Ramachandra Iyer, J.
1. This appeal raises a question regarding the liability of the Trustees of the Port of Madras to sales tax in respect of the charges levied and collected by them for water supplied to the ships that anchor at the Madras Port. Under Section 171 of the City Municipal Act, the Corporation of Madras is bound to supply the Port Trust with water on such terms as to payment and subject to such conditions of supply as shall be determined by the Council of the Corporation, subject to appeal to the State Government. The water supplied by the Corporation is stored by the Port Trust authorities in tanks specially constructed for the purpose and thereafter utilised for the purposes of the Port. One of the purposes, for which water is utilised, is to supply the same to the ships that call at the Port of Madras. The Corporation charges the Port Trust at the rate of Rs. 4-7-0 per 1000 gallons of water supplied by it. The Port Trust, in turn, charges the ships which take water on the quayside at the rate of Rs. 5-8-0 per 1000 gallons. But, if the ships are outside the Harbour, water is supplied to them through barges and the charge levied is at the rate of Rs. 8 per 1000 gallons. During 1940-1948, there had been ho levy of sales tax on the charges thus collected by the Port Trust, the Government having exempted the Port Trust from such levy. The exemption, however, was cancelled on 27th October, 1948. After some correspondence, the Deputy Commercial Tax Officer, Harbour Division, Madras, by his letter dated 8th June, 1949, called upon the Chairman of the Port Trust to pay tax on sale of water from 1st July, 1948. The Port Trust did not accept the claim; they, however, paid under protest a sum of Rs. 3,761-13-3 on the amount of Rs. 2,40,757, which was realised as charges for supply of water to the ships in the year 1948-49. Thereupon, the suit, out of which this second appeal arises, was filed by them to recover the sum of Rs. 3,745 on the ground that the levy was unauthorised. The respondent contested the claim and stated that the levy was proper, as the Port Trust was a dealer who sold goods and was, therefore, liable to be assessed to sales tax. They also contended that, under Section 18 of the Sales Tax Act, a suit for recovery of the tax paid could not be instituted after a period of six months from the date of the order and that, therefore, the suit was barred.
2. The learned First Additional Judge of the City Civil Court (later designated as the Assistant City Civil Judge) who tried the suit held that the Port Trust could not be deemed to be dealers and would, therefore, not be liable to pay a tax. But he held that, as the suit was filed on the 23rd August, 1950, all payments made prior to a period of six months therefrom would be barred by limitation and passed a decree for the payment made within the aforesaid period, namely, a sum of Rs. 1,554 with proportionate costs.
3. The State of Madras filed an appeal to this Court against the decree and judgment of the trial Court. The Port Trust filed a memorandum of cross-objections, claiming that they would be entitled to recover the sum collected by them by way of sales tax by the respondent. The appeal and memorandum of cross-objections were transferred by this Court to the City Civil Judge for disposal.
4. Tha learned Additional City Civil Judge held that, in purchasing water from the Corporation and levying charges therefor, the Port Trust would be a dealer within the meaning of Section 2(b) of the Madras General Sales Tax Act as, in his opinion, it was not necessary that there should be an element of profit in the transaction. The learned Judge disagreed with the view of the trial Court on the question of limitation and held that, as the entire claim was within the period limited by Article 62 of the Limitation Act, there would be no bar of limitation. In the view that the levy was authorised by the statute, the learned Judge allowed the appeal and dismissed the memorandum of cross-objections. The Port Trust of Madras has, thereupon, filed this second appeal against the decree and judgment of the lower appellate Court.
5. Section 3 of the Madras General Sales Tax Act (which will be referred to as the Act) enacts that every dealer shall pay for each year a tax on his total turnover for such year. Section 2(b) defines a dealer as 'any person who carries on the business of buying or selling goods'. Section 2(h) defines 'sale' as 'transfer of the property in goods by one person to another in the course of trade or business for cash or for deferred payment or other valuable consideration....'
