ASSISTANT COMMISSIONER, ERNAKULAMversusHINDUSTAN URBAN INFRASTRUCTURE LTD. AND ORS.

                         (2015] 1 S.C.R. 100


A          ASSISTANT COMMISSIONER, ERNAKULAM
                                   V.
    HINDUSTAN URBAN INFRASTRUCTURE LTD. AND ORS.
            (Civil Appeal Nos. 354-355 of 2015)
                         JANUARY 13, 2015
B
             [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.

        Allowing the appeal, the Court

         HELD: 1.1. The definition of "dealer" under various
H                                 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]
                                                             F
     1.3. Section 5-A of the Act, 1963 stipulates certain
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 is an officer of the Court
    and that for the purpose of discharging statutory
    obligations imposed under the Companies Act, 1956, the
    Official Liquidator merely steps into the shoes of the
    company in liquidation. By virtue of the notice issued by
D   the Official Liquidator for inviting tenders, for the sale of
    the assets of the Company, it is amply evident that the
    liquidator intended to conduct a transfer of the said
    goods in liquidation. Since the conduct of an auctioned
    sale involved transfer of goods, it falls within the wide
E   ambit of section 2(viii)(f) of the Act, 1963. [Para 59] [127-
    D, F]

       1.6. The Company in liquidation is a "dealer" with
  regard to the sale of its assets by way of an auction under
F a winding up order. An Official Liquidator steps into the
  shoes of the Director of the company in liquidation and
  performs his statutory functions in accordance with the
  directives of the Court. Pursuant to section 5 of the Act,
  1963, the Company in liquidation, as a dealer, will incur
G liability to pay sales tax at the point of first sale as
  incurred by any other dealer under the said Act.
  Furthermore, Rule 54 of the Rules, 1963 contemplates a
  situation where a business owned by a dealer, is under
  the control of a receiver or manager or any other person,

H
 ASSISTANT COMMISSIONER, ERNAKULAM v. HINDUSTAN         103
            URBAN INFRASTRUCTURE LTD.

irrespective of his designation, who manages the               A
business on behalf of the said dealer. In the said scenario,
the said person, in-charge of the business on behalf of
the dealer, would be eligible to sales tax in the same
manner as it would have been leviable upon and
recoverable from the dealer itself. Therefore, the liability   B
to pay sales tax, would be on the Official Liquidator in the
same manner as the dealer, that is, the Company in
liquidation. The Official Liquidator would be required to
pay the tax payable on the sale of the assets of the
company in liquidation. [Paras 61, 62) [127-H; 128-A-D, E]     c
     1.7. As regards the liability of the auction purchaser,
this Court, in an order passed in Civil Appeal No.5048 of
2003 observed that in view of facts and circumstances
of the case, the auction purchaser would not be liable to
pay sales tax. The offer of the auction purchaser, as          D
accepted by the Official Liquidator and confirmed by the
High Court, was inclusive of all taxes. It would have been
the bounden duty of the Official Liquidator to have
separated an amount for the payment of taxes under the
Act, 1963 to avoid any liability. The Special Government       E
Pleader (Taxes), on behalf of the Revenue, before the
Single Judge of the High Court clearly stated that the
liability to pay sales tax would be on the Official
Liquidator. [Para 63) [128-F-H; 129-A)
                                                               F
     Chowringhee Sa/es Bureau (P) Ltd. v. CIT 1973 (2)
SCR 618: (1973) 1 SCC 46; State of UP. v. Union of India
2003 (1) SCR 785 : (2003) 3 sec 239; T.N. v. Shakti
Estates 1989 (1) SCR 408: (1989) 1 sec 636; T.N. v. M.K.
Kandaswami 1976 (1) SCR 38: (1975) 4 SCC 745; Karya            G
Palak Engineer, CPWD v. Rajasthan Taxation Board (2004)
7 SCC 195; State of Orissa v. Titaghur Paper Mills Co. Ltd.
1985 SCR 26:1985 Supp SCC 280; Food Corporation of
India v. State of Kera/a 1997 (1) SCR 24: (1997) 3 SCC 410;
Navlakha & Sons v. Ramanuja Oas 1970 (3) SCR 1 : (1969)
                                                               H
    104      SUPREME COURT REPORTS             [2015] 1 S.C.R.


