Sankar Prasad Mitra, J.
1. This is a reference under Section 21(1) of the Bengal Finance (Sales Tax) Act, 1941. The applicant, Messrs Indian Iron & Steel Co., Ltd., is a dealer registered under the Act. The Commercial Tax Officer, for the assessment year ending on the 31st March, 1953, by an order dated the 11th 'January, 1956, made an assessment for sales tax with regard to the following' transactions of the applicant during the relevant assessment year:--
(i) sales of coke-breeze to staff for Rs. 42,314,
(ii) supply of stores to the colliery staff amounting to Rs. 21,068, and (iii) value of stores supplied to staff amounting to Rs. 1,372.
2. The applicant's appeal to the Assistant Commissioner of Commercial Taxes failed. The applicant filed a revision petition before the Commissioner of Commercial Taxes. It was submitted to the Commissioner that coke-breeze and stores were supplied to the applicant's staff at concessional rates only to provide amenities to them and there being no motive of profit in such deals, the applicant could not be treated as a dealer in respect of such supplies and the same were not sales for the purpose of the Act. The Additional Commissioner of Commercial Taxes rejected this contention. The dealer then went to the Board of Revenue. The Board upheld the Additional Commissioner.
3. Thereafter the applicant applied under Section 21(1) of the Act to the Board of Revenue for reference to this court certain questions of law. The Board by its order dated the 24th December, 1962, observed as follows:
With regard to question No. 2, it is an admitted fact that the petitioner is a dealer. But the contention is that certain sales (of coke-breeze, stores etc.) made to the staff cannot be subjected to sales tax inasmuch as profit-motive was totally absent in these transactions. The Board appears to have held that although profit-motive might have been absent in the particular sale transactions, they nevertheless constitute sales within the meaning of the Bengal Finance (Sales Tax) Act, 1941, and that having been made by a dealer, they are to be subjected to sales tax. There is no authoritative decision on this question, which is certainly a question of law. In the circumstances, a reference will be made to the High Court on this question which should stand modified as under. The question to be referred is : 'whether sales by the petitioner to the members of its staff of certain commodities such as coke-breeze and stores should be excluded from its turnover as dealer for the purpose of imposition of sales tax under the Bengal Finance (Sales Tax) Act, 1941, merely because such sales were without any profit-motive, and thus be exempt from sales tax?
4. This is the question referred to us. But it seems that the real controversy between the parties has not been brought out in this question. In the Bengal Finance (Sales Tax) Act, 1941, in Section 2(c) a 'dealer' has been defined. According to this definition a 'dealer' means, inter alia, any person who carries on the business of selling goods in West Bengal. It is interesting to compare this definition with the definition of a 'dealer' in the Bihar Sales Tax Act, 1959. In the Bihar Act 'dealer' means, inter alia, any person who sells any goods whether for commission, remuneration or otherwise. The Bihar definition seems to be of a slightly wider amplitude. Then again, by the West Bengal Taxation Laws (Amendment) Act, 1969, Section 2(la) was incorporated into ^he Bengal Finance (Sales Tax) Act with retrospective effect. This amended provision has tried to define 'business'. It says that 'business' includes '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 the motive to make profit and whether or not any profit accrues from such trade, commerce, manufacture, adventure or concern.'
5. It is apparent, therefore, that the sale of coke-breeze or stores by the applicant to its employees without any profit would not exempt the sales from payment of sales tax. But the question is, whether the dealer in the instant case carried on the business of selling coke-breeze and stores in West Bengal. This is the issue which has to be decided in this reference. But, as we have said, it has not been brought out in the question referred to this court. Naturally, one has to enquire whether the matter was specifically raised before the tax authorities, before this court can be invited to set at rest the real dispute between the parties. Mr. Sen Gupta, learned counsel for the respondent, has urged that before the departmental authorities it was never argued that coke-breeze and stores were supplied to employees to provide them with social amenities and, as such, this court should not enter into this controversy or reframe the question referred to it for settling an issue of this nature.
6 Mr. Sen Gupta is right that from the order of the Commercial Tax Officer it does not appear that the dispute we have indicated was raised or considered by him (vide pages 4 to 6 of the paper-book). But at pages 11 and 12 we find the grounds of appeal against the order of assessment under Section 11 of the Bengal Finance (Sales Tax) Act. Ground No. 2 is :
That the charges of Rs. 42,314 realised for coke-breeze supplied to the employees at concessional rate cannot form part of your petitioner's turnover because such supplies were effected not with a view to do the business of selling.
