Delta Jute and Industries Limited Vs. Commercial Tax Officer and ors. - Court Judgment

Excerpt:
1. in this application under section 8 of the west bengal taxation tribunal act, 1987, the applicant has prayed for a declaration that the orders dated august 7, 1984 passed by the commercial tax officer, central section, the order dated july 11, 1986 passed by the assistant commissioner of commercial taxes, central section and the order dated september 30, 1997 passed by the west bengal commercial taxes appellate and revisional board, relating to the assessment of the applicant for the four quarters ending june 30, 1981 under section 11(1) of the bengal finance (sales tax) act, 1941 and the appeal and revision cases related to the said assessment order, are illegal and for an order restraining the respondent no. 4, certificate officer, 24-parganas, from taking steps for further realisation of the impugned demands levied upon the applicants by these orders, 2. the case of the applicant is that it is a public limited company within the meaning of the companies act, 1956 and is a dealer registered under the bengal finance (sales tax) act, 1941 as well as under the west bengal sales tax act, 1954. the assessment of the applicant for the period of four quarters ending june 30, 1981 was made by respondent no. 1, the commercial tax officer, central section, raising a total additional demand for rs. 3,00,587.17 which included levy of tax in respect of sales for which the requisite declaration forms could not be made available in spite of due diligence exercised by the applicant. a further sum of rs. 2,31,858.06 representing sales effected from the applicant's canteen for catering to the needs of the applicant's employees was also brought to tax levied under the act.3. an appeal under section 20(1) under the 1941 act was preferred before the assistant commissioner, commercial taxes, central section (respondent no. 2) who by an order passed on july 11, 1986 modified the said assessment order to certain extent without, however, giving the requisite relief as prayed for. a revision petition was filed before the west bengal commercial taxes appellate and revisional board (in short, "the board") which was registered as revision case no. 547 of 1986-87. the revisional authority also failed to extend due and proper justice to the applicant.4. before the revisional authority the applicant had mainly urged that (i) declarations since received by the applicant for a total sum of rs. 11,62,003.32 should be entertained under rule 27a(9) of the bengal sales tax rules, 1941 and necessary benefit of concessional rate of tax should be extended to the applicant ; (ii) a penalty of rs. 25,000 imposed under section 11(1) of the 1941 act should be deleted. the declaration forms covering the sum of rs. 11,62,003.32 with supporting bill copies were produced before the board. a duly sworn affidavit dated september 22, 1997 affirming that one employee of the applicant-company was all along specially entrusted with collecting sales tax declaration forms from purchasing dealers and reminding them by personal representation for such issuance of declaration forms to the applicant, was filed before the board in proof of the applicant's diligence. these, however, were not unfortunately considered by the board and no reference even to the said affidavit has been made in the revisional order passed by the board which apparently was vague. in the course of hearing, it is submitted, bill copies in support of the declaration forms were also demanded at the revisional stage. they also were produced at the revisional stage but the same have not, it is submitted, been referred to in the revisional order.5. it is further submitted that the applicant's canteen sales could not be taxed under the 1941 act, as it could not be said that the applicant was a dealer indulging in the business of canteen sales if the sale of goods is not intended and the dominant object was to render service in compliance with a legal mandate. the dominant object of the sales made in canteen was not "sale" at all but only service.6. in their affidavit-in-opposition, the respondents have submitted that in the absence of requisite declaration forms the applicant's claim in the return for concessional rate of tax or for tax-free sales made could not be allowed by the respondent no. 1 while making assessment of tax. such requisite declaration forms had to be produced mandatorily by the applicant up to the time of assessment under section 11 made by the respondent no. 1, being the first assessing authority.the applicants, it is submitted, did not show any sufficient cause for not producing such requisite declaration forms at the time of assessment made by the respondent no. 1. the respondent no. 1 had no option but to disallow the claim for concessional rate of tax as claimed by the applicants. a turnover of rs. 2,31,858.06 which represented canteen sales by the applicants was subjected to tax in accordance with the provisions of law.7. the applicants failed to establish, it is submitted, even before the board in course of hearing of the revision application that they were prevented by sufficient cause from producing necessary declaration forms before the assessing authority at the time of assessment and hence ten declarations in form xxiva, covering sales of rs. 11,62,003.32, tendered for the first time by the applicants at the stage of revision, were not accepted. the declarations in form xxiva which were sought to be produced at the stage of revision were not obtained before the disposal of the appeal. it is denied that the applicants were diligent in obtaining requisite declarations against their sales from the purchasing dealers, as they purportedly wrote letters to their purchasing dealers in 1985-86 for certain declaration forms although they were under statutory obligation to substantiate their claim for concessional rate of tax as preferred in the return furnished upon verification and to produce them before the assessing authority at the time of assessment made by him on august 7, 1984. the applicants had nothing to satisfy the revisional authority that they were prevented by sufficient cause from producing such declarations before the assessing authority. filing of an affidavit before the board is not admitted. merely because the applicants produced bill copies sought to be covered fay declarations and wanted to tender declaration at the stage of revision, it is submitted, their obligation to satisfy the appellate or revisional authority that they were prevented by sufficient cause to produce such declarations at the time of assessment cannot be waived by the board.8. it is also submitted that in accordance with the definition of "business" contained in clause (la) of section 2 of the 1941 act any transaction in connection with or ancillary or incidental to, manufacture of goods by the applicants is liable to tax under the 1941 act. it is further submitted that the facts and circumstances of the case decided by this tribunal in the case reported in [1997] 107 stc 75 (brijlal tulsian v. commercial tax officer) are not identical with those of the present case.9. the dealer was, it is submitted, informed duly by notice in form xxvii intimating him the modified taxable turnover and specifying the net amount of tax, penalty or interest payable by the applicants on january 3, 1987 and thereupon the certificate officer (respondent no.4) took steps for recovery of the amount so modified by the board in its revisional order.10. in their affidavit-in-reply, the applicant has generally reiterated its case and has also submitted that from the correspondence which was "admittedly" produced before the appellate authority, it would be clear that there was no lack of due diligence on the part of the applicant in obtaining the declaration forms.11. the applicant has argued that