G.K. Mitter, J.
1. This is a reference under Section 21(3) of the Bengal Finance (Sales Tax) Act, 1941. The question referred to this Court is:
Whether the Director of Supplies and Disposals, United States Transfer Directorate, having his office situated at No. 6, Esplanade East, Calcutta, carries on the business of selling goods in West Bengal and is, therefore, a 'dealer' within the meaning of Section 2(c) of the Bengal Finance (Sales Tax) Act, 1941?
2. The facts of this case are as follows: The Directorate of Disposals (United States Transfer Directorate) was an organisation of the Government of India. The said Directorate with various branches under its control were responsible for the disposal of surplus American war equipment which had been taken over by the Government of India. When the said equipment was substantially disposed of the work of the said Directorate dwindled and had merged with that of the Regional Commissioner (Disposals) on nth January, 1950. Later the Supply and Disposal wings of the Government of India were merged and was redesignated as the Directorate of Supplies and Disposals. The functions of this Directorate were:--(a) to dispose of surplus goods; (b) to purchase goods on behalf of the Government of India, various State Governments and approved autonomous bodies. The Director of Disposals (United States Transfer Directorate) refused to get registered under the Bengal Finance (Sales Tax) Act, 1941, on the ground that he was not a dealer. On 9th November, 1955, the Commercial Tax Officer, Esplanade Charge of the Directorate of Commercial Taxes, Government of West Bengal, issued a notice under Sections 11(2) and 14(1) of the said Act to the Director directing him to produce the books of account and other documents for the purpose of assessment of the tax payable under the Act in respect of the period from 1st April, 1949, to 30th May, 1949. After hearing the representative of the Directorate, the Commercial Tax Officer made an assessment on 23rd February, 1956. The assessee filed an appeal from the said assessment to the Assistant Commissioner of Commercial Taxes. The point urged was that the Directorate of the Government of India was not working to earn a profit and was not carrying on the business of selling goods in West Bengal and as such was not a dealer. This contention was turned down and a revision petition was filed before the Commissioner of Commercial Taxes. On the refusal of the petition a further revision petition was made before the Board of Revenue, West Bengal, which too was rejected.
3. The whole question is whether the Directorate can be said to be a dealer within the meaning of the expression used in the Sales Tax Act. Under Section 2(c) of the Act a dealer is a person who carries on the business of selling goods in West Bengal and includes the Government. The question before us is whether in the matter of disposal of surplus American war material the Director was carrying on a business of selling goods. It is not disputed that he was selling goods but it is urged that his activity did not savour of a business. It was argued that the ' business ' implies a motive of making profit and a person who carries on a business of selling goods must be one who manufactures or procures them, inter alia, by purchasing them and then selling them. It was contended that the goods were left in India at the conclusion of the war by the American Government to be dealt with by the Government of India just as it pleased. Government could have used the goods themselves or made a gift of them to others who required them or thrown them away as scrap. As a matter of fact a considerable portion of the goods was used up by the Government itself and the balance instead of being thrown away was sold to the public. It was argued that such selling did not involve a business inasmuch as the whole stock came to the Government of India as a windfall but as its volume was considerable an organisation had to be set up so that the disposal could take place smoothly.
4. It is not necessary to deal with all the orders made by the Revenue authorities in this case but it would be enough to refer to the salient features noted by the Member, Board of Revenue, in rejecting the petition of revision of the Directorate on 12th September, 1960. According to the Member, 'it cannot also be said in this case that there has been no profit motive: in fact, the profit motive appears to be dominant. To determine whether a person is carrying on the business of selling, one of the most important considerations would be how many such sale transactions took place and during how long a period. Another point of importance would be if there was a profit motive behind those sale transactions. In these cases, goods of the value of several lakhs had been sold in a series of transactions. It is not the case of the petitioner that there had been one or two sale transactions only.