A 3 SCC 537; Hari Prasad Jayantilal & Co. v. V.S. Gupta,
  Income Tax Officer, Ahmedabad & Anr. 1966 SCR 732 : AIR
  1966 SC 1481; Ajay G. Podar v. Official Liquidator of J. S. &
  WM. & Others 2008 (11) SCR 145 : (2008) 14 SCC 17 -
  referred to.
B
       Re Mesco Properties (1980) 1 All ER 117; Ayerst
  (Inspector of Taxes) v. C & K (Construction) Ltd. (1975) 2 All
  ER 537 - referred to.

      Guide to the Companies Act by A. Ramaiya 16th Edn
C (2004) - referred to.
                        Case Law Reference:
          1973 (2) SCR 618       Referred to         Para 36

D         2003 (1) SCR 785       Referred to         Para 37
          1989 (1) SCR 408       Referred to         Para 38
          1976 (1) SCR 38        Referred to         Para 39
          (2004) 1 sec 195       Referred to         Para 40
E
          1985 SCR 26            Referred to         Para 41
          1997 (1) SCR 24        Referred to         Para 42
          1970 (3) SCR 1         Referred to         Para 49
F         1966 SCR 732           Referred to         Para 50
          2008 (11) SCR145       Referred to         Para 51
      CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.
G 354-355 of 2015.

        From the Judgment and Order dated 11.02.2003 and
    21.03.2003 of the High Court of Kerala at Ernakulam in MFA
    No. 1394 of 2002 and R.P. No. 191 of 2003 respectively.

H
  ASSISTANT COMMISSIONER. ERNAKULAM v. HINDUSTAN              105
             URBAN INFRASTRUCTURE LTD.
                               -:•
    K. R. Sasiprabhu, Jogy Scaria, Mohammad Sadiq for the             A
Appellant.

      S. K. Bagaria, B. Mohan, Shant Kumar Jain, Meera Mathur
for the Respondents.

    The Judgment of the Court was delivered by                        B

     H.L. DATTU, CJI. 1. Leave granted.

     2. The issue that arises for our consideration and decision
in the present appeals is whether an "Official Liquidator" is a       c
"dealer" within the meaning of section 2 (viii) of the Kerala
General Sales Tax Act, 1963 (for short, "the Act, 1963"), and
therefore would be required to collect sales tax in respect of
the sales effected by him pursuant to winding up proceedings
of a company in liquidation.
                                                                      D
      3. These appeals are directed against the judgment(s) and
order(s) passed by the High Court of Kerala in M.F.A. No.1394
of 2002, dated 11.02.2003, and in Review Petition No.191 of
2003, dated 21.03.2003. The Division Bench of the High Court
in review confirmed the finding in M .F.A. No.1394 of 2002 and        E
concluded that the Official Liquidator is not a "dealer" under the
Act, 1963. However, by the impugned judgment, the High Court
has set aside the finding of the learned Single Judge which held
that the machinery purchased in the auction sale conducted by
the Official Liquidator is not be liable to be taxed under the Act,   F
1963. The impugned judgment has further accepted a fresh
plea raised by the appellant that the auction purchaser would
be liable to pay purchase tax under section 5A of the Act, 1963.

      4. It is relevant to state that respondent No.1, that is,
Hindustan Urban Infrastructure Ltd., had filed a separate             G
appeal- Civil Appeal No.5048 of 2003 against the specific
finding of the High Court in the impugned judgment with regard
to the liability to pay purchase tax which was imposed upon the
auction purchaser thereunder. This Court has separately dealt
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    106       SUPREME COURT REPORTS               [2015] 1 S.C.R.


A with the aforesaid question by its order dated 04.09.2014 in
  the said civil appeal.

    FACTS:-

       5. To appreciate the issues involved, it would be necessary
B to notice the facts leading up to the present appeals. M/s.
  Premier Cable Company Ltd. (for short, "the Company"), was
  registered under the Companies Act, 1956 (for short, "the Act,
  1956"), and engaged in the manufacturing of PVC power
  cables, Aluminium conductors, enameled wires, etc. Pursuant
C to a recommendation by the Board for Industrial and Financial
  Reconstruction, (for short, "BIFR"), the Company was ordered
  to be wound up by an order passed by the High Court in C.P.
  No.2 of 1996, dated 18.06.1998. Respondent No.2, that is, the
  Official Liquidator attached to the High Court was appointed
D to take charge of the assets and liabilities of the Company and
  to deal with the same in accordance with the provisions of the
  Act, 1956 and the Rules framed thereunder.