the fact that there was due diligence on their part in obtaining the declaration forms would be established from the correspondence produced by the applicant before the revisional authority as also from the affidavit filed by swadesh ranjan das, an employee of the applicant-company, to the effect that he had been working in the applicant-company for more than twenty years and regularly collecting sales tax declaration forms from the purchasing dealers and reminding them on personal representation for issue of outstanding declarations. it is admitted by the applicant that the forms in question were received by them on september 5, 1988 and january 2, 1989. the appellate order was passed on july 11, 1986.therefore, admittedly up to the appeal stage the forms could not be produced by the applicant because they were not available. these forms were obtained and produced before the board at the stage of revision.the board discussed the matter at length in its judgment and observed that in order to show that the applicant was prevented by sufficient cause the applicant had filed some copies of letters written by the dealer in the years 1985 and 1988 seeking for some declaration forms.the board also observed that there was nothing to show that these letters were ever replied to and there was also nothing to show that the applicant pursued the matter in any way. the board has further observed that on close scrutiny they found that the letters which were never replied to from any end, were of doubtful nature and those documents had failed to inspire any confidence in the mind of the members of the board. in this connection, mr. bose, learned advocate for the applicants, has submitted, citing the case of tata refractories limited [1994] 95 stc 343 (orissa) that a liberal view should be taken because law permits in certain cases exemption/deduction/concession subject to filing of declaration forms. if declaration forms are produced, it would be equitable and proper to accept the forms and grant concession/deduction/exemption. a liberal view should be taken as the assessee does not gain by withholding the declaration forms in support of its claim or deduction. he also cited the case of brijlal tulsian [1997] 107 stc 75 where this tribunal had held that where letters were produced before the appellate authority to the effect that in spite of reminders the purchasing dealers did not furnish the declaration forms upto the time of assessment the burden of proof upon the applicant regarding due diligence was discharged. in such a case, this tribunal held, the applicant had proved that he was prevented by sufficient cause from producing the declaration forms upto the time of assessment. mr. bose argued that in the instant case detailed correspondence has been produced showing the applicant pursuing his purchaser-dealers. the applicant has also furnished an affidavit affirmed by its employee, who was specifically entrusted with the task of pursuing such purchaser-dealers for obtaining declaration forms from them, stating that he has been working for the said purpose in the applicant-company for twenty years. hence, mr. bose has submitted, it was clear that there was no negligence on the part of the applicant-company in pursuing the matter. the board has not even referred to the affidavit of the employee concerned in its judgment and therefore, the board's decision not to entertain these declaration forms which were produced before them was liable to be set aside.12. the argument of mr. bose however, does not carry conviction in this case. it is true that the dealer does not gain by withholding the declaration forms in support of its claim or deduction and it would normally be equitable to accept the forms and grant the benefit of the declaration forms. but the situation would be completely different where the dealer is negligent or callous or does not place materials to show that genuine effort was made to get the declaration forms. the question whether the declaration forms should be accepted or not would therefore depend on an assessment by the authorities about the bona fides of the dealer regarding the delay in production of the declaration forms. on a scrutiny of the order of the board it is found that the board held that the letters produced by the applicant were of doubtful nature and those documents had failed to inspire any confidence in the mind of the members of the board. on such a question of fact it would be perhaps unreasonable to hold that the board was acting in a perverse manner unless there are specific reasons to hold so. in the instant case there is no circumstance which can suggest that the board was coming to a conclusion which was totally bereft of reason. even a casual look at the correspondence produced before us shows that a letter allegedly dated april 10, 1985 addressed to well pack (sk) pvt. ltd., produced before us cannot be a genuine letter because the letter which is dated april 10, 1985 is written on a letterhead which is clearly one which could not have been in existence in the year 1985 as the date printed in the place where year is shown on the letterhead shows "199...". it is apparent that a letter allegedly dated april 10, 1985 has been produced on a letter head which could not have been in use during the 1980s, and hence this letter is clearly a spurious one. when this was pointed out mr. bose submitted that he would not press the claim related to the declaration forms covered by that letter. but mere deletion of the claim regarding declaration forms covered by that letter is not enough. in our opinion, submission of such a glaringly spurious letter casts doubt on the other correspondences produced by the applicant and therefore we cannot hold that the board was wrong in considering that such correspondence was of doubtful nature and did not inspire any confidence. in that view of the matter the refusal of the board to grant relief in respect of the declaration forms produced for the first time before the board is considered to be a valid one.13. mr. bose has submitted that canteen sales should not have formed a part of the gross turnover of the business because it was not a part of the business of the applicant-dealer. the sale of goods in the canteen was not for the purpose of earning profit and the dominant object was to render service to the employee in compliance with the legal mandate.he cited the decision of the madhya pradesh high court in the case of hukumchand mills ltd. [1996] 101 stc 141 [fb]. in that case it was held that where the occupier of a factory, in compliance with section 46 of the factories act, 1948, provides canteen facilities for its workers, the question whether it would be taxable under the madhya pradesh general sales tax act, 1958, in respect of the canteen sales would depend on several factors. if sale is not intended and the dominant object is to render service in compliance with the legal mandate, the occupier would not be a dealer indulging in such a business. if the intention is not of sale of food, the transaction would not be liable to be called trade, commerce, manufacture or any adventure or concern of that nature and thus would not be business within the meaning of section 2(bb) of the madhya pradesh general sales tax act, 1958. mr.bose submitted that section 2(bb) of the madhya pradesh general sales tax act, 1958, is similar to section 2(1a) of the bengal finance (sales tax) act, 1941 and hence in this case also there was no question of the dealer being taxed for the sales in the canteen. he also cited the case of andhra pradesh state road transport corporation, hyderabad v.commercial tax officer, hyderabad iii [1971] 27 stc 42 (ap) where it was held that in order that an incidental or ancillary transaction or activity may amount to "business" within the meaning of clause (ii) of section 2(bbb) of the andhra pradesh general sales