5. In my opinion, the Member, Board of Revenue, correctly assessed the position. In order to find whether a person is carrying on a business of selling goods his entire activities must be considered. One must consider the magnitude of the transactions, their frequency and also see whether there was a profit motive behind the operations. The system of sale must also not be left out of account. If a person sets up an organisation with ramifications and branches at various places and centres for disposing of goods these would be elements to be noted in arriving at a conclusion as to whether he was carrying on a business of selling or not. Various cases were cited at the bar where transactions by which the goods were disposed of were held not to constitute a business of selling goods because they were not commercial in nature and were not activated by profit making motive. In Gannon Dunkerley & Co. (Madras) Ltd. v. State of Madras A.I.R. 1954 Mad. 1130, it was found that the assessee's main business was to execute contracts for construction of buildings, bridges, dams, roads etc. During the period in review the assessee executed a large number of such contracts all over the State of Madras and in order to provide amenities to their workmen distributed food-grains to them and debited the cost thereof against their wages. They also ran canteens for the supply of foodstuff to their employees at their workshops but they derived no profit either from the sale of the foodgrains or foodstuff. The Madras High Court held that the supply of foodgrains or foodstuff had no element of profit behind it and was intended merely as a scheme for the amelioration of the workmen and was in no sense a business of selling goods. According to the learned Judges ' the word business must be understood in commercial sense as involving an activity designed to earn profit. ' In Deputy Commercial Tax Officer v. Cosmopolitan Club A.I.R. 1954 Mad. 1144, it was found that the Club was not a profit-making concern and as it had no intention to make a profit by or out of the sale of refreshments to its members, and there being no taint of commerciality in the transaction the turnover in respect of the sales in question could not be assessed to sales tax. In Sree Meenakshi Mills Ltd. v. State of Madras A.I.R. 1954 Mad. 1143, the Court had to consider whether the sale of foodstuff in the canteens of the mills on a non-profit basis was a business and it was held following Gannon Dunkerley's case A.I.R. 1954 Mad. 1130 that the assessees were not dealers carrying on a business.
6. To the same effect is the judgment of the High Court of Mysore in Davanagere Cotton Mills Ltd. v. The State of Mysore  8 S.T.C. 793. In Girdharilal Jiwanlal v. Assistant Commissioner of Sales Tax, Nagpur, and Anr.  8 S.T.C. 732, the assessee was a person who carried on a business in coal, machinery, cotton and cotton seeds, groundnut and cotton bales in respect of which he was a registered dealer under the relevant Sales Tax Act. He also owned extensive lands on which he raised crops of cotton, groundnut and grain. After meeting his personal requirement he sold the balance of the produce during the three periods under assessment. The Court found that he was principally an agriculturist who only sold surplus agricultural produce not required by himself and as such was not a dealer.
7. In State of Bombay v. Ahmedabad Education Society  7 S.T.C. 497, it was found that the assessee had to put up buildings for residential quarters for the staff of colleges and hostels for students. It gave a contract for the construction of these buildings to Gannon Dunkerley Ltd. Realising that it would be cheaper and more economical to have a brick factory of its own for manufacturing bricks, it set up such a factory as also some lime kilns. It supplied bricks to Gannon Dunkerley Co. Ltd. and disposed of bricks manufactured in excess of their requirements. It did so to a sister educational institution and also to certain individuals without making any profit. It was found by the Bombay High Court that the object of the assessee in setting up the brick factory and the lime kilns was to use bricks for its own use and the disposal of the surplus was not made with an eye to profit and as such it could not be said to be carrying on a business of selling or supplying goods.
8. In Raja Bhairabendra Narayan Bhup v. Superintendent of Taxes, Dhubri and Ors.  9 S.T.C. 60, the assessee was a zamindar who had extensive sal forests in his zamindary. These forests were divided into coupes which were settled every year by auction to the highest bidders. The settlement holders were permitted to fell the sal trees and market them by sawing up etc. He was sought to be taxed as a dealer under the Assam Sales Tax Act. The Assam High Court took the view that the trees which were sold had grown spontaneously upon the land of the assessee and they were sold, not as an independent business, but in exercise of the rights which the assessee had in the zamindary of disposing of the timber grown on his land. According to the Assam High Court ' where the business did not exist independently of its own, apart from the ownership of the lands, the produce whereof had been sold, it could not be argued that the party concerned was carrying on a business of selling or supplying goods.
9. As against the above the following cases also may be noted. In Aryodaya Spinning and Weaving Co. Ltd. v. The State of Bombay  11 S.T.C. 141, the assessees had a factory with a spinning and weaving plant. It was found that they were carrying on the business of selling yarn, cloth, cotton, waste stores etc. and accordingly they were registered as dealers. In the relevant period they sold off some excess cotton and cotton waste. These sale transactions were sought to be charged by the Sales Tax Authorities. The assessees contended that they were not carrying on a business of selling cotton or cotton waste, and, therefore, the price received on those sales could not be included in computing their turnover. The Court held that the application submitted by the assessee for registration or the registration certificate issued was not decisive of the matter. It observed that
cotton waste is cotton which is discarded in the process of carding on account of its short staple and unsuitability for manufacturing yarn of the type required by the factory. If such cotton waste not required for use in the factory is disposed of normally and regularly, it must be regarded as an incident of the business of the assessees. It is true that the normal business of the assessees was the business of manufacturing and selling cotton textiles and cotton yarn, but if the activity pursued by the assessees of selling cotton waste has a reasonable relation to the normal activity pursued by them, it must be regarded as an allied business activity.