6. To appreciate the case of the appellant, it is necessary first to ascertain the purpose for which the Port Trust is established, its powers and duties. The Port Trust Act was enacted for the proper working of the Madras Harbour by investing the control thereof in a body of persons, well acquainted with the affairs of the harbour, to whose judgment and experience the carrying out of the duties in connection with regulation, conservency and improvement of the port might be entrusted and arming them with adequate powers for the duties in connection with the aforesaid purpose. The Madras Port Trust Act is a consolidating statute. The preamble to the Act states that the enactment was for the purposes of 'regulation, conservency and improvement of the Port of Madras'. Section 6 enacts that the duty of carrying out the provisions of the Act would be with the Trustees of the Port of Madras who are to form a body corporate, having perpectual succession and a common seal. Section 31 of the Act vests the properties specified in Schedule II of the enactment and all movable properties held by it, in the Board. The Act provides for the Constitution of the Board of Trustees, their duties and powers. Chapter V invests the Board with power to execute works and perform certain services. There are also provisions in the Act enabling the Board to impose and recover rates, to borrow, to expend, etc. Section 35 enables the Board to execute such works and provide such appliances as the Board may determine necessary or expedient for the puposes of the port. Such works and appliances may include boats, barges and other appliances necessary in connection with the supply of water to ships in the port, vide Section 36(9). Section 39 prescribes that the Board shall provide all reasonable facilities and shall have power to undertake the services enumerated therein. Section 42 enables the Board to have a scale of rates at which and a statement of the conditions under which any of the services specified in the section shall be performed and Clause (c) relates to services, like supplying a ship with water. Under Section 45, the Board has power to increase the rates to cover deficiency of revenue. Section 56 gives a power to the Board of Trustees to sell the goods in its custody for any rates or rents due to it or in respect of any lien it might have. Section 60 enables the Board to apply for the distraint of a vessel which defaults in the payment of rates, charges or penalties. Sections 74 and 74-A authorise the Board to spend the rent, income and other proceeds of any property on objects specified therein and also to establish reserve fund.
7. From the provisions set out above, it is clear that the constitution of the Board and its powers are for the working of the provisions of the Madras Port Trust Act in regard to regulation, conservency and improvement of the Port of Madras and that it is not conceived as a commercial body for making profit by sale of goods. The provisions to which we have made reference, no doubt, authorise the levy of certain rates and charges by the Board. These charges are for the services rendered and notwithstanding the fact that the Board could increase the charges so as to balance its budget, it cannot be held that the Board is constituted a trading corporation or is one authorised to carry on the business of buying and selling goods.
8. On behalf of the appellant, it was contended that water could never be the subject-matter of a sale, as it would not be goods within the meaning of the Act or the Sale of Goods Act. Reliance was placed for this contention in a passage contained in Mulla's Commentary on the Sale of Goods Act, at page 13 and to the observations in Rash Behari v. Emperor : AIR1936Cal753 . It is unnecessary, however, to consider whether the authorities referred to above had in view only running water or water impounded and reduced to a person's possession as well.
9. Under the Act, it is not the sale by any person that is rendered liable to tax. The sale should be by a dealer as defined in the Act, one who buys and sells goods with the object or intention of making a profit, whether the object has ultimately been achieved or not. In Gannon Dunkerley and Co. v. State of Madras  5 S.T.C. 216, the assessee, which was carrying on business as engineering contractors, supplied food-grains to its employees and recovered the cost of the goods supplied by debiting the same against the wages earned by them. It was found that there was no element of profit in the transaction and the scheme of supplying food-grains was an ameliorative one, not intended as a business. A Division Bench of this Court, to which one of us was a party, held that the word 'business' employed in the definition of a dealer in Section 2(b) was used in the sense of buying and selling goods with a view to earn profits and should be understood in a commercial sense. The view that there should be a profit motive in order that a person carrying on the business might be termed a dealer coming within the scope of the Act was reiterated in Sree Meenakshi Mills Ltd. v. State of Madras  5 S.T.C. 291, where a spinning mill which ran a canteen for the benefit of its employees was held not to be a dealer so as to be liable to sales tax. The question was again considered and the view taken in the Gannon Dunkerley case  5 S.T.C. 216 was upheld by the decision of another Bench of this Court in Deputy Commercial Tax Officer v. Cosmopolitan Club  6 S.T.C. 1. Balakrishna Aiyar, J., observed at page 16 :
After an examination of the language of the statute and the authorities we are clear in our minds that only commercial activities whose goal is profit whether that goal be reached or not are caught by the definition.