tax act, 1957, it should be in connection with the trade or commerce or adventure carried on by the assessee and should itself partake of the nature of trade, commerce, manufacture, adventure or concern. in the instant case, mr.bose argued, canteen sales by the applicant-company was not of the nature of trade or commerce but were of the nature of a social service as would be evident from the fact that a cup of tea was supplied to the worker at a place of rs. 0.05 per cup which means that it was really being supplied free of cost. under the circumstances, he argued, there was no legal validity about the imposition of tax on canteen sales.14. mr. k.k. saha, submitted, regarding canteen sales, that the question of profit-motive was not relevant and the provisions in the bengal finance (sales tax) act, 194f were not identical to the provisions of the madhya pradesh general sales tax act, 1958 which were under examination in the case reported in [1996] 101 stc 141 (mp) [fb] (commissioner of sales tax, m.p. v. hukumchand mills ltd.) or the andhra pradesh general sales tax act, 1957 which was under examination in the case reported in [1971] 27 stc 42 (ap) (andhra pradesh state road transport corporation v. commercial tax officer, hyderabad hi). he submitted that the definition of "business" given in section 2{la) of 1941 act is similar to the definition of business given in madras general sales tax act after the 1961 and 1964 amendment acts. mr. saha cited the case of state of tamil nadu v. burmah shell oil storage and distributing co. of india ltd. [1973] 31 stc 426 (sc) where the supreme court had held that in view of the amendment of the definition of business in 1964 in section 2(d) of the madras general sales tax act, 1959, canteen sales were liable to sales tax. mr. saha argued that the case reported in [1971] 27 stc 42 (ap) (andhra pradesh state road transport corporation v. commercial tax officer, hyderabad iii) has been discussed in the supreme court decision reported in [1973] 31 stc 426 (state of tamil nadu v. burmah shell oil storage and distributing co. of india ltd.) and this decision is squarely applicable to the instant case.15. for the purpose of comparison, the relevant definitions of "business" given in section 2(d) of the madras general sales tax act, 1959 (after the 1964 amendment) and the definition of "business" in section 2(1a) given in bengal finance (sales tax) act, 1941 are given below : (i) 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 a motive to make gain or profit and whether or not any profit accrues from such trade, commerce, manufacture, adventure or concern ; and (ii) any transaction in connection with, or incidental or ancillary to, such trade, commerce, manufacture, adventure or concern" ; (i) any trade, commerce or manufacture or execution of works contract or any adventure or concern in the nature of trade, commerce or manufacture or execution of works contract, whether or not such trade, commerce, manufacture, execution of works contract, adventure or concern is carried on with the motive to make profit and whether or not any profit accrues from such trade, commerce, manufacture, execution of works contract, adventure or concern ; and (ii) any transaction in connection with, or ancillary or incidental to, such trade, commerce, manufacture, execution of works contract, adventure or concern." 16. a comparison of the definitions would show that they are virtually identical. hence the decision of the supreme court in the case of state of tamil nadu v. burtnah shell oil storage and distributing co. of india ltd. [1973] 31 stc 426 should apply in the instant case. the chargeability to sales tax, under the madras general sales tax act, 1959 as amended by acts of 1961 and 1964 on (along with other items) canteen sales was under consideration of the supreme court. the respondent oil companies under the factories act had to supply tea and edibles to its workmen for the canteen established by it. the question was whether these transactions attracted sales tax after the 1964 act.the supreme court allowed the appeal with respect to canteen sales in respect of the period september 1, 1964, to march 31, 1965. the supreme court observed that under the definition of "business" even commercial transactions carried on without a motive to make gain or profits or whether or not any profit accrues from such activity are included in that definition. the amended sub-clause (ii) also includes in that definition transaction in connection with, or incidental or ancillary to, such trade, manufacture, adventure or concern. the question was whether the word "such" in sub-clause (ii) of clause (d) of section 2 refers to the trade, etc., defined in sub-clause (i). the supreme court held that the word "such" in the second sub-clause, imports by reference the definition of sub-clause (i) into that of sub-clause (ii). in that case the supreme court observed with approval the decision of the andhra pradesh high court in the hyderabad asbestos cement products limited v. state of andhra pradesh [1972] 30 stc 26. in that case, the assessee maintained a canteen for the use of workers in compliance with the provisions of the factories act, 1948, and the rules made thereunder. the question was, whether the turnover relating to the supplies of food and drink to the workers at the canteen would be charged to sales tax under the andhra pradesh general sales tax act, 1957. the assessee contended that it was compelled by statute to provide or maintain a canteen for use of workers, that the canteen was not run with a profit-motive, as such it would not be said that there were any sales when food and drink were supplied to the workers at the canteen and that even if profit-motive was not an ingredient of "business" it must be established that the assessee intended to do business in food and drink before it could be subjected to the levy of sales tax. the court held that in view of the definition of "business" as amended by the amendment act of 1966, proof of profit-motive is unnecessary to constitute business and that the transaction of supply of food and drink to the workmen in the canteen maintained by the assessee, in pursuance of the factories act and the rules, were sales and constituted business for the purpose of the act. dealing with the case of , the learned judges said that they were unable to agree with that case as the madras high court had not paid sufficient attention to the word "such" occurring in the second part of the definition, which according to them obviously referred to the "trade, commerce, manufacture, adventure or concern" mentioned in the first part of the definition, that is to say, "trade, commerce, manufacture, adventure or concern" of which a motive to make gain or profit is not an essential requisite, nor was it permissible to hold that there was no "business" in the commercial sense of "business" with a motive to make profit, when such motive has been expressly declared unnecessary by the legislature. in their view under both parts of the definition profit-motive is now immaterial and the concept of business in respect of matters falling under section 2(d)(ii) in the commercial sense put forward and accepted in the earlier cases must be abandoned. the supreme court observed in this connection "we think the view adopted by the andhra pradesh high court is in consonance with our own reading of the section which we have indicated earlier". in view of this decision of the supreme court and the identity of the definitions of "business", in their material parts, of the two acts, viz., madras general sales tax act, 1959 and bengal finance (sales tax) act, 1941 it must be held, in the light of the supreme court decision, that canteen sales of the applicant-company would be liable to taxation.17. in the result, the application is rejected without any order as to costs.

