COMMISSIONER OF SALES TAX Vs. RAM DULARE BALKISHAN AND BROS

JUDGEMENT

(1.) IN this reference under Section 44 of the Madhya Pradesh General Sales Tax Act, 1958, read with Section 23 (1) of the Central Provinces and Berar Sales Tax Act, 1947, the question which

(2.) RAMDULARE Balkishan and Brothers of Balaghat are bus operators and carry on the business of providing transport. They own several buses and trucks. During the period from 1st January, 1957, to 31st March, 1959, the assessee sold unserviceable cars, trucks, tyres, and other used motor accessories to various persons. The value of all these sales amounted to Rs. 6,154-12-0. The Assistant Sales Tax Officer, Chhindwara, held that the assessee was a "dealer" as defined in Section 2 (c) of the Act of 1947 and accordingly assessed Ramdulare Balkishan and Brothers to sales tax on these sales. The assessee unsuccessfully appealed to the Appellate Assistant Commissioner of Sales Tax, Jabalpur. Thereupon a second appeal was preferred before the Board of Revenue by the assessee which was allowed and it was held that the assessee was not liable to pay any sales tax on the value of the sales of unserviceable material. The present reference is at the instance of the Sales Tax Commissioner.

(3.) THE reference must be answered in the light of our decision in State of M. P. v. Bengal Nagpur Cotton Mills Ltd. [1961] 12 S. T. C. 333. In that case, after referring to the definitions of "dealer" and "sale" given in Section 2 of the Act of 1947, we pointed out that under Section 5 of the Act sales tax was payable by a dealer on his taxable turnover of the goods specified in the Schedule as liable to tax ; that the Act did not impose sales tax on all goods but only on those goods specified in Schedules I and II; that it did not, impose the tax on the mere sale or purchase of the goods specified in the Schedules; and that what was taxable under the Act was the sale of those goods effected by a dealer. We further said that according to the definition of "dealer" every seller of a commodity was not a dealer ; that in order to constitute a person a "dealer", he must be engaged, whether as principal or agent, in the business of selling or supplying goods; that for the purpose of the Act the transfer of property in the goods from one person to another should be in the course of business of selling or supplying the goods ; and that for the imposition of tax under the Act on the sale transaction of a commodity, it was not sufficient that the sale should be by a "dealer" carrying on the business of selling or supplying some commodity but that the business of the dealer must be the selling or supplying the particular commodity sought to be taxed. We further said-Merely because an activity is continuous or repeated, it does not follow that it is a business activity as understood in a commercial sense. The expression 'carries on the business of selling or supplying goods' in the definition of 'dealer' must be construed in its commercial sense. So construed, it means the carrying on of continuous trading operations with a view to earn profit. A person engaged in continuous trading operations may not actually obtain profit. He may incur a loss. But if he engages himself in those operations with the object of earning profit, then he is carrying on a business. The test is, therefore, the object with which the activity is carried on, and not whether he actually gets profit or loss, which is material.