 1760, the question with regard to the interpretation of article 285 (1) and article 289 (1) was considered and it was observed that the excise duty is tax on production or manufacture and not on property as such. The said articles of the Constitution were held concerned with tax directly on income or on property and not with tax which may indirectly affect income of property. It was observed : "this will show that the taxable event in the case of duties of excise is the manufacture of goods and the duty is not directly on the goods but on the manufacture thereof. We may in this connection contrast sales tax which is also imposed with reference to goods sold, where the taxable event is the act of sale. Therefore, though both excise duty and sales tax are levied with reference to goods, the two are very different imposts; in one case the imposition is on the act of manufacture or production while in the other it is on the act of sale. In neither case therefore can it be said that the excise duty or sales tax is a tax directly on the goods for in that event they will really become the same tax. It would thus appear that duties of excise partake of the nature of indirect taxes as known to standard works on economics and are to be distinguished from direct taxes like taxes on property and income". The majority view thus in the above case was that the nature of tax was that the sales tax could be levied in respect of taxable event of the goods. The tax which has been levied in the present case is not on the property of the Union of India, but is on the transaction of sale of goods and, therefore, the explanation which has been provided under article 285 of the Constitution of India has no application. The first question, therefore, is answered in favour of the Commercial Taxes Officer, and against the assessee. Another question which has been raised is that the petitioners are not dealers. In Director of Supplies and Disposals, Calcutta v. Member, Board of Revenue, West Bengal [1967] 20 STC 398 (SC) it was held that "the expression 'business', though extensively used in taxing statutes, is a word of indefinite import. In taxing statutes, it is used in the sense of an occupation, or profession, which occupies 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 with a profit-motive; there must be some real and systematic or organised course of activity or conduct with a set purpose of making profit. To infer from a course of transactions that it is intended thereby to carry on business, ordinarily there must exist the characteristics of volume, frequency, continuity and system indicating an intention to continue the activity of carrying on the transactions for a profit. But no single test or group of tests is decisive of the intention to carry on a business. It must be decided in the circumstances of each particular case whether an inference could be raised that the assessee is carrying on the business of purchasing or selling of goods within the meaning of the statute. " It is submitted by the learned counsel for the assessee that the definition of "dealer" which has been given in section 2 (f) of the RST Act covers only those persons who are carrying on business. The said clause contemplates a business and, therefore, there must be a regular activity in the nature of business. The word "business" was added in section 2 (cc) by Act No. 9 of 1965 and has been defined as under : " 2 (cc) 'business' includes - (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, manufacture, adventure or concern is carried on with a motive to make gain or profit and whether or not any profit accrues from such trade, commerce manufacture, adventure or concern; and (ii) any transaction in connection with, or incidental or ancillary to, such trade, commerce, manufacture, adventure, or concern; but does not include activities of sale, supply or distribution of goods carried on without any profit motive by - (i) any charitable or religious institution in the performance of its functions for achieving its avowed objects; and (ii) an educational institution where such sale, supply or distribution is made to its students. " Sub-clause (i) of clause (cc) of section 2 provides for any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture and the Director-General of Supplies and Disposals is not carrying on the business. It is also submitted that sub-clause (ii) of clause (cc) of section 2 makes the transactions which are ancillary or incidental to such trade, commerce, manufacture, adventure or concern liable to tax and according to the submission of the learned counsel for the assessee there must be a trade, commerce, manufacture, adventure or concern and only then the transaction in connection with or incidental or ancillary to such trade, commerce, manufacture, adventure or concern would fall within the purview of sub-clause (ii ). If these is no trade, commerce, manufacture, adventure or concern then the transaction in connection with or incidental or ancillary to such trade, commerce, manufacture, adventure or concern would not fall within the purview or sub-clause (ii ). If there is no trade, commerce, manufacture, adventure or concern then the transaction in connection with or incidental or ancillary thereto could not be considered within the definition of "business". Reliance has been placed on the decision of the apex Court reported in [1967] 20 STC 398 (Director of Supplies and Disposals v. Member, Board of Revenue), wherein it was held that "the expression 'business' though extensively used in taxing statutes, is a word of indefinite import. In taxing statutes, it is used in the sense of an occupation, or profession which occupies 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 with a profit-motive; there must be some real and systematic or organised course of activity or conduct with a set purpose of making profit. To infer from a course of transactions that it is intended thereby to carry on business, ordinarily there must exist the characteristics of volume, frequency, continuity and system indicating an intention to continue the activity of carrying on the transactions for a profit. But no single test or group of tests is decisive of the intention to carry on a business. It must be decided in the circumstances of each particular case whether an inference could be raised that the assessee is carrying on the business of purchasing or selling of goods within the meaning of the statute. " In the above case, the dispute was with regard to disposal of surplus material which was left in India at the conclusion of the last war by the American Government and used by the Government of India itself and the surplus left with the Government of India which was no longer required or was not useful or had become obsolete, was sold by the assessee. It was held by the apex Court that the appellant was not carrying on the business of selling goods and was not a dealer. This decision of the apex Court was given when there was no such provision which has been inserted in the Rajasthan Sales Tax Act by Act No. 9 of 1965. Learned counsel for the Revenue has placed reliance on the decision of the apex Court in the case of District Controller of Stores v. Assistant Commercial Taxation Officer [1976] 37 STC 423 wherein the Railway which was concerned in the activity of transportation and engaged in commerce was held to be a dealer and, therefore, in accordance with the definition of "business" as introduced with retrospective effect by the Rajasthan Taxation Laws (Amendment) Act, 1965, it was held that the sales of unserviceable material and the scrap of material were liable to sales tax.