7. Ground No. 7 is :
That the charges of Rs. 1,372 realised for goods supplied to staff mostly at nominal price and at cost cannot form part of your petitioner's turnover because such supplies were effected not with a view to do the business of selling.
8. In the order of the Assistant Commissioner of Commercial Taxes, however (at pages 14 to 19 of the paper-book) the point raised has not been dealt with, but in the grounds of appeal for revision under Section 20(3) of the Act the point at issue, we find, has again been taken. Ground No. 2 is:
That the charges of Rs. 42,314 realised for coke-breeze supplied to the employees at concessional rate cannot form part of your petitioner's turnover, because supplies were not effected with a view to do the business of selling and in respect of them your petitioner cannot be considered as 'dealer' as defined under the Bengal Finance (Sales Tax) Act, 1941.
9. And ground No. 4 is :
That the charges of Rs. 1,372 realised for goods supplied to staff mostly at nominal price and at cost cannot form part of your petitioner's turnover, because such supplies were effected not with a view to do the business of selling and in respect of them your petitioner cannot be considered as 'dealer' as defined under the Bengal Finance (Sales Tax) Act, 1941....
10. The Additional Commissioner in his order dated the 28th July, 1959, has, it appears, dealt with this question to some extent. At page 27 of the paper-book he has said:
It was not denied that such employees did pay the price of the goods to the company, but it was argued that as these were supplied at concessional rates only to provide some amenities to the employees and there being no motive for profit in such deals the petitioner was not a dealer for such supplies and there were no sales for the purpose of the Bengal Finance (Sales Tax) Act, 1941, and consequently the proceeds thereof could not be taxed.
11. He has rejected this argument and has stated:
The petitioner's contention is that it was not a 'business' of the company to sell such goods, as these were supplied without any profit, although, admittedly, these supplies were not of a casual nature but were made regularly. But there must be no reason to restrict the implication of the above definition to the business of selling goods in commercial sense with a view to earn profit.
12. It appears, therefore, that the applicant did contend both before the Assistant Commissioner of Commercial Taxes and the Additional Commissioner that coke-breeze and stores were supplied to its own employees without profit and these supplies were not effected with a view to do the business of selling. The same points were taken also in the grounds of application for revision under Section 23 [vide grounds 2(a) and 2(c) at page 32 of the paper-book] but the Additional Member, Board of Revenue, it appears, has not dealt with these issues at all. The Supreme Court in Commissioner of Income-tax, Bombay v. Scindia Steam Navigation Co. Ltd. [1961] 42 I.T.R. 589 (S.C.) has been pleased to lay down that when a question of law is raised before the Tribunal but the Tribunal fails to deal with it, it must be deemed to have been dealt with by it, and is, therefore, one arising out of its order. We are of the opinion that these principles apply to the proceedings before the sales tax authorities in the instant reference. And in order to bring out the real controversy between the applicant and the respondent the question referred to us should be reframed as follows :
Whether the sales by the petitioner to the members of its staff of certain commodities, such as coke-breeze and stores, should be excluded from its turnover as 'dealer' for the purpose of imposition of sales tax under the Bengal Finance (Sales Tax) Act, 1941, and thus be exempt from sales tax.' We now propose to give our answer to this reframed question. As we have pointed out already, a person cannot be a 'dealer' within the meaning of the Bengal Finance (Sales Tax) Act unless, inter alia, he carries on the business of selling the goods in question in the State of West Bengal. In the instant reference the applicant's case is that coke-breeze and stores were supplied to employees without any profit-motive to provide them with social amenities and these facts, it appears, were not found to be incorrect by the authorities concerned. There are a few decisions which have considered what is meant by the 'business of selling goods in West Bengal'. In the case of the State of Gujarat v. Raipur . [1967] 19 S.T.C. 1 at p. 5 (S.C.), the Supreme Court has said : 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.
13. Then again, the Madras General Sales Tax Act, 1959 (as amended by Act 15 of 1964) contained the same definition of 'business' as in our Act, which we have quoted above. The Madras High Court in Deputy Commissioner of Commercial Taxes v. Sri Thirumagal Mills Ltd. [1967] 20 S.T.C. 287 at p. 289 has construed this definition but the Madras High Court says :
The primary requisite of 'business' as defined even under the Madras Act 15 of 1964 is that it should be a trade or commerce or adventure or concern in the nature of trade or commerce. Presence or absence of profit will not matter. But the activity must be of commercial character and in the course of trade or commerce.
