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Commercial Taxes Officer, Survey and Investigation Vs. the Divisional Superintendent, Northern Railway - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtRajasthan High Court
Decided On
Case NumberD.B. Civil Sales Tax Reference Case No. 32 of 1969
Judge
Reported in[1980]45STC18(Raj); 1979()WLN658
AppellantCommercial Taxes Officer, Survey and Investigation
RespondentThe Divisional Superintendent, Northern Railway
Appellant Advocate S.C. Bhandari, Adv.
Respondent Advocate L.R. Bhansali, Adv.
Cases ReferredSuperintendent and Remembrancer of Legal Affairs v. Corporation of Calcutta A.I.R.
Excerpt:
.....coal ash--held, n. rly. is a dealer & was liable to pay bale tax.;when a department of the state government or she central government carries on business activity, we fail to understand why it should not be considered as a 'dealer'.;we are therefore, of opinion that the railway, would fall within the definition of the terra 'dealer' as defined in the act.;reference answered - - the assessee filed appeal to the deputy commissioner (appeals), sales tax, jodhpur, but was unsuccessful. on the other hand, the normal construction, namely, that the general act applies to citizens as well as to state unless it expressly or by necessary implication exempts the state from its operation, steers clear of all the said anomalies. when a department of the state government or the central..........by the learned counsel for the parties, it would be necessary to refer to the definition of the term 'dealer' contained in clause (f) of section 2 of the act at the relevant time:'dealer' means any person who carries on the business of selling and supplying goods in the state whether on commission or for remuneration or otherwise and includes the state government in respect of any such business, a hindu undivided family, and also a society, club or any other association which sells or supplies goods to its members.4. the act was subsequently amended on 1st april, 1960, by- amendment act no. 18 of 1960, whereby the term 'dealer' was defined as below:2. (f) 'dealer' means any person who carries on the business of buying and selling or supplying goods in the state whether on commission.....
Judgment:

C.M. Lodha, C.J.

1. The short question, which arises for consideration in this reference under Section 15(2) of the Rajasthan Sales Tax Act, 1954 (hereinafter referred to as the Act), is whether the Northern Railway is liable to pay sales tax on the sale of coal-ash made by it. The question of law referred to us reads as under:

Whether, in the facts and circumstances of the case, the Divisional Superintendent, Northern Railway, Jodhpur, was a 'dealer' within the meaning of Section 2(f) of the Rajasthan Sales Tax Act, 1954, for the assessment year 1956-57 and was consequently liable to pay sales tax under that Act

2. For the period from 1st April, 1956, to 31st March, 1957, the Divisional Superintendent, Northern Railway, Jodhpur, was assessed to sales tax on the sale of coal-ash made by him. The Sales Tax Officer held that the Divisional Superintendent, Northern Railway, Jodhpur, came within the definition of 'dealer' as defined in the Act. The assessee filed appeal to the Deputy Commissioner (Appeals), Sales Tax, Jodhpur, but was unsuccessful. He preferred a revision before the Board of Revenue for Rajasthan, which allowed the same and set aside the order of the Deputy Commissioner (Appeals) holding that the assessee was not liable to pay sales tax on the sale of coal-ash. The Commercial Taxes Officer then applied to the Board for stating the case and referring the question of law arising out of its order for the opinion of this Court. The Board, however, rejected the application. Thereupon, the Commercial Taxes Officer made an application to this Court under Section 15(2) of the Act, which was allowed on 11th March, 1968. It is in pursuance of the order of this Court dated 11th March, 1968, that this reference has been made.

3. For a correct appraisal of the arguments advanced by the learned counsel for the parties, it would be necessary to refer to the definition of the term 'dealer' contained in Clause (f) of Section 2 of the Act at the relevant time:

'dealer' means any person who carries on the business of selling and supplying goods in the State whether on commission or for remuneration or otherwise and includes the State Government in respect of any such business, a Hindu undivided family, and also a society, club or any other association which sells or supplies goods to its members.

4. The Act was subsequently amended on 1st April, 1960, by- Amendment Act No. 18 of 1960, whereby the term 'dealer' was defined as below:

2. (f) 'dealer' means any person who carries on the business of buying and selling or supplying goods in the State whether on commission or for remuneration or otherwise and includes the Central Government, a State Government or any of their departments in respect of any such business, a Hindu undivided family and a society, club or any other association which buys goods from, or sells or supplies goods to, its members.

5. The learned counsel for the Northern Railway has urged that the Central Government and its departments are not included in the definition of the word 'dealer', as it stood at the relevant time. His argument is that since the State Government is expressly included in the term, but the Central Government has been excluded, the intention of the legislature is clear and points to the fact that the Central Government was exempted from the application of the Act.

