State of Haryana Vs. Government of India Photolitho Press - Court Judgment

Excerpt:
- jawahar lal gupta, j.1. is the government of india's photolitho press which is printing and supplying paper, files, and registers, etc., to various departments of the government a dealer within the provision of section 2(c) of the haryana general sales tax act, 1973 the state of haryana claims that the press is a dealer. it is engaged in commercial activities. it is buying and selling paper. it has failed to get itself registered. thus, it is liable to pay tax as well as penalty.2. the sales tax tribunal did not accept the claim of the state. it has accepted the appeal and set aside the orders of assessment as well as penalties passed in respect of various years starting from 1973-74. aggrieved by the order, the excise and taxation commissioner prayed for a reference to this court. the petition was allowed by the tribunal. hence these ten references. the following questions have been referred for the opinion of this court :(i) whether, in the facts and circumstances of the case, the respondent which supplies forms, registers and other printed matter, printed by it to various departments of central government against payment carries on the business of buying and selling goods to other persons constitute trade so as to make it a dealer as defined in section 2(c) of the haryana general sales tax act, 1973 ?(ii) whether the disposal of waste paper by respondent against payment through public auctions which results out of its activity of printing and supplying forms and registers constitutes transactions of sale as ancillary or incidental to trade' as mentioned in the question (i), exigible to tax under the haryana general sales tax act, 1973 ?(iii) whether, in the facts and circumstances of the case, the tribunal was justified in quashing the orders of penalty ?3. ms. palika monga, learned counsel for the revenue, contends that the respondent is buying paper. it is printing forms, etc. it is supplying the material to various departments of the government. it also sells the scrap. thus, the respondent is engaged in trade as defined in explanation '(iv)' to section 2(c) of the haryana general sales tax act, 1973. consequently, it was liable to get itself registered and pay tax. the tribunal has erred in setting aside the orders. is it so ?4. a brief reference may be made to the provisions. section 2(c) defines a 'dealer' as under :'(c) 'dealer' means any person including a department of government who carries on whether regularly or otherwise, trade, whether with or without a profit-motive, directly or otherwise, whether for cash, deferred payment, commission, remuneration or other valuable consideration, of purchasing, selling, supplying or distributing any goods in the state, or importing into, or exporting out of, the state, any goods irrespective of the fact that the main place of business of such person is outside the state and where the main place of business of such person is not in the state, includes the local manager or agent of such person in the state in respect of such business : provided that a person or a member of his family who sells within the state exclusively the agricultural produce grown by himself or grown on any land in which he has an interest whether as owner, usufructuary mortgagee, tenant or otherwise, shall not be deemed to be a dealer.' explanation '(iv)' gives the definition of 'trade'. it reads as under : '(iv) 'trade' includes any transaction casual or otherwise, of purchasing, selling, supplying, distributing, importing, exporting or manufacturing any goods in connection with, or incidental or ancillary to, such trade.' 5. a perusal of the above provisions shows that even a department of the government can be a dealer. however, to fall within the mischief of the provision, it must be carrying on the activity of purchasing, selling, supplying or distributing goods. by virtue of the explanation even casual transaction carried on by a dealer shall fall within the definition of 'trade'. what is the position in the present case?6. the press is wholly owned by the government of india. it buys paper, prints forms. it also compiles registers, etc., and supplies the material to various departments. admittedly, the supply is by the government to its own departments or even to the instrumentalities of the state. not to any private person. the activity is not commercial. the central government is not carrying on any business. the activity is not for any commercial gain or profit. the press is a part of the governmental activity wherein the work of supplying the articles of stationery, etc., to the departments of the government is carried on.7. ms. palika monga points out that the existence of profit-motive is not essential for a person to fall within the definition of a 'dealer'. she is undoubtedly right. however, what deserves notice is that a person can be a dealer only when it is engaged in purchase, sale and supply of goods, etc., for cash or commission. not otherwise. it is the admitted position that the press does not charge any money or commission for the supply of articles of stationery to the government departments. there is no sale. in fact, the government purchases various articles of stationery and processes them for its own use. this activity involves no transaction which may fall within the definition of 'trade' nor can the central government be treated as a dealer. it does nothing that may be called commercial. there is no sale as understood in law. this is precisely the view that has been taken by the tribunal. we find nothing wrong in it.8. ms. palika monga has referred to certain decisions to contend that even a casual sale would bring the case within the mischief of 'trade' and thus the respondent would be a 'dealer'. she has referred to the decision of their lordships of the supreme court in district controller of stores, northern railway, jodhpur v. assistant commercial taxation officer [1976] 37 stc 423.9. this was a case of the railway selling unserviceable materials. it was found by their lordships that the assessee was engaged in commerce. it was transporting goods, since the primary activity was trade and commerce, sale of unserviceable material was considered as ancillary to the main activity. thus, the claim of the revenue was sustained. however, the position in the present case is totally different. herein the press is not engaged in any commerce. thus, the casual sale of scrap would not be ancillary to its main job of meeting the needs of different departments of the government.10. ms. palika monga has also referred to the decision in state of tamil nadu v. shakti estates and state of tamil nadu v. shree shanmugham estate [1989] 73 stc 209 (sc). this was a case wherein large areas of forest land were purchased by the two companies. their purpose was to raise coffee and cardamom plantations. it was engaged in business. keeping in view 'the sustained activity' of the companies it was held that the sale of surplus trees existing on the land was a part of the trading activity of the assessee. similarly, in united india insurance co. ltd. v. commissioner of commercial taxes, bangalore [1990] 78 stc 99, the karnataka high court had found that the insurance company was engaged in the 'business of insuring goods, motor vehicles, machinery....'. thus, the sale of insured goods which were damaged in transit was held to be a part of the trading activity.11. all these cases indicate that when a department of the government is engaged in business or commerce, even a casual sale of unserviceable or serviceable goods would be treated as a part of the trading activity. however, in the present set of cases it is the admitted position that the press does not charge any money from the departments to which it supplies various articles of stationery. thus, there is no sale. equally, the press is not engaged in any trading activity. it has not undertaken a commercial venture. it is a department of the government serving itself as also the other departments of the government. in this situation, the activity of the assessee does not fall within the mischief of 'trade'. the press is not a 'dealer'.12. in view of the above, we find that the press is not carrying on the business of buying and selling goods so as to make it a 'dealer' as defined in section 2(c) of the act. the disposal of waste paper through public auction is not ancillary or incidental to the job of supplying articles of stationery to the departments of the government. it does not fall within the definition of 'trade'. in the circumstances of the case, the tribunal was justified in quashing the orders of assessment and penalty.13. no other point has been raised.14. thus, all the three questions as referred by the tribunal are answered against the revenue. since no one has put in appearance on behalf of the assessee, we make no order as to costs.