        6. Pursuant to the aforesaid order, the Official Liquidator
E issued a notice inviting tenders, in respect of the sale of assets
  of the Company in liquidation, dated 26.11.2001. The aforesaid
  assets included land with factory building, workshop building,
  canteen building, godowns, quarters and other auxiliary
  buildings and also plant and machinery of the company in
F liquidation. The Terms and Conditions of the sale of the assets
  of the Company expressly provided, inter alia, that such sale
  would be subject to confirmation by the High Court and further
  subject to any subsequent terms and conditions as may be
  imposed by the High Court.

G      7. Respondent No.1-auction purchaser, in response to the
  notice inviting tenders issued by the Official Liquidator, offered
  to purchase Lot Nos.1-2 for a total amount of Rs.5,76,00,000/
  - (Rupees Five Crore Seventy Six Lakh only), by an offer letter
  dated 18.12.2001. It was expressly stated therein that the said
H amount would be inclusive of all statutory levies such as Sales
  ASSISTANT COMMISSIONER, ERNAKULAM v. HINDUSTAN              107
     URBAN INFRASTRUCTURE LTD. [H.L. DATTU, CJI.)

Tax, Central Sales Tax, Excise Duty, etc., if any, as may be          A
applicable. After accepting the offer so made, the. Official
Liquidator had placed the same before the learned Judge
dealing with the company matters for its confirmation.

     8. Subsequent to the confirmation of the said sale, the
                                                                      B
auction purchaser, being desirous to transport the purchased
assets across the border of multiple States, had requested the
Official Liquidator to incorporate the relevant sales tax
registration numbers in the sale invoices, vide letter dated
29.08.2002. By letter dated 03.09.2002, the Official Liquidator
had declined to accede to the request so made.                        C

     9. Subsequently, the Official Liquidator filed an affidavit
before the learned Single Judge of the High Court, inter a/ia,
stating that the Official Liquidator would neither be collecting
nor be paying any cess or sales tax in respect of the sale            D
effected by the respondent No.2. It was stated that, in the
opinion of the Official Liquidator, the auction purchaser should
be directed by the High Court to meet any expenses or liability
towards payment of cess, sales tax, etc., if and when the same
becomes payable.                                                      E

      10. An application was also filed by the Official Liquidator,
in the Company Petition before the learned Singe Judge, inter
a/ia, seeking clarification on certain aspects of the matter
including whether the auction purchaser would be liable to pay
tax on the purchase of goods, pursuant to the auction conducted       F
and further to direct the auction purchaser to pay any tax as may
be leviable by the Sales Tax Department. The learned Single
Judge after considering the prayers made in the application has
passed an order, in C.A. No.293 of 2002 and C.A. No.333 of
2002 in C.P. No.2 of 1996, dated 30.10.2002, wherein it was           G
held that the sale in question cannot be treated as a sale by
the Central Government or by a registered dealer entitled to
collect tax and further has observed that the auction purchaser
cannot be treated as a dealer under the Act, 1963 and further
that the said sale in question would not be exigible to sales tax.    H
    108       SUPREME COURT REPORTS                  [201S] 1 S.C.R.


A        11. The Appellant, aggrieved by the order of the learned
    Single Judge, filed an appeal against the order dated
    30.10.2002, inter alia, contending that the Official Liquidator
    would be bound to pay sales tax as and when a sale of the
    assets of the company in liquidation would be effected by him.
8   The Division Bench of the High Court by an order passed in
    M.F.A. No.1394 of 2002, observed that the "Official Liquidator"
    would not fall within the definition of "dealer" under the Act, 1963,
    dated 11.02.2003. Accordingly the appeal was dismissed and
    the order of the learned Single Judge was confirmed.
c      12. Aggrieved by the aforesaid order dated 11.02.200,3,
  the appellant filed Review Petition No.191 of 2003 before the
  High Court. In the Review Petition, a new plea was advanced
  by the appellant claiming that even if the Official Liquidator did
  not fall within the definition of dealer under the Act, 1963, section
D SA of the said Act would be attracted insofar as the auction
  purchaser is concerned.