10. In supplying water to the ships that call at the Port of Madras, the Trustees of the Port Trust are only discharging a statutory duty imposed upon them by the Act and it cannot be held that they are doing any business so as to make them a dealer within the terms of Section 2(b) of the Madras General Sales Tax Act. No profit motive could be implied in the levy of charges for the water supplied to the ships. In the present case it is implicit in the finding of the lower court, that there was no actual profit; even if it were to be found that there was a profit, we are of opinion that the obligation to supply water and a right to charge therefor the ships which take the water was by virtue of a statute, whose object was to regulate the working of the Port of Madras and not to establish a profit earning business. The provisions of Section 42(e) show that the levy of charges in respect of water supplied is for services rendered. On behalf of the respondent reference was made to the provisions of Section 45, which invest a power in the Board of Trustees to increase the rates to the extent specified in the section; it was argued that the provisions of the section contemplated a profit being made, to enable the balancing of the budget of the Port Trust and that, therefore; the object of the levy could not be held to be free from profit motive. We cannot, however, agree with the contention. The supply of water to a ship is a service to be rendered by the Port. Sections 42 to 44-A clearly indicate that the rates levied are for services rendered. Even assuming that the power granted under Section 45 would enable the Trustees to levy a fee higher than what it could cost them to render the services, with the object of raising funds for meeting the expenditure on other objects, still the levy would not amount to an attempt to make a profit. The statute has prescribed the conditions and limits within which the increase in the rates could be made and this would indicate that a limited power is delegated to a local authority to levy a fee for a specified purpose.
11. But there may be cases where a statutory corporation is allowed to carry on business with a profit motive. In such a case, though the rights and duties are defined by the statute, the Corporation would be a dealer liable to be taxed on its sales or purchases. An instance in point is the case reported in India Coffee Board v. State of Madras  5 S.T.C. 292., where it was held that the Coffee Board would be liable to pay sales tax on its turnover. The India Coffee Board was constituted by the Coffee Market Expansion Act, 1942, with a view to pool the coffee grown by the producers, sell the same at a profit and distribute the proceeds to the growers. Under the provisions of the Act, the Coffee Board became the owner of the goods, as soon as the coffee grown by the individual producers were surrendered to the pool and the Board sold the goods for a profit at the best possible price. The entire profits earned, except to the small extent which could with the sanction of the Central Government be diverted to the general fund, were distributed to the producers. It was held that the Coffee Board would be a dealer within the scope of the definition in Section 2(b) of the Act. That decision accepted the principle that in order to constitute a business within the meaning of Section 2(b) of the Act there should be a profit earning motive; but it was not necessary that it should have the intention of appropriating the profits to itself; the motive to earn profit would be there even if such profits were to be distributed to the persons for whose benefit the statutory corporation was constituted.
12. The Port Trust Act does not constitute the Board of Trustees of the Port Trust for the purpose of carrying on any business in buying and selling with a view to make a profit. There would, therefore, be no liability on their part to pay sales tax on the charges collected in respect of the water supplied by it to the ships. The view of the lower court on this point cannot, therefore, be sustained.
13. But on the other question, namely, the scope of Section 18 of the General Sales Tax Act, we agree with the lower court that the provisions of the section would not be applicable to suits for recovery of amount illegally collected as sales tax and that the rule of limitation applicable therefor is that contained in Article 62 of the Limitation Act. Vide State of Madras v. Abdul Kader : AIR1953Mad905 . The appellant would, therefore, be entitled to a decree for the entire amount claimed. The appeal will be allowed with costs throughout.