STATE OF PUNJAB & ANR. versus M/S. BAJAJ ELECTRICALS LTD.

Citation: [1968] 2 S.C.R. 536 · Decided: 05-12-1967 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Dismissed
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Judgment (excerpt)

STATE OF PUNJAB & ANR. 
v. 
M/S. BAJAJ El,ECTRICALS LTD. 
December 5, 1967 
[J. C. SHAH, V. RAMASWAMI AND V. BllARGAVA, JJ.) 
Punjab Professions, Tr<:des, Cal/ingJ and Employment Taxation Act, 
(Pun;. 7 of 1956), s. 7-Supp/ying gooib within State against ord<r• out-
side State-Supplier has no shop, branch or agent within Star~-Uabi/ity 
to tax-"Trade", Meaning of. 
The respondeot a Joint Ste><:k Company, having oo shop or oftice or 
a11eot within the State of Puojab, used to rupply goods witbio the State 
pursuant to orders re<;eived and accepted at New Delhi, and alao wed to 
receive the price for the goods withio the Sta'e. The Asoesaing Authority, 
)Carnal, ... essed the respondent to profesiion tax uoder the Punfab Pro-
feosions, Trades, Calliogs and Employments Taxation Acr, 
1956. 
The 
order "'"-' quashed by the High Court. 
!n •ppcal to this C.ourt., 
HELD : The activities of the respondent in the 
State were mere 
anciUary activit.ies and did not amount to carrying on trade within the 
State. [538 C-D) 
The expression "trade" is not defined 
in the Act. "Trade" in 
its 
primary meaning is lhc exchanging of goods for goods or goods for 
money; in its sccond<1ry meaning it is repeated activity in ,the nature of 
businc.c;! carried on with a profit motive, tho activity being manual or 
mercantile, as distinguished from the liberal arts or learned professions or 
agriculture. 
The question whether trade jj carried on by a person at a 
given place, though on~ of mixed Jaw and fact, must in each case be 
determiocd on a consideration of the nature of the trade, the variou! 1teps 
lakeu for carrying on the trade and other relevant facts. [537 H-538 EJ 
Grainger and Son v. Gough (Surveyor of TaXLs) 3 T.C. 464, F.L. Smilli 
& Co. v. F. Greenwood (Surve,vor of Ta.re.<), 8 T.C. 193 and Firestone 
'fyre Co. Ltd. v. Lewr//in, 37 T.C. 111. distinguished. 
C1vu. APPELLATE JURISDICTION: Civil Appeal No. 287 
of 
1967. 
Appeal from the judgment and order dated May 29, 196-4 of 
the Punjab High Court.in Civil Writ No. 1609 of 1961. 
Harba11s Singh and R. N. Sachthey, for the appellants. 
The Judgment of the Court was delivered by 
Shah, J. 
The respondent-a Joint Stock Company-has its 
principal place of business in Bombay, and a branch office in 
New Delhi. 
The Assessing Aulhority, Kamal, exercising power 
under the Punjab Professions, Trades, Callings and Employments 
Taxation Act 7 of 1956, assessed the respondent to profession tax 
B 
c 
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E 
F 
G 
H 
A 
B 
c 
D 
E 
F 
G 
H 
PUNJAB V. BAJAJ ELECTRICALS LTD. (Shah, /.) 
537 
for the years 1960-61 and 1961-62 and 
issued a 
notice 
of 
demand for the amount so assessed. The High Court of Punjab 
quashed the notice; of demand and the assessm~nt orders holding 
that the respondent did not carry on trade w1thm the State of 
Punjab and was not liable to be assess~d to tax un~er the Act. 
The State of Punjab has appealed to ,this Court agamst the order 
of the High Court. 
Section 3 of Act 7 of, 1956 provides : 
"Every person who carries on trade, either by him-
self or by an agent or representative, or who follows a 
profession or calling or who is in employment, either 
wholly or in part, within the State of Punjab, shall be 
liable to pay for each financial year or a part thereof a 
tax in respect of such profession, trade, calling or em-
ployment. 
Provided 
The respondent, it is common ground, has no branch office or 
any other place of business in the State of Punjab. It has also .not 
appointed any agent or· representative to carry on business on its 
behalf within the State. 
The respondent supplies goods to the 
Government of Punjab and certain "semi-Government bodies" in 
the State in execution of orders received at its branch office at 
Delhi. The goods are despatched from Delhi by rail or by pub-
lic motor transport. Pursuant to the terms and conditions of the 
"Rate Contract" between the respondent and 1 the Controller of 
Stores for the S'.ate of Punjab, the respondent consigns the goods 
sold by it to the appropriate Government DepartmenfF.0.R. des-
tination. 
Inspection of the goods i; made within the State of 
Punjab. The price for the goods sold is colle_cted by presenting 
bills or railway receipts through Banks to the consign=. 
The Assessing Authority held that the respondent "may rea-
sonably be regarded as selling good> within" the State of Punjab 
because it was supplying goods F.O.R. destination. 
The High 
Court held that the respondent could not in
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