       13. By the impugned judgment(s) and order(s) passed in
  Review Petition No. 191 of 2003, dated 21.03.2003, the High
E Court held that the Official Liquidator cannot be treated as a
  dealer under the Act, 1963, and therefore it is not exigible for
  payment of sales tax. However, the Court was of the view1 that
  the auction purchaser is liable to pay purchase tax under
  section SA of the Act, 1963.

F ISSUES:-

       14. The issues that arise for the consideration in the
  present appeals are firstly, whether the Official Liquidator is a
  "dealer" within the meaning of the Act, 1963, and secondly,
G whether the Official Liquidator would be required to pay sales
  tax in respect of sales effected pursuant to a winding up
  proceedings.

    SUBMISSIONS:-

H         1S. Shri V. Giri, learned counsel for the appellant, submits
  ASSISTANT COMMISSIONER, ERNAKULAM v. HINDUSTAN             109
     URBAN INFRASTRUCTURE LTD. [H.L. DATTU, CJI.]

that the consistent stand taken by the Revenue, is that the          A
Official Liquidator is liable to pay sales tax on the transaction
in question. He would state that the Official Liquidator was held
to be a "dealer" under the Act, 1963 by the learned Single
Judge as well as by the Division Bench of the High Court, and
that it is only in review that the said finding was reversed. To     B
support the decision of the learned Single Judge and the
Division Bench of the High Court, he would rely upon the
definition of "dealer" as provided under the Act, 1963 and
submit that the Official Liquidator is an agent of the Central
Government and therefore would deemed to be a dealer as              c
provided under explanation 2 to section 2(viii)(f) of the Act,
1963. To further substantiate his contention, he would refer to
the Statement filed, by the Special Government Pleader (Taxes),
appearing for the Sales Tax Authorities, before the learned
Single Judge of the High Court, wherein it was categorically         0
stated that the Official Liquidator would be liable to pay tax at
the relevant rate under the Act, 1963, whether or not he had
collected the same from the auction purchaser.

     16. Shri C.S. Rajan, learned counsel for the Official
Liquidator-respondent No.2, would support the findings of the        E
High Court in the review petition and state that the Official
Liquidator would not be liable to pay any tax under the Act,
1963. He would further state that the liability would in fact be
on the auction purchaser who would be exigible to purchase
tax under section 5A of the Act, 1963.                               F

      17. Shri Rajan would then elaborate upon the nature of the
activities carried on" by the Official Liquidator and submit that
since an Official Liquidator is an officer of the Court, he merely
discharges statutory functions imposed upon him and therefore        G
cannot be held liable to pay tax under the Act, 1963. To support
this submission, he would further refer to various provisions of
the Act, 1956 and the Companies (Court) Rules, 1959 (for short,
"the Rules, 1959"). Shri Rajan would lastly submit that since the
Official Liquidator discharges statutory functions of selling the
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    110      SUPREME COURT REPORTS                 [2015] 1 S.C.R.


A   assets of the Company in liquidation, he cannot be perceived
    to be carrying on "business" as defined under the Act, 1963
    and thus cannot be exigible to tax.

        18. Shri S.K. Bagaria, learned senior counsel for the
  auction purchaser would submit that the question of payment
8
  of purchase tax could not arise because firstly, the contention
  was raised for the first time in the review petition, and secondly,
  the said tax is a single-point levy at the first point of sale. He
  would contend that the auction purchaser could not be made
  liable for a tax that was not even imposed or demanded by the
C competent authority. He would then contend that the Official
  Liquidator makes the sale on behalf of the Company and not
  as the owner. Lastly, Shri Bagaria would refer to Rule 54 of the
  Kerala General Sales Tax Rules, 1963 (for short, "the Rules,
  1963") and section 17 of the Central Sales Tax Act, 1956 (for
D short, "the CST Act") to demonstrate that the liability to pay .
  sales tax was clearly on the Official Liquidator.

       19. We have heard the learned counsel for the parties to
  the /is and also carefully perused the orders passed by the
E courts and the forums below.

        20. The point for the consideration and decision of this
    Court is whether the Official Liquidator is a "dealer" within the
    meaning of the Act, 1963, and whether or not he would be
F   required to pay sales tax in respect of sales effected by him
    pursuant to winding up proceedings.