14. So far as our court is concerned the provisions of both Section 2(c) and Section 2(la) were construed in Fort Gloster Industries Ltd. v. Member, Board of Revenue, West Bengal [1970] 26 S.T.C. 141 at pp. 160-161. It is observed :.The amended definition of 'business' under Section 2(la) insists that it must be a trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. That is the first and essential requisite for a 'business' even under that amendment. The second limitation provided by the amendment in this section is the negative aspect to say that there may or may not be the motive to make profit. But even in describing that negative aspect, the basic condition of trade, commerce or manufacture or adventure or concern remains and all that it says is that 'such trade, commerce, manufacture, adventure or concern' may or may not be carried with the motive to make profit. Unless, therefore, the turnover relates to trade, commerce, manufacture, adventure or concern there can be no question for its attracting a tax under the Bengal Finance (Sales Tax) Act simply on the ground that it is without profit and that such absence of profit-motive is not a sufficient ground for exemption. If the thing itself is not basically trade, commerce, manufacture, adventure or concern then no further question of the motive for profit or not making a profit arises. The basic test of trade, commerce, manufacture, adventure or concern must be satisfied before any tax can be attracted. Once the basic test is satisfied the further fact that it was not carried on with the motive to make a profit will not matter and will not grant an exemption.
15. The unmistakable trend of these authorities is that a person cannot be a 'dealer' under the Bengal Finance (Sales Tax) Act unless he carries on the business of selling goods in a commercial sense. In other words, activity of a commercial character must be clearly established before a person can be brought into the net of taxation under this Act. In the reference before us if the employer sells certain commodities of daily use to the employee without any profit to provide the employee with social amenities at a cheaper rate it cannot, in our view, be said that the employer is carrying on business with a commercial motive. Mr. Sen Gupta, counsel for the respondent has urged before us that the view expressed in the authorities cited above is no longer sustainable by reason of the latest pronouncement of the Supreme Court in Deputy Commercial Tax Officer, Saidapet, Madras v. Enfield India Ltd. Co-operative Canteen Ltd. [1968] 21 S.T.C. 317 (S.C.) At page 322 it is observed:
For turnover from a transaction to be taxable under the Act, the transaction must have constituent elements, viz., (1) parties competent to contract; (2) mutual assent; (3) thing, the absolute or general property in which is transferred from the seller to the buyer; and (4) price in money paid or promised. When a co-operative society supplies to its members for a price refreshment in the canteen maintained by it, the four constituent elements of sale are normally present: the parties are competent to contract; there is mutual assent; refreshments which belonged absolutely to the society stand transferred to the buyer and price is either paid or promised.
16. Relying on these observations of their Lordships of the Supreme Court Mr. Sen Gupta has strongly urged that all the four constituent elements aforesaid are present in the instant case. There were two parties to the contract, viz., the employer and the employee : there was mutual assent: the property in the coke-breeze and stores were transferred from the employer to the employee : and price in money was paid. In these circumstances, according to counsel for the respondent, the transactions in question became taxable under the Bengal Finance (Sales Tax) Act.
17. To our mind the general observations of the Supreme Court quoted above cannot be called in aid of the respondent's case herein. These observations were made in the context of the object for which the co-operative society was registered. The object was to provide a canteen for the employees of Enfield India Limited. Naturally, the refreshments that the society was supplying to the employees of Enfield India Ltd., were supplied in the course of the trade or business of the society and the proceeds realised by such sales were taxable under the relevant statute. The four tests of the Supreme Court were suggested, in our view, against the background of these facts. Moreover, in the explanation to Section 2(g) of the Madras Sales Tax Act of 1959, it is clearly stated :
A society (including a co-operative society), club or firm or an association which, whether - or not in the course of business, buys, sells, supplies or distributes goods from or to its members for cash, or for deferred payment, or for commission, remuneration or other valuable consideration, shall be deemed to be a dealer for the purposes of this Act.
18. This shows that the facts in the Madras case were widely different from the facts we are dealing with in this reference.
19. In these premises, we are of opinion that the applicant was not a 'dealer' in the relevant assessment year in respect of coke-breeze and stores and our answer to the reframed question is in the affirmative and in favour of the applicant.
20. Each party will bear and pay its own costs.
K.L. Roy, J.
21. I agree.