Judgment:
1. In this application under Section 8 of the West Bengal Taxation Tribunal Act, 1987, the applicant has prayed for a declaration that the orders dated August 7, 1984 passed by the Commercial Tax Officer, Central Section, the order dated July 11, 1986 passed by the Assistant Commissioner of Commercial Taxes, Central Section and the order dated September 30, 1997 passed by the West Bengal Commercial Taxes Appellate and Revisional Board, relating to the assessment of the applicant for the four quarters ending June 30, 1981 under Section 11(1) of the Bengal Finance (Sales Tax) Act, 1941 and the appeal and revision cases related to the said assessment order, are illegal and for an order restraining the respondent No. 4, Certificate Officer, 24-Parganas, from taking steps for further realisation of the impugned demands levied upon the applicants by these orders, 2. The case of the applicant is that it is a public limited company within the meaning of the Companies Act, 1956 and is a dealer registered under the Bengal Finance (Sales Tax) Act, 1941 as well as under the West Bengal Sales Tax Act, 1954. The assessment of the applicant for the period of four quarters ending June 30, 1981 was made by respondent No. 1, the Commercial Tax Officer, Central Section, raising a total additional demand for Rs. 3,00,587.17 which included levy of tax in respect of sales for which the requisite declaration forms could not be made available in spite of due diligence exercised by the applicant. A further sum of Rs. 2,31,858.06 representing sales effected from the applicant's canteen for catering to the needs of the applicant's employees was also brought to tax levied under the Act.