    RELEVANT PROVISIONS:-

       21. To appreciate the arguments canvassed it is relevant
G to notice the relevant provisions. They are- sections 448, 456,
  457 of the Act, 1956; Rules 232, 233 of the Rules, 1959;
  sections 2 (vi), 2 (viii), 5, 5A, 22 of the Act, 1963; and Rule 54
  of the Rules, 1963. Since these provisions have been
  amended from time to time, we have considered the provisions
H as they were in statute book during the relevant period.
  ASSISTANT COMMISSIONER, ERNAKULAM v. HINDUSTAN              111
     URBAN INFRASTRUCTURE LTD. [H.L. DATTU, CJI.]

      22. Sections 448, 456, 457 of the Act, 1956 deal with the      A
appointment and powers of the Official Liquidator. Section 448
of the Act, 1956 provides for the appointment of an Official
Liquidator for the purpose of winding up of a company. The
Official Liquidator so appointed conducts the proceedings in
the winding up of the company and performs other duties, as          B
the court imposes upon him, in consonance with the provisions
of the Act, 1956. Section 456 of the Act, 1956 states that
pursuant to a winding uµ order, the liquidator shall take into
his custody or under his control, all the properties, effects and
actionable claims to which the company is or appears to be           C
entitled to. By the said provision, all the properties and effects
of the company are deemed to be in the custody of the court,
from the date of the winding up order. Section 457 of the Act,
1956 lists the powers of the Official Liquidator. The powers
include, inter alia, to carry on business of the company for its     o
beneficial winding up, to sell the immovable and movable
property and actionable claims of the company, by public
auction or private contract, and to do all things as may be
necessary for winding up the affairs of the company and
distribution of its assets. However, the powers conferred by         E
virtue of the section 457 of the Act, 1956, on the liquidator, are
subject to the control of the Court.

       23. In exercise of the powers. conferred by sub-sections
 (1) and (2) of section 643 of the Act, 1956, the Rules, 1959
 were enacted. The relevant rules regarding the collection and       F
.distribution of assets in a winding-up by court are found under
 Rules 232 to 234 of the Rules, 1959. Rule 232 deals with the
 powers of the Official Liquidator. As per the rule, the duties
 imposed on the Court under section 467(1) of the Act, 1956
 concerning the collection of the assets of the company and the      G
 application of the assets in discharge of the company's
 liabilities must be discharged by the Official Liquidator as an
 officer of the Court. The discharge of the aforesaid functions
 would be subject to the control of the Court and to the proviso
 in section 643(2) of the Act, 1956. Rule 233 states that in         H
    112       SUPREME COURT REPORTS                 [2015] 1 S.C.R.


A   discharge of the duties imposed upon the Official Liquidator,
    pursuant to section 467(1) of the Act, 1956, and for the purpose
    of acquiring and retaining possession of the property of the
    company, he must be treated as a Receiver of the property
    appointed by the Court.
B
         24. Section 2 of the Act, 1963 provides for the meaning
    of certain expressions in the said Act. Section 2(vi) defines
    "business" as follows:

          "(vi) "Business" includes: -
c
          (a) any trade, commerce or manufacture or any adventure
          or concern in the nature of trade, commerce, or
          manufacture, whether or not such trade, commerce,
          manufacture, adventure or concern is carried on with a
D         motive to make gain or profit and whether or not any profit
          accrues from such trade, commerce, manufacture,
          adventure or concern; and

          (b) any transaction in connection with, or incidental or
          ancillary to such trade, commerce, manufacture, adventure
E         or concern;"

         25. Section 2(viii) of the Act, 1963 deals with the definition
    of the term 'dealer' as under:

F         "(viii) "Dealer" means any person who carries on the
          business of buying, selling, supplying or distributing goods,
          executing works contract, transferring the right to use any
          goods or supplying by way of or as part of any service, any
          goods directly or otherwise, whether for cash or for
          deferred payment, or for commission, remuneration or
G
          other valuable consideration and includes, -

          (a) [Omitted]

          (b) a casual trader;
H
ASSISTANT COMMISSIONER, ERNAKULAM v. HINDUSTAN            113
   URBAN INFRASTRUCTURE LTD. [H.L. DATTU, CJI.]

