LexGOVT, MEDICAL STORE DEPOT, GAUHATI versus THE SUPDT. OF. TAXES, GAUHATI & ORS.
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739
GOVT, MEDICAL STORE DEPOT { GAUllATI
v.
THE SUPDT. OF. TAXES, GAUllATI & ORS.
AUGUST 29, 1985
[V .D. TULZAPURKAR, SABYASACHl MUKHAR.JL AND RANGANATH MISRA, JJ •] .
Assam Finance (Sales Tax) Act 1956, Central Sales Tax Act
1956 s .2(b) -
Govenunent Medical Store Depot -
Tr;msactions on
'no loss no profit' basis - Whether 'dealer' - Liability to Sales
Tax - Whether-arises.
The Central Govenunent in the Ministry of Health, Family
Planning and Urban Development set up s Medical Store Depot at
Gauhati for the purpose of procuring and supplyi.rig medical stores
to the Government institutions, both Central and State, as also
the Railway establishments located in
~sam, North Eastern
Frontier Areas, Nagaland; Manipur, Tripura and other neighbouring
places on payment.
The appellant-Depot.did not apply for registration on· the
ground that it was not a dealer within the meaning of section
2(b) of the Central Sales Tax, Act, 1956 and, therefore, was not
li&.ble to tax as the transactions were without any· profit"'m:>tiVe
and on the basis of 'No loss~ No. profit'. The Superintendent of
Taxes, however, got the appellant-Depot registered under ·•section
7(1) of the Assam Finance (Sales Tax) Act, 1956 and also tr..ated
it to be a dealer under the Central· Sales Tax Act 1956 · &rui ·on
that basis the Taxing Authority made .assessments.
The appellant challellged the demarufs' under Art·; 226 contend-
ing that it was not a dealer and. that the certificate. of _regis-
tration issued to it without any appli:cation should be··cancelled
and the demands made should be ·quashed because the action of the
Taxing Authority in compulsorily registering it·was· bad and the
assessments W..re illegal. Tl)e High Court dismissed the Writ
Petition and held ·that. the appellant-Depot is a
'dealer' within
the m..aning of sec. 2(d) of the Central ·Sales Tax Act 1956 and·
that the Superint<!lldent of Taxes had jurisdiction to register it
and also to pass the impugned order of assessment.
Allowing the appeals to this Court,
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740
SUPREME COURT REPORTS
[1985] SUPP.2 s.c.R.
llEUl: l. The High Court, on the materials placed before it,
went wroug in cliSlllissiog the writ petition. The Writ Petition
should bsve been allowed and
the assessment should bsve been
quashed. [746 E-F]
2. In respect of the pre-amended period .when in the defini-
tion of the term 'business' profit-motive was an ingredient, in
the absence of profit-motive tranaactions though satisfying the
requirement of volume, frequew:y, continuity and regularity,
would not constitute business so as to make a person carrying on
such transactiona a dealer. [744 H, 745-AJ
'l'be State of Gujarat v. Baipar !famfacturing eo. Ltd., 19
s.T.c 1, llinduatan Steel Ltd. •· nae State of Ortaea, 25 s.T.c.
211, State of ADdhra Pndeab v. Abdall llaksb1 & Broa., 15 s.T.c,
644, State of r..u 11..iu v. ~
llilla Ltd. etc., 29 s.T.c.
290, .and 'l'be Joint Director of Foods, Vf9Ubepatm v. 'l'be State
of Andhra Pndeab, 38 s.T.c. 329, relied upon.
Deputy comercial Tax Officer, S.d dapet, Hadr8ll & Anr. v.
Infield India Ltd. Co-operative c...reen Ltd., 21 s.T.c. 317 and
~
Medical Store Depot v. State of 1IHyllD& & Anr., 39
s.T.c. 114, in applicable.
ln the instant case, the appellant bad fran the very begin-
ning taken the stand tbst its transactions were without any
profit motive. The burden lay on the Revenue to show tbst these
tranaactions were carried on with profit motive, whether profit
was actually earned or not being of no material importance, and
no investigation bad been made by the respondent into this aspect
when it made. the assessments. Nor was the High court called upon
to record such a fincling on the basis of any material placed and
the respondent remained satisfied by pleacling a bare denial to
the assertion in the writ petitions supported by the scheme and
its terms. [746 A-CJ
'l'be State of Gujarat v. Baipar Ham1factur1Ag eo. Ltd., 19
s.T.c. 1., relied upon.
CIVIL APPELLATE JURISDICTION
Civil Appeal Nos • 17 48-17 5 7
of 1973.
From the Judgment and Order dated 26.6.1973 of the Gauhati
.High Court at Gauhati in Civil Rule Nos. 366-370 & 460-464 of
1969.
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GOVT. MEDICAL STORE v. SUPDT. OF TAXES [RANGANATH MISRA, J.J 741
A
Q,p, Sharma and R.N. Poddar for the Appellant.
B.B. Ahuja and S.K. Nandy for the Respondents.
The Judgment of the Court was delivered by
B
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