3. An appeal under Section 20(1) under the 1941 Act was preferred before the Assistant Commissioner, Commercial Taxes, Central Section (respondent No. 2) who by an order passed on July 11, 1986 modified the said assessment order to certain extent without, however, giving the requisite relief as prayed for. A revision petition was filed before the West Bengal Commercial Taxes Appellate and Revisional Board (in short, "the Board") which was registered as Revision Case No. 547 of 1986-87. The revisional authority also failed to extend due and proper justice to the applicant.

4. Before the revisional authority the applicant had mainly urged that (i) declarations since received by the applicant for a total sum of Rs. 11,62,003.32 should be entertained under Rule 27A(9) of the Bengal Sales Tax Rules, 1941 and necessary benefit of concessional rate of tax should be extended to the applicant ; (ii) a penalty of Rs. 25,000 imposed under Section 11(1) of the 1941 Act should be deleted. The declaration forms covering the sum of Rs. 11,62,003.32 with supporting bill copies were produced before the Board. A duly sworn affidavit dated September 22, 1997 affirming that one employee of the applicant-company was all along specially entrusted with collecting sales tax declaration forms from purchasing dealers and reminding them by personal representation for such issuance of declaration forms to the applicant, was filed before the Board in proof of the applicant's diligence. These, however, were not unfortunately considered by the Board and no reference even to the said affidavit has been made in the revisional order passed by the Board which apparently was vague. In the course of hearing, it is submitted, bill copies in support of the declaration forms were also demanded at the revisional stage. They also were produced at the revisional stage but the same have not, it is submitted, been referred to in the revisional order.

5. It is further submitted that the applicant's canteen sales could not be taxed under the 1941 Act, as it could not be said that the applicant was a dealer indulging in the business of canteen sales if the sale of goods is not intended and the dominant object was to render service in compliance with a legal mandate. The dominant object of the sales made in canteen was not "sale" at all but only service.

6. In their affidavit-in-opposition, the respondents have submitted that in the absence of requisite declaration forms the applicant's claim in the return for concessional rate of tax or for tax-free sales made could not be allowed by the respondent No. 1 while making assessment of tax. Such requisite declaration forms had to be produced mandatorily by the applicant up to the time of assessment under Section 11 made by the respondent No. 1, being the first assessing authority.

The applicants, it is submitted, did not show any sufficient cause for not producing such requisite declaration forms at the time of assessment made by the respondent No. 1. The respondent No. 1 had no option but to disallow the claim for concessional rate of tax as claimed by the applicants. A turnover of Rs. 2,31,858.06 which represented canteen sales by the applicants was subjected to tax in accordance with the provisions of law.

7. The applicants failed to establish, it is submitted, even before the Board in course of hearing of the revision application that they were prevented by sufficient cause from producing necessary declaration forms before the assessing authority at the time of assessment and hence ten declarations in form XXIVA, covering sales of Rs. 11,62,003.32, tendered for the first time by the applicants at the stage of revision, were not accepted. The declarations in form XXIVA which were sought to be produced at the stage of revision were not obtained before the disposal of the appeal. It is denied that the applicants were diligent in obtaining requisite declarations against their sales from the purchasing dealers, as they purportedly wrote letters to their purchasing dealers in 1985-86 for certain declaration forms although they were under statutory obligation to substantiate their claim for concessional rate of tax as preferred in the return furnished upon verification and to produce them before the assessing authority at the time of assessment made by him on August 7, 1984. The applicants had nothing to satisfy the revisional authority that they were prevented by sufficient cause from producing such declarations before the assessing authority. Filing of an affidavit before the Board is not admitted. Merely because the applicants produced bill copies sought to be covered fay declarations and wanted to tender declaration at the stage of revision, it is submitted, their obligation to satisfy the appellate or revisional authority that they were prevented by sufficient cause to produce such declarations at the time of assessment cannot be waived by the Board.

