ASSISTANT COMMISSIONER, ERNAKULAM versus HINDUSTAN URBAN INFRASTRUCTURE LTD. AND ORS.

Citation: [2015] 1 S.C.R. 100 · Decided: 13-01-2015 · Supreme Court of India · Bench: H.L. DATTU · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
B 
(2015] 1 S.C.R. 100 
ASSISTANT COMMISSIONER, ERNAKULAM 
V. 
HINDUSTAN URBAN INFRASTRUCTURE LTD. AND ORS. 
(Civil Appeal Nos. 354-355 of 2015) 
JANUARY 13, 2015 
[H.L. DATTU, CJI AND S.A. BOBDE, J.] 
Kera/a General Sales Tax Act, 1963 - s. 2(vi), 2(viii), 5, 
5A, 22 - Dealer - Winding up proceedings of a company in 
C liquidation - Sa/es effected by Official Liquidator pursuant 
thereto - Liability of the Official Liquidator to pay sales tax -
Held: By inviting tenders, for the sale of the assets of the 
Company, the liquidator intended to conduct a transfer of the 
goods in liquidation - Since the said transfer falls within the 
D wide ambit of s. 2(viii}(f}, Company in liquidation is a "dealer" 
with regard to the transfer - In terms of s. 5, the Company in 
liquidation, as a dealer, would incur liability to pay sales tax 
at the point of first sale as incurred by any other dealer under 
the Act - Furlher, since the Official Liquidator merely steps 
E into the shoes of the company in liquidation and performs his 
statutory functions in accordance with the directives of the 
Courl, the "Official Liquidator" is a "dealer" within the meaning 
of s. 2(viii) - In terms of r. 54 the person, in-charge of the 
business on behalf of the dealer, would be eligible to sales 
F tax in the same manner as it would have been leviable upon 
and recoverable from the dealer itself - Therefore, the liability 
to pay sales tax, would be on the Official Liquidator in the 
same manner as the dealer, that is, the Company in 
liquidation - Kera/a General Sales Tax Rules, 1963 - r. 54 -
G Companies Act, 1956 - ss. 448, 456, 457 - Companies 
(Courl} Rules, 1959. 
H 
Allowing the appeal, the Court 
HELD: 1.1. The definition of "dealer" under various 
100 
ASSISTANT COMMISSIONER, ERNAKULAM v. HINDUSTAN 
101 
URBAN INFRASTRUCTURE LTD. 
sales tax legislations has been given a broad and A 
inclusive interpretation. Such a broad and expansive 
interpretation is in consonance with what the legislature 
intended with regard to imposing sales tax liability on all 
transactions of sale of goods. Therefore, the definition 
of a "dealer" under the Kerala ·General Sales Tax Act, B 
1963, would include persons, if they are involved in 
carrying on any business or trading activity, such as the 
sale of machinery. [Para 43] [120-G-H; 121-A] 
1.2. Section 5 of the Act, 1963 is the charging 
provision with regard to imposition of sales tax. It C 
envisages levy of tax on sale or purchase of goods by a 
dealer. Pursuant to section 5 of the Act, 1963, in the case 
of goods specified in the First and Second Schedule, the 
single point tax could be levied only at the rates and 
points specified against such goods in the said D 
Schedules. The First Schedule specifies that the point of 
levy of tax for the goods in question could be only at the 
point of first sale in the State by a dealer. In the instant 
case, the dealer under the Act, 1963 would be liable to 
pay sales tax for the machinery sold at the point of first E 
sale, as per section 5 read with the First Schedule of the 
Act, 1963. The transaction in the instant appeal would be 
eligible to tax under Section 5(1) of the Act, 1963. [Paras 
44, 45] [121-8, C; E-G] 
1.3. Section 5-A of the Act, 1963 stipulates certain F 
situations wherein purchase tax could be imposed on any 
dealer who purchases any goods, either from a registered 
dealer or from any other person, the sale or purchase of 
which is liable to tax under Act, 1963. The said provision G 
however will apply only in circumstances when no tax is 
payable under sub-sections (1),(3),(4),(5) of section 5. 
However, the given transaction is pxigible to tax under 
Section 5(1) of the Act, 1963 and, ~herefore, tax liability 
under Section SA of the Act, 1963 would not apply to the 
said transaction. [Para 46] [121-G-H; 122-A, 8] 
H 
102 
SUPREME COURT REPORTS 
(2015] 1 S.C.R. 
A 
1.4. Since the Official Liquidator is akin to an agent 
employed for the purpose of winding up of a company, 
he steps into the shoes of the Directors of the said 
Company for the purposes of discharging the statutory 
functions of an Official Liquidator. Thus, during the said 
B 
proceedings, the Directors cease to exercise any 
functions from the date on which the Official Liquidator 
is appointed and all powers and functions for carrying on 
the business of the company thereafter vest with the 
official liquidator. [Para 56] [126-F, H] 
c 
1.5. An Official Liquidator 

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