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Commissioner of Commercial Taxes Vs. Kesoram Industries and Cotton Mills Ltd - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtKolkata High Court
Decided On
Case NumberMatter No. 1215 of 1966
Judge
Reported in[1979]44STC197(Cal)
AppellantCommissioner of Commercial Taxes
RespondentKesoram Industries and Cotton Mills Ltd
Appellant AdvocateS. Bhattacharya and ;A.B. Chatterjee, Advs.
Respondent AdvocateB.N. Sen, B. Gupta and ;Ajay Mitra, Advs.
Cases ReferredJodhpur v. Assistant Commercial Taxation Officer
Excerpt:
- .....tax officer was confirmed.3. the respondent went up in revision from the above order to the west bengal commercial tax tribunal. the member of the tribunal accepted the contentions of the respondent and, following fort gloster industries ltd. v. member, board of revenue, west bengal [1970] 26 s.t.c. 141 held that where the dealer was obliged to run a canteen under the factories act, it was a welfare activity and not a business within the meaning of the statute. the member also noted that the extended definition of the expression 'business' in section 2(1a) of the said act, which was introduced by an amendment with retrospective operation, under which all transactions incidental or ancillary to any trade, commerce or manufacture or concern within the expression 'business' were also.....
Judgment:

Dipak Kumar Sen, J.

1. The facts found and/or admitted in this reference are, inter alia, as follows:

Messrs. Kesoram Industries and Cotton Mills Ltd., the respondent herein, filed its return for sales tax under Section 11(1) of the Bengal Finance (Sales Tax) Act, 1941 (hereinafter referred to as the said Act), for the four quarters ending on 31st March, 1964. In computing the gross turnover, it was noticed that amounts realised from sales in the respondent's canteen aggregating Rs. 1,67,946.35 as also the proceeds of casual sales of block and discarded goods had not been included in the gross turnover. The respondent claimed that in law the said amounts did not form part of the taxable turnover. The Commercial Tax Officer rejected such contentions, included the said amounts in the turnover and assessed sales tax accordingly.

2. Being aggrieved thereby, the respondent preferred an appeal to the Assistant Commissioner of Commercial Taxes. Following the judgment of the Supreme Court in Deputy Commercial Tax Officer, Saidapet, Madras v. Enfield India Ltd. Cooperative Canteen Ltd. [1968] 21 S.T.C. 317 (S.C.) the Assistant Commissioner held that the proceeds of the canteen sales, except that of sale of cooked food should be included in the gross turnover. As to casual sales of block and discarded goods, the Assistant Commissioner held that, by reason of the volume, frequency, continuity and regularity of such transaction, they could not be held to be sporadic and came within the definition of 'business' as given in the said Act. In respect of both the items, the order of the Commercial Tax Officer was confirmed.

3. The respondent went up in revision from the above order to the West Bengal Commercial Tax Tribunal. The Member of the Tribunal accepted the contentions of the respondent and, following Fort Gloster Industries Ltd. v. Member, Board of Revenue, West Bengal [1970] 26 S.T.C. 141 held that where the dealer was obliged to run a canteen under the Factories Act, it was a welfare activity and not a business within the meaning of the statute. The Member also noted that the extended definition of the expression 'business' in Section 2(1a) of the said Act, which was introduced by an amendment with retrospective operation, under which all transactions incidental or ancillary to any trade, commerce or manufacture or concern within the expression 'business' were also included therein, has been struck down by this Court as ultra vires in Shew Bhagwan Goenka v. Commercial Tax Officer [1973] 32 S.T.C. 368. Accordingly, in respect of sales of discarded and rejected machinery, etc., the Member held that the respondent could not be considered to be running a business in terms of its memorandum.

4. The revision application of the respondent was allowed.

5. On an application of the Commissioner of Sales Tax under Section 21(1) of the said Act, the following questions have been referred for the opinion of this Court as questions of law arising out of the order of the Tribunal:

(1) Whether or not, in the facts of the case, this Tribunal was justified in law in holding that canteen sales and sales of old surplus and discarded materials effected by the respondent-company prior to the insertion of the definition of 'business' on 16th November, 1967, were not exigible to tax under the Bengal Finance (Sales Tax) Act, 1941, as amended by an Ordinance of 1967, since repealed and saved by the West Bengal Taxation Laws (Amendment) Act, 1969 ?

(2) Whether the Reference Bench of the Calcutta High Court in exercise of its power under the Bengal Finance (Sales Tax) Act, and as a creature of the statute itself could decide any question relating to the vires of any provision thereof ?

(3) If the repeal of the repealing law had the effect of reviving the law as it obtained before original legislation relating to retroactivity came to be struck down as ultra vires

5. It does not appear from the order from which this reference has been sought that the above questions Nos. (2) and (3) were ever mooted before or considered by the Tribunal. The said two questions were also never asked for by the Commissioner. In this view of the matter, we decline to answer the said questions.

6. As regards question No. (1), the Learned Counsel for the respondent at the hearing cited a decision of the Supreme Court in Director of Supplies and Disposals, Calcutta v. Member, Board of Revenue, West Bengal, Calcutta A.I.R. 1967 S.C. 1826 where it was held by the Supreme Court that sales by the Government of India through the Directorate of Disposals of surplus war equipments taken over by the Government of India from the American forces after the second world war were not in the course of business of buying and selling of goods within the meaning of Section 2(c) of the said Act, though such sales were not casual, were spread over a number of years, and items sold included goods of great variety, which were disposed of with the help of a widespread organisation after frequent advertisements.

7. The only submission made on behalf of the sales tax authorities was that, after the amendment of the statute, whereby the definition of the word 'business' was widened, sales effected in a canteen as also sales of surplus and discarded materials would come within the ambit of the taxable transactions. In support of this contention, a decision of the Supreme Court in State of Tamil Nadu v. Burmah Shell Oil Storage and Distributing Co. of India Ltd. [1973] 31 S.T.C. 426 (S.C.) was cited, where the Supreme Court construed the effect of a corresponding amended definition in the Madras General Sales Tax Act. Another decision of the Supreme Court in District Controller of Stores, Northern Railway, Jodhpur v. Assistant Commercial Taxation Officer, A.I.R. 1976 S.C. 489 was also cited in this connection. In the latter case, the Supreme Court, while construing an amendment effected to the Rajasthan Sales Tax Act, 1954, held that the legislature was competent to give retrospective effect to the definition of 'business' introduced in that Act by an amendment.

8. So far as this Court is concerned, the matter stands concluded by the decision in Shew Bhagwan Goenka [1973] 32 S.T.C. 368 whereby the retrospective operation of the extended definition was struck down. No other decision in respect of the statute with which we are concerned has been cited. The decision is binding on us and we are only concerned with the statute as it stands after this judgment.

9. In this view of the matter it cannot be said that the transactions effected by the respondent in the instant case by effecting sales in its canteen and by effecting sales of its old surplus and discarded materials were exigible to sales tax.

10. The question is accordingly answered in the affirmative and in favour of the respondent. In the facts and circumstances, there will be no order as to costs.

Banerji,

I agree.


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