8. It is also submitted that in accordance with the definition of "business" contained in clause (la) of Section 2 of the 1941 Act any transaction in connection with or ancillary or incidental to, manufacture of goods by the applicants is liable to tax under the 1941 Act. It is further submitted that the facts and circumstances of the case decided by this Tribunal in the case reported in [1997] 107 STC 75 (Brijlal Tulsian v. Commercial Tax Officer) are not identical with those of the present case.

9. The dealer was, it is submitted, informed duly by notice in form XXVII intimating him the modified taxable turnover and specifying the net amount of tax, penalty or interest payable by the applicants on January 3, 1987 and thereupon the Certificate Officer (respondent No.4) took steps for recovery of the amount so modified by the Board in its revisional order.

10. In their affidavit-in-reply, the applicant has generally reiterated its case and has also submitted that from the correspondence which was "admittedly" produced before the appellate authority, it would be clear that there was no lack of due diligence on the part of the applicant in obtaining the declaration forms.

11. The applicant has argued that the fact that there was due diligence on their part in obtaining the declaration forms would be established from the correspondence produced by the applicant before the revisional authority as also from the affidavit filed by Swadesh Ranjan Das, an employee of the applicant-company, to the effect that he had been working in the applicant-company for more than twenty years and regularly collecting sales tax declaration forms from the purchasing dealers and reminding them on personal representation for issue of outstanding declarations. It is admitted by the applicant that the forms in question were received by them on September 5, 1988 and January 2, 1989. The appellate order was passed on July 11, 1986.

Therefore, admittedly up to the appeal stage the forms could not be produced by the applicant because they were not available. These forms were obtained and produced before the Board at the stage of revision.

The Board discussed the matter at length in its judgment and observed that in order to show that the applicant was prevented by sufficient cause the applicant had filed some copies of letters written by the dealer in the years 1985 and 1988 seeking for some declaration forms.

The Board also observed that there was nothing to show that these letters were ever replied to and there was also nothing to show that the applicant pursued the matter in any way. The Board has further observed that on close scrutiny they found that the letters which were never replied to from any end, were of doubtful nature and those documents had failed to inspire any confidence in the mind of the Members of the Board. In this connection, Mr. Bose, learned advocate for the applicants, has submitted, citing the case of Tata Refractories Limited [1994] 95 STC 343 (Orissa) that a liberal view should be taken because law permits in certain cases exemption/deduction/concession subject to filing of declaration forms. If declaration forms are produced, it would be equitable and proper to accept the forms and grant concession/deduction/exemption. A liberal view should be taken as the assessee does not gain by withholding the declaration forms in support of its claim or deduction. He also cited the case of Brijlal Tulsian [1997] 107 STC 75 where this Tribunal had held that where letters were produced before the appellate authority to the effect that in spite of reminders the purchasing dealers did not furnish the declaration forms upto the time of assessment the burden of proof upon the applicant regarding due diligence was discharged. In such a case, this Tribunal held, the applicant had proved that he was prevented by sufficient cause from producing the declaration forms upto the time of assessment. Mr. Bose argued that in the instant case detailed correspondence has been produced showing the applicant pursuing his purchaser-dealers. The applicant has also furnished an affidavit affirmed by its employee, who was specifically entrusted with the task of pursuing such purchaser-dealers for obtaining declaration forms from them, stating that he has been working for the said purpose in the applicant-company for twenty years. Hence, Mr. Bose has submitted, it was clear that there was no negligence on the part of the applicant-company in pursuing the matter. The Board has not even referred to the affidavit of the employee concerned in its judgment and therefore, the Board's decision not to entertain these declaration forms which were produced before them was liable to be set aside.