(3.) FROM the definition of "dealer" it will be evident that departments of the Central Government as well as the State Government have been specified in the definition of "dealer". The decision which was given by the apex Court in the case of the assessee reported in [1967] 20 STC 398 (Director of Supplies and Disposals v. Member, Board of Revenue), has no relevance in view of the amended definition of "dealer", wherein the explanation was added by Act No. 4 of 1979 retrospectively deeming the Central or State Government or their departments or offices to be dealer for the purpose of this Act, whether or not in the course of business the activity of buying or selling, etc. , had been carried on by them, read with the definition of "business" and the decision of the apex Court in the case of District Controller of Stores, Northern Railway v. Assistant Commercial Taxation Officer [1976] 37 STC 423 and Member, Board of Revenue, West Bengal v. Controller of Stores, Eastern Railway [1989] 74 STC 5. The Central and State Governments have been statutorily made dealers under the Act and the only thing to be seen is that the transactions carried on are in the course of business or ancillary or incidental thereto. Even the casual transactions have been made liable to tax under section 2 (ccc ). In these circumstances, I am of the view that the Board of Revenue was justified in coming to the conclusion that the assessee is a dealer. It may also be noted that the assessee is registered as No. 64/4 under the provisions of the Rajasthan Sales Tax Act, and, therefore, cannot claim that he is not a dealer, besides the fact that even this question was not referred to by the Board of Revenue through its order dated March 9, 1984. If the order was passed against him for registration, the said order is not in dispute and even if the registration was taken voluntarily, even then it is not proper at this stage to challenge the position that the assessee is not a dealer. The third point which has been raised by the learned counsel for the assessee is that the advance which was required to be deposited under section 7 (2a) of the RST Act was not a tax and, therefore, no interest could be charged under section 11b. Reliance has been placed on the definition of section 2 (r) in which tax has been defined as under : " tax" means a tax leviable under the provisions of this Act. From the definition of "tax" which has been given above, it will be evident that tax means tax leviable under the provisions of this Act. The advance tax which is liable to be paid cannot be treated differently than the tax and is part of the process of payment of tax. The amount which has been paid as tax will assume the character of a tax and once advance tax is required to be deposited, it is because of the fact that tax is leviable and, therefore, before quantification of final liability, the process starts and an amount is required to be deposited by way of advance tax. Thus the amount which has been deposited as advance tax would be considered as tax in terms of section 2 (r ). Even the power of the legislation to collect advance tax is an ancillary/incidental power for levy and collection of tax. The provision of section 7 has required the deposit of tax at intervals than those prescribed in sub-section (1 ). Sub-section (1) refers to the submission of return and the period during which it is to be submitted. The additional power which has been provided under section 7 (2a) is only to cast an obligation for making payment of advance tax at shorter intervals than those prescribed under sub-section (1) of section 7 and, therefore, the monthly tax which was required by notifications issued under sub-section (2a) of section 7 was to be adjusted with the liability of tax, which may arise in respect of quarterly return. The argument of the learned counsel for the assessee that if in a particular quarter there is a huge liability and in the succeeding quarter the liability is of reduced amount, then the assessee cannot be required to make payment of 1/3 of the tax on the basis of preceding quarter and the amendment which has been made by Act No. 4 of 1979 substituting the words "tax according to his account" should be considered as procedural and the words "proportionate tax" on the basis of last return, should refer only where there is actual liability in the vicinity of tax liability of preceding year. According to the learned counsel for the assessee there may be circumstances where no sale is effected in the subsequent quarter and thus the law cannot force to make payment for the first and second month of the quarter on the basis of the preceding quarter to make payment proportionately. If it is being done then it would be collection of tax without authority of law. It is also submitted that according to the assessee he has already paid tax which was taxed in accordance with the books of accounts and, therefore, the liability of interest which has been fixed under section 11b has wrongly been calculated on the basis of the tax liability of the preceding quarter. From the perusal of the assessment order it is found that interest of Rs. 13,806 was levied under section 11b for not making the payment of monthly instalments under section 7 (2a) of the Act. The notice was issued to the assessee and no reply was submitted. In appeal, it was contended that no interest is leviable. Before the Board of Revenue it was contended that monthly advance payment towards tax is not "tax" as defined in section 2 (r) of the Act and, therefore, no interest can be levied for non-payment of monthly advance towards tax. The question which has been referred by the Board of Revenue is also as reproduced above. On the perusal of the above question and on the basis of definition given under section 2 (r) of the Act, I am of the view that, even the monthly payment of advance tax is tax. The contention that advance tax for the first two months is less than the liability according to books was not raised before any authority and, therefore, cannot be examined here. Thus, this contention of the assessee has also no force and, therefore, non-payment of advance tax required under section 7 (2a) of the Act is subject to the interest in accordance with the provisions of section 11b. The revision has no force and is dismissed. Petition dismissed. . ;