10. In the result, it was held that the assessees should be regarded as dealers in cotton.
11. In Gosri Dairy Vytilla v. The State of Kerala  12 S.T.C. 683 the assessee was a registered dealer only for its dairy products. It was found that the assessee had been regularly selling its unserviceable cows in such numbers that the annual proceeds thereof ran to the tune of Rs. 11,000 to Rs. 16,000. A Full Bench of the Kerala High Court came to the conclusion that this activity must be regarded as one in the course of the business of the assessee in view of the frequency, regularity and the volume of sales of cattle by it.
12. In Madras Electricity Department Canteen, Madras v. The State of Madras  13 S.T.C. 288, the assessee's main object was serving the members of the canteen with lunch and tiffin. There was no prohibition in the bye-laws governing the canteen of sale of lunch and tiffin to non-members. During the period of assessment the assessee was found to have sold lunch and tiffin to outsiders and earned a profit. It was held by the Madras High Court that ' catering to persons outside the members of the canteen necessarily implies that the canteen had a business or a profit motive. It is impossible to designate sales to outsiders as not comprised in a business activity.
13. In The State of Andhra Pradesh v. H. Abdul Bakshi & Bros.  15 S.T.C. 644, the assessees were registered dealers under the Hyderabad General Sales Tax Act who carried on the business of tanning hides and skins and of selling the tanned skins. For the purpose of their business they purchased undressed hides and skins and also tanning bark and other material required in their tannery. They disputed their liability to pay tax on a certain sum included in the turnover on the ground that the amount represented the price paid for buying tanning bark required in their tannery. They submitted that tanning bark was bought for consumption in the tannery and not for sale, and they were accordingly not dealers in tanning bark. Section 2(m) of the Hyderabad Act defined turnover as meaning an aggregate amount for which goods were either bought by or sold by a dealer. Under Section 2(e) of the Act a dealer was a person, local authority etc. engaged in the business of buying, selling or supplying goods in the State of Hyderabad whether for a commission, remuneration or otherwise. It was held by the Supreme Court that,
the expression ' business ' though extensively used 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, and not for sport or pleasure. But to be a dealer a person need not follow the activity of buying, selling- and supplying the same commodity.
14. In our opinion, it is immaterial to consider the source of the surplus material sold off by the Directorate of Disposals. The fact that they were received as a windfall or gift is of no moment. What we have to consider is the sum total of the activity of the Directorate in selling them. When we find that the sales were not casual, that they were spread over a number of years and they included goods of great diversity which were disposed of with the help of a wide-spread organisation it is impossible to take the view that the disposal did not amount to a business of selling goods. It is common knowledge that the goods which were offered for sale were largely advertised in the newspapers and auctions of them used to be held from time to time. Is it possible to urge that there was no motive of making profit behind the sales? The answer is clearly in the negative. All these considerations impel us to hold that the Directorate of Disposals was engaged in a business of disposing of surplus American war material and the Director was a dealer within the meaning of the expression in the Bengal Sales Tax Act.
15. Our attention was drawn to the case of Commissioner of Taxes v. British Australian Wool Realization Association Ltd.  A.C. 224, where the question was whether profits were made by the sale of undisposed surplus wool acquired for the war at the conclusion thereof so as to attract the levy of income-tax. It was contended on behalf of the Revenue that the sale proceeds less expenses was taxable income and was gain made in the operation of business in carrying out a scheme for profit-making. On behalf of the respondent it was argued that the balance of proceeds of sale was the result of realization, not of trading for profit, and was therefore not income or profits liable to tax. It was argued that the company was formed to continue the realization of the wool, and it was precluded from entering into other transactions, that the wool was not taken into the books of the company at any real valuation and that this was not necessary--as the shareholders contributed neither wool nor cash. The contention of the Revenue was turned down by the Judicial Committee of the Privy Council. According to the Board ' in the realization the association was engaged for three years. It never essayed in other activity...it paid no dividends. The net proceeds of realization as they became available were, as to one moiety, accounted for to the Imperial Government, its principal. As to the other moiety of the Australian wool, supplemented by the cash proceeds to earlier realizations...these were applied, first, in the redemption of the priority wool certificates and next in paying off, under schemes of reduction sanctioned by the Court, the capital credited as paid on the shares of the association. As a result of this procedure--a procedure which it will be seen was the nearest possible approximation, while the association was still a going concern, to the normal distribution made by a company in liquidation--Ios. per share were distributed in April, 1923, and 9s. per share in February, 1924.' Further it was held that the sums available for distribution were in no way profits earned by the association. In my view, there is nothing in this judgment which helps the assesses before us. The only similarity seems to be that the wool disposed of there was received as surplus war material.
16. In the result, the question must be answered in the affirmative and against the assessee who will pay the costs of this Reference.
S.A. Masud, J.
17. I agree.