12. The argument of Mr. Bose however, does not carry conviction in this case. It is true that the dealer does not gain by withholding the declaration forms in support of its claim or deduction and it would normally be equitable to accept the forms and grant the benefit of the declaration forms. But the situation would be completely different where the dealer is negligent or callous or does not place materials to show that genuine effort was made to get the declaration forms. The question whether the declaration forms should be accepted or not would therefore depend on an assessment by the authorities about the bona fides of the dealer regarding the delay in production of the declaration forms. On a scrutiny of the order of the Board it is found that the Board held that the letters produced by the applicant were of doubtful nature and those documents had failed to inspire any confidence in the mind of the Members of the Board. On such a question of fact it would be perhaps unreasonable to hold that the Board was acting in a perverse manner unless there are specific reasons to hold so. In the instant case there is no circumstance which can suggest that the Board was coming to a conclusion which was totally bereft of reason. Even a casual look at the correspondence produced before us shows that a letter allegedly dated April 10, 1985 addressed to Well Pack (SK) Pvt. Ltd., produced before us cannot be a genuine letter because the letter which is dated April 10, 1985 is written on a letterhead which is clearly one which could not have been in existence in the year 1985 as the date printed in the place where year is shown on the letterhead shows "199...". It is apparent that a letter allegedly dated April 10, 1985 has been produced on a letter head which could not have been in use during the 1980s, and hence this letter is clearly a spurious one. When this was pointed out Mr. Bose submitted that he would not press the claim related to the declaration forms covered by that letter. But mere deletion of the claim regarding declaration forms covered by that letter is not enough. In our opinion, submission of such a glaringly spurious letter casts doubt on the other correspondences produced by the applicant and therefore we cannot hold that the Board was wrong in considering that such correspondence was of doubtful nature and did not inspire any confidence. In that view of the matter the refusal of the Board to grant relief in respect of the declaration forms produced for the first time before the Board is considered to be a valid one.

13. Mr. Bose has submitted that canteen sales should not have formed a part of the gross turnover of the business because it was not a part of the business of the applicant-dealer. The sale of goods in the canteen was not for the purpose of earning profit and the dominant object was to render service to the employee in compliance with the legal mandate.

He cited the decision of the Madhya Pradesh High Court in the case of Hukumchand Mills Ltd. [1996] 101 STC 141 [FB]. In that case it was held that where the occupier of a factory, in compliance with Section 46 of the Factories Act, 1948, provides canteen facilities for its workers, the question whether it would be taxable under the Madhya Pradesh General Sales Tax Act, 1958, in respect of the canteen sales would depend on several factors. If sale is not intended and the dominant object is to render service in compliance with the legal mandate, the occupier would not be a dealer indulging in such a business. If the intention is not of sale of food, the transaction would not be liable to be called trade, commerce, manufacture or any adventure or concern of that nature and thus would not be business within the meaning of Section 2(bb) of the Madhya Pradesh General Sales Tax Act, 1958. Mr.

Bose submitted that Section 2(bb) of the Madhya Pradesh General Sales Tax Act, 1958, is similar to Section 2(1a) of the Bengal Finance (Sales Tax) Act, 1941 and hence in this case also there was no question of the dealer being taxed for the sales in the canteen. He also cited the case of Andhra Pradesh State Road Transport Corporation, Hyderabad v.Commercial Tax Officer, Hyderabad III [1971] 27 STC 42 (AP) where it was held that in order that an incidental or ancillary transaction or activity may amount to "business" within the meaning of clause (ii) of Section 2(bbb) of the Andhra Pradesh General Sales Tax Act, 1957, it should be in connection with the trade or commerce or adventure carried on by the assessee and should itself partake of the nature of trade, commerce, manufacture, adventure or concern. In the instant case, Mr.

Bose argued, canteen sales by the applicant-company was not of the nature of trade or commerce but were of the nature of a social service as would be evident from the fact that a cup of tea was supplied to the worker at a place of Rs. 0.05 per cup which means that it was really being supplied free of cost. Under the circumstances, he argued, there was no legal validity about the imposition of tax on canteen sales.

14. Mr. K.K. Saha, submitted, regarding canteen sales, that the question of profit-motive was not relevant and the provisions in the Bengal Finance (Sales Tax) Act, 194f were not identical to the provisions of the Madhya Pradesh General Sales Tax Act, 1958 which were under examination in the case reported in [1996] 101 STC 141 (MP) [FB] (Commissioner of Sales Tax, M.P. v. Hukumchand Mills Ltd.) or the Andhra Pradesh General Sales Tax Act, 1957 which was under examination in the case reported in [1971] 27 STC 42 (AP) (Andhra Pradesh State Road Transport Corporation v. Commercial Tax Officer, Hyderabad HI). He submitted that the definition of "business" given in Section 2{la) of 1941 Act is similar to the definition of business given in Madras General Sales Tax Act after the 1961 and 1964 Amendment Acts. Mr. Saha cited the case of State of Tamil Nadu v. Burmah Shell Oil Storage and Distributing Co. of India Ltd. [1973] 31 STC 426 (SC) where the Supreme Court had held that in view of the amendment of the definition of business in 1964 in Section 2(d) of the Madras General Sales Tax Act, 1959, canteen sales were liable to sales tax. Mr. Saha argued that the case reported in [1971] 27 STC 42 (AP) (Andhra Pradesh State Road Transport Corporation v. Commercial Tax Officer, Hyderabad III) has been discussed in the Supreme Court decision reported in [1973] 31 STC 426 (State of Tamil Nadu v. Burmah Shell Oil Storage and Distributing Co. of India Ltd.) and this decision is squarely applicable to the instant case.

