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The New India Assurance Co., Ltd. Vs. Deputy Commercial Tax Officer, Esplanade Division - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtChennai High Court
Decided On
Reported in(1972)1MLJ398
AppellantThe New India Assurance Co., Ltd.
RespondentDeputy Commercial Tax Officer, Esplanade Division
Cases ReferredState of Gujarat v. Raipur
Excerpt:
- t.n. district police act, 1859 [act no. 24/1859]. section 10 & tamil nadu special police subordinate service rules, rule 14(b), clause (iv) explanation (1); [a.p. shah,c.j., f.m. ibrajhim kalifulla & v. ramasubramanian, jj] rule 14(b),ci.(iv) explanation (1) providing that a person acquitted or discharged on benefit of doubt shall be treated as person involved in criminal case - validity being questioned - held, the impugned rule 14(b) ci.(iv) explanation (1) has been issued in exercise of the power conferred upon the government under the tamil nadu district police act, the criminal city police act and the proviso to article 309 of the constitution., the rule is not assailed on the ground of lack of competence. it is challenged only on the ground that it is violative of articles 14 and..........supplying or distributing goods...whether for cash or for deferred payment...and includes a casual trader and others. in the instant case, the main commercial activity of the petitioner is general assurance business. they do not buy or sell or supply or distribute goods either for cash or for deferred payment or for any other valuable consideration. occassionally, when in the course of their activity they come into possession of a damaged vehicle over which they settled their claims under the insurance policy taken for the purpose and if in order to get rid of the damaged vehicle, they engage the services of an auctioneer and sell the same, they cannot even be characterised as casual traders. it is a casual transaction, but it is not a transaction of a casual trader. the inclusive.....
Judgment:
ORDER

T. Ramaprasada Rao, J.

1. The petitioner-company is an incorporated company under the Indian Companies Act doing General Insurance business. In connection with the claims made on a motor car which was involved iii an accident in the year 1961, the petitioner is said to have paid all the claims and taken over the damaged motor car. As the petitioner's only business is insurance, it had to sell away the said damaged motor car which came into its possession accidentally, by reason of the settlement of the claim in connection with an accident to that vehicle which was apparently insured with them. They caused the sale of the damaged motor car through M/s. Alwin & Co., Auctioneers. The auction sale held on 9th April, 1961 fetched a sum of Rs. 2,700. Nearly six years later, the respondent served on the petitioner a notice dated 29th March, 1967 inviting his attention to the auction sale held by M/s. Alwin & Co., and wanted to bring to tax the amount fetched in the above auction as if it was an amount realised by a sale of goods which attracts a single point levy under the Madras General Sales Tax Act. The petitioner was given time till 11-00 A.M. on 31st March, 1967. The respondent thereafter took up the matter at about 5-00 P.M. on 31st March, 1967 and as the petitioner did not file any objections he finally assessed the petitioner to sales tax as indicated and also levied a penalty. It is as against this1 order that the present writ petition has been filed. A dealer as defined in the Madras General Sales Tax Act, 1959 in Section 2(g) therein means any person who carries on the business of buying, selling, supplying or distributing goods...whether for cash or for deferred payment...and includes a casual trader and others. In the instant case, the main commercial activity of the petitioner is general assurance business. They do not buy or sell or supply or distribute goods either for cash or for deferred payment or for any other valuable consideration. Occassionally, when in the course of their activity they come into possession of a damaged vehicle over which they settled their claims under the insurance policy taken for the purpose and if in order to get rid of the damaged vehicle, they engage the services of an auctioneer and sell the same, they cannot even be characterised as casual traders. It is a casual transaction, but it is not a transaction of a casual trader. The inclusive definition which refers to a casual trader apparently refers to a person who trades in such casual activities. In the instant case, the primary business of the petitioner is not sale of motor cars. This is not in dispute. Therefore, the activity which is purely accidental and which was undertaken in order to clear the damaged motor car from their custody and godown cannot be attributed to be a commercial activity of a casual trader. As the Supreme Court held in State of Gujarat v. Raipur . : [1967]1SCR618 . To attribute an intention to carry on business of selling goods it is not sufficient that the assessee was carrying on business in some commodity and he disposed of for a price, articles discarded, surplus or unserviceable. Unless they are frequent, voluminous, continuous and regular, an inference that they were all undertaken in the course of trade whether real or casual cannot be properly drawn. I am, therefore, of the view that the petitioner cannot come within the definition of Section 2(g) as a dealer and it is only the dealings of a dealer which can be brought to tax, if they are assessable at all, under the provisions of the Madras General Sales Tax Act. In any view of the matter the amount brought to tax by the respondent cannot be included or treated as assessable turnover which has escaped assessment. Therefore both the order of assessment and the imposition of penalty in consequence thereto were passed without proper exercise of jurisdiction. In this view the rule nisi is made absolute. The writ petition is allowed. There will be no order as to costs.


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