6. At this stage, we may observe that there is no doubt that the Northern Railway, even though it is a department of the Central Government, is carrying on business activities. The word 'business' has been defined in Section 2(cc) as follows:

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 such profit accrues from such trade, commerce, manufacture, adventure or concern; and

(ii) any transaction in connection with, or incidental or ancillary to, such trad, 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 a sale, supply or distribution is made to its students.

7. The activity of the railway in selling coal-ash must be held to be a business within the definition of the term 'business' as the term has been so defined as to include any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce, adventure or concern carried on with a motive to make gain or profit and whether or not any such profit accrues from such trade, commerce, manufacture, adventure or concern. In District Controller of Stores, Northern Railway, Jodhpur v. Assistant Commercial Taxation Officer A.I.R. 1976 S.C. 489, the Supreme Court observed that the fact that though the activity involved in selling unserviceable material and scrap-iron, etc., would not amount to carrying on business in the normal connotation of that term, yet it would be business as defined in the Act. Their Lordships further observed that the railway, since it is concerned in the activity of transportation, is engaged in commerce within the meaning of Clause (i) of the definition and the sale of unserviceable materials and scrap-iron, etc., by it is a transaction in connection with or ancillary to such commerce within Clause (ii) of that definition.

8. As regards the definition of the term 'dealer' reference may be made to Superintendent and Remembrancer of Legal Affairs, West Bengal v. Corporation of Calcutta A.I.R. 1967 S.C. 997, wherein a Bench of 9 Judges overruled the earlier view taken by that Court in Director of Rationing and Distribution v. Corporation of Calcutta A.I.R. 1960 S.C. 1355, and held that the rule of construction that the King is not bound by a statute unless he is expressly named or brought in by necessary implication, which was accepted by the Privy Council in interpreting statutes vis-a-vis the Crown is inconsistent with and incongruous in the present set-up. The Supreme Court observed:

On the other hand, the normal construction, namely, that the general Act applies to citizens as well as to State unless it expressly or by necessary implication exempts the State from its operation, steers clear of all the said anomalies. It prima facie applies to all States and subjects alike, a construction consistent with the philosophy of equality enshrined in our Constitution. This natural approach avoids the archaic rule and moves with the modern trends. This will not cause any hardship to the State. The State can make an Act, if it chooses, providing for its exemption from its operation. Though the State is not expressly exempted from the operation of an Act, under certain circumstances such an exemption may necessarily be implied. Such an Act, provided it does not infringe fundamental rights, will give the necessary relief to the State.

9. Admittedly, in the present case, the Central Government is not expressly excepted from the operation of the Act and there do not appear to us any circumstances from which such an exception may necessarily be implied. The argument of the learned counsel for the railway is that since the State Government was included within the definition of the term 'dealer' but the Central Government was not so included, it must be inferred by necessary intendment that the intention of the legislature was to exclude the Central Government and its departments from the definition. In this connection, we may point out that the State Government was not included in the definition of the term 'dealer' prior to 1st April, 1958. It appears to us that the State Government initially and the Central Government subsequently were explicitly included within the definition of the term 'dealer' only by way of clarification, in order to remove doubts, if any. But that does not mean that the State Government and the Central Government were excepted from the operation of the Act by necessary intendment. When a department of the State Government or the Central Government carries on business activity, we fail to understand why it should not be considered as a 'dealer'. No such circumstances have been pointed out to us with reference to the provisions of the Act which may lead us to the conclusion that the Central Government and its departments were excepted from the operation of the Act by necessary intendment. We are, therefore, of the opinion that the railway would fall within the definition of the term 'dealer' as defined in the Act.

10. The learned counsel for the railway also placed reliance on Chellaram Kishan-das v. State of Maharashtra [1964] 15 S.T.C. 545, wherein the Maharashtra High Court had held that the expression 'person' normally would include the Union of India or a State, but, as a rule of interpretation, the Union of India or State would be excluded from the charging or penal provisions of the statute unless the intention of the legislature to the contrary could be inferred from the express provisions or by necessary intendment. It is, however, important to note that the learned Judges of the Maharashtra High Court have also observed, while dealing with the definition of the term 'person' in Section 10(1) of the Bombay Sales Tax Act, 1953, that there is no reason to exclude the Government of India from the expression 'person' occurring in Sub-section (1) of Section 10 of the Act. Be that as it may, in face of the authoritative pronouncement of their Lordships in the Superintendent and Remembrancer of Legal Affairs, West Bengal A.I.R. 1967 S.C. 997, there remains no room, for argument that the State Government or the Government of India, as the case may be, are not governed by the general law unless there is a specific provision incorporated in the law applying the Act to them. This is clear from the passage we have extracted above from their Lordships' judgment in Superintendent and Remembrancer of Legal Affairs v. Corporation of Calcutta A.I.R. 1967 S.C. 997.

11. Our answer to the question, therefore, is in the affirmative. Let the answer be returned to the Board. There will be no order as to costs.


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