15. For the purpose of comparison, the relevant definitions of "business" given in Section 2(d) of the Madras General Sales Tax Act, 1959 (after the 1964 Amendment) and the definition of "business" in Section 2(1a) given in Bengal Finance (Sales Tax) Act, 1941 are given below : (i) 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 a motive to make gain or profit and whether or not any profit accrues from such trade, commerce, manufacture, adventure or concern ; and (ii) any transaction in connection with, or incidental or ancillary to, such trade, commerce, manufacture, adventure or concern" ; (i) any trade, commerce or manufacture or execution of works contract or any adventure or concern in the nature of trade, commerce or manufacture or execution of works contract, whether or not such trade, commerce, manufacture, execution of works contract, adventure or concern is carried on with the motive to make profit and whether or not any profit accrues from such trade, commerce, manufacture, execution of works contract, adventure or concern ; and (ii) any transaction in connection with, or ancillary or incidental to, such trade, commerce, manufacture, execution of works contract, adventure or concern." 16. A comparison of the definitions would show that they are virtually identical. Hence the decision of the Supreme Court in the case of State of Tamil Nadu v. Burtnah Shell Oil Storage and Distributing Co. of India Ltd. [1973] 31 STC 426 should apply in the instant case. The chargeability to sales tax, under the Madras General Sales Tax Act, 1959 as amended by Acts of 1961 and 1964 on (along with other items) canteen sales was under consideration of the Supreme Court. The respondent oil companies under the Factories Act had to supply tea and edibles to its workmen for the canteen established by it. The question was whether these transactions attracted sales tax after the 1964 Act.

The Supreme Court allowed the appeal with respect to canteen sales in respect of the period September 1, 1964, to March 31, 1965. The Supreme Court observed that under the definition of "business" even commercial transactions carried on without a motive to make gain or profits or whether or not any profit accrues from such activity are included in that definition. The amended sub-clause (ii) also includes in that definition transaction in connection with, or incidental or ancillary to, such trade, manufacture, adventure or concern. The question was whether the word "such" in sub-clause (ii) of clause (d) of Section 2 refers to the trade, etc., defined in sub-clause (i). The Supreme Court held that the word "such" in the second sub-clause, imports by reference the definition of sub-clause (i) into that of sub-clause (ii). In that case the Supreme Court observed with approval the decision of the Andhra Pradesh High Court in the Hyderabad Asbestos Cement Products Limited v. State of Andhra Pradesh [1972] 30 STC 26. In that case, the assessee maintained a canteen for the use of workers in compliance with the provisions of the Factories Act, 1948, and the Rules made thereunder. The question was, whether the turnover relating to the supplies of food and drink to the workers at the canteen would be charged to sales tax under the Andhra Pradesh General Sales Tax Act, 1957. The assessee contended that it was compelled by statute to provide or maintain a canteen for use of workers, that the canteen was not run with a profit-motive, as such it would not be said that there were any sales when food and drink were supplied to the workers at the canteen and that even if profit-motive was not an ingredient of "business" it must be established that the assessee intended to do business in food and drink before it could be subjected to the levy of sales tax. The court held that in view of the definition of "business" as amended by the Amendment Act of 1966, proof of profit-motive is unnecessary to constitute business and that the transaction of supply of food and drink to the workmen in the canteen maintained by the assessee, in pursuance of the Factories Act and the Rules, were sales and constituted business for the purpose of the Act. Dealing with the case of , the learned Judges said that they were unable to agree with that case as the Madras High Court had not paid sufficient attention to the word "such" occurring in the second part of the definition, which according to them obviously referred to the "trade, commerce, manufacture, adventure or concern" mentioned in the first part of the definition, that is to say, "trade, commerce, manufacture, adventure or concern" of which a motive to make gain or profit is not an essential requisite, nor was it permissible to hold that there was no "business" in the commercial sense of "business" with a motive to make profit, when such motive has been expressly declared unnecessary by the Legislature. In their view under both parts of the definition profit-motive is now immaterial and the concept of business in respect of matters falling under Section 2(d)(ii) in the commercial sense put forward and accepted in the earlier cases must be abandoned. The Supreme Court observed in this connection "we think the view adopted by the Andhra Pradesh High Court is in consonance with our own reading of the section which we have indicated earlier". In view of this decision of the Supreme Court and the identity of the definitions of "business", in their material parts, of the two Acts, viz., Madras General Sales Tax Act, 1959 and Bengal Finance (Sales Tax) Act, 1941 it must be held, in the light of the Supreme Court decision, that canteen sales of the applicant-company would be liable to taxation.

17. In the result, the application is rejected without any order as to costs.