MEMBER BOARD OF REVENUE, WEST BENGAL versus CONTROLLER OF STORES EASTERN RAILWAY CALCUTTA, ETC.

Citation: [1989] 2 S.C.R. 777 · Decided: 28-04-1989 · Supreme Court of India · Bench: R.S. PATHAK · Disposal: Appeal(s) allowed

Judgment (excerpt)

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MEMBER BOARD OF REVENUE, WEST BENGAL 
v. 
CONTROLLER OF STORES EASTERN RAILWAY 
CALCUTTA, ETC. 
APRIL 28, 1989 
[R.S. PATHAK, CJ, L.M. SHARMA, 
AND N.D. OJHA, JJ.] 
Bengal Finance (Sales Tax) Act, 1941: Section2(c). 
A 
B 
"Dealer"-Rai/way-Effecting sale of unclaimed, unconnected C 
goods for money consideration-Whether dealer. 
Indian Railways Act, 1890: Section 56. 
The assessee South Eastern Railway, a registered dealer under the 0 
Bengal Finance (Sales Tax) Act, 1941, disposing of unclaimed and 
unconnected goods for money consideration under Section 56 of the 
Indian Railways Act, 1890, applied to the Commercial Tax Officer for 
cancellation ofregistration as a "dealer". 
The Commercial Tax Officer rejected the application on the 
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ground that the disposal of unclaimed goods for valuable consideration 
was a regular feature of the assessee's activities, and, therefore, the 
assessee fell within the scope of the Bengal Finance (Sales Tax) Act, 
1941. 
Assessee's revision application was rejected by the Assistant Com· 
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missioner of Commercial Taxes on the ground that the sales effected by 
the assessee were sales under the Act and that the assessee was a 
'--.._ ___ "dealer". A second revision of the assessee was also dismissed by the 
Additional Commissioner of Sales Tax. 
On a further revision the Board of Revenue also confirmed the 
status of the assessee as a "dealer", holding that in the systematic'11nd 
organised character of business of auctioning by the assessee, a transfer 
of property was involved and therefore a sale of goods took place. 
At the instance of the assessee a reference was made to the High 
Court. The High Court answered the question in favour of the assessee 
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by holding that the disposal of t!te _goods did not indicate that tit• 
777 
778 
SUPREME COURT REPORTS 
[1989] 2 S.C.R. 
A 
Railway was carrying on business as a dealer liable to assessment under ')-.. 
the AcL 
B 
The assessee in the connected appeal, Eastern Railway, was 
engaged in selling scrap and unserviceable material, and a similar order 
was passed by the High Court in its favour. 
Hence these appeals by the Revenue. 
1 
Allowing the appeals and setting aside the judgments of the High 
Court, this Court, 
HELD: 1. The assessee South Eastern Railway was a carrier 
C of the goods and if at the stage of delivery, goods remained unclaimed 
for a period, the Railway was entitled to dispose them of. The activity 
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of so disposing of the goods was adjunctive to the principal activity 
of the carriage of goods by the Railway. It is an activity which may 
be regarded as necessarily incidental or ancillary to its business as 
D carrier of the goods. Therefore, the assessee South Eastern Railway was 
a "dealer" for the purposes of the Bengal Finance (Sales Tax) Act, 
1941. [780G-H] 
2. The assessee in the connected appeal, Eastern Railway, who 
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was disposing scrap and unserviceable material was also a "dealer" for 
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the purposes of the Bengal Finance (Sales Tax) Act, 1941. [780H; 78IA] 
District Controller of Stores, Northern Rly, Jodhpur v. The As-
sistant Commercial Taxation Officer & Anr., [!976] 37 S.T.C. 423 
applied. 
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CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1069 1
of 1975. 
G 
From the Order dated 18.5.1973 of the Calcutta High Court in 
Matter No. 586 of 1968. 
D.N. Mukharjee and G.S. Chatterjee for the Appellant. 
D.N. Dwivedi and C.V. Sobba Rao for the Respondents. 
The Judgment of the Court was delivered by 
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PATHAK, CJ. The question raised in these two appeals is 
BOARD OF REVENUE v. CONTROLLER OF STORES !PATHAK, Cl:) 779 
whether the assessee Railway in each appeal is a "dealer" within the 
meaning of the Bengal Finance (Sales Tax) Act, 1941 and therefore 
liable to assessment under that Act. 
In C.A. No. 845 of 1974 the facts are these. 
The assessee South Eastern Railway disposes of unclaimed and 
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unconnected goods for money consideration. On 1 April, 1952 the 
t_ assessee applied for registration as a dealer under the Bengal Finance 
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(Sales Tax) Act in respect of unconnected or unclaimed goods, and 
was accordingly registered. It submitted returns of sales effected by it 
of unclaimed and unconnected goods year after year and paid sales tax 
pursuant to the assessments made by the Sales Tax department. How-
ever, in assessment proceedings for the four quarters ending March, 
1959 the assessee applied to the Commercial Tax Officer for cancella-
tion of the registration of the asse

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