  (c) xx xx                                                      A

  (d) xx xx

  (e) xx xx

  (f) a person who whether in the course of business or not:     B

  (1) transfers any goods, including controlled goods
  whether in pursuance of a contract or not, for cash or
  deferred payment or other valuable consideration;

  (2) transfers property in goods (whether as goods or in        c
  some other form) involved in the execution of a works
  contract;

  (3) delivers any goods on hire-purchase or any system of
  payment by installments;                                       D
  (4) transfers the right to use any goods for any purpose
  (whether or not for a specified period) for cash, deferred
  payment or other valuable consideration;

  (5) supplies, by way of or as part of any service or in any    E
  other manner whatsoever, goods, being food or any other
  articles for human consumption or any drink (whether or
  not intoxicating), where such supply or service is for cash,
  deferred payment or other valuable consideration;
                                                                 F
  Explanation:- (1) A society including a co-operative
  society, club or firm or an association or body of persons,
  whether incorporated or not) which whether or not in the
  course of business, buys, sells, supplies or distributes
  goods from or to its members for cash or for deferred          G
  payment, or for commission, remuneration or other
  valuable consideration, shall be deemed to be a dealer
  for the purposes of this Act;

  Explanation: - (2) The Central Government or a State
  Government, which whether or not in the course of              H
    114        SUPREME COURT REPORTS                [2015] 1 S.C.R.


A         business, buy, sell, supply or distribute goods, directly or
          otherwise, for cash or for deferred payment, or for
          commission, remuneration or other valuable consideration,
          shall be deemed to be a dealer for the purposes of this
          Act.
B
                 (g) a bank or a financing institution, which, whether
                 in the course of its business or not, sells any gold
                 or other valuable article pledged with it to secure
                 any loan, for the realisation of such loan amount.

c         Explanation I: - Bank for the purposes of this clause
          includes a Nationalized Bank or a Schedule Bank or a Co-
          operative Bank;

          Explanation II: - Financing Institution means a financing
0         institution other than a bank;"

        26. On perusal of the aforementioned definitions, it would
  appear that the term "business" has been given a broad
  meaning by including within its ambit both incidental and
  ancillary transactions. Further, it has also eliminated the
E requirement of a profit motive as being an essential component.
  The definition of "dealer" has also been given a wide ambit. It
  includes any person carrying on business of, inter a/ia, buying,
  selling, supply or distribution of goods, whether directly or
  otherwise. All modes of payment whether by way of cash,
F commission, remuneration or other valuable consideration have
  been included therein. It also includes, inter a/ia, a casual
  trader, a non-resident dealer, a commission agent, a broker,
  an auctioneer and other mercantile agents. Sub-section (f) of
  the definition further expands the scope of the provision by
G including within its ambit, an array of transactions, which may
  or may not be in the course of business. Section 2(viii)(f)(1)
  expressly includes, within the definition of a "dealer", a person
  who whether in the course of business or not transfers any
  goods, whether in the pursuance of a contract or not, for cash
H or deferred payment.
  ASSISTANT COMMISSIONER, ERNAKULAM v. HINDUSTAN                115
     URBAN INFRASTRUCTURE LTD. [H.L. DATTU, CJI.]

      27. Section 5 of the Act, 1963 is the charging provision        A
under the said Act and provides for the levy of tax on the sale
and purchase of goods. It provides that every dealer, whose
total turnover for that year is not less than Rs.2,00,000/-, would
be liable to pay tax as per rates and at points as specified in
the Schedules to the Act, 1963. The First Schedule to the Act,        B
1963 would be relevant for the purpose of the present appeal.
Serial No.84 of the said Schedule deals with, inter alia,
Machinery and it provides that the point of levy shall be at the
point of first sale in the State by a dealer who is liable to tax
under section 5 of the Act, 1963.                                     c
     28. Section 5A of the Act, 1963 is the charging provision
as regard to the imposition of purchase tax. Under the said
provision, the purchaser of any goods which may be consumed,
used, disposed or dispatched to any place outside the State
from a registered dealer will incur liability for payment of          D
purchase tax. The provision amply clarifies that purchase tax
would be applicable only in circumstances in which no tax is
payable under sub-sections (1), (3), (4) or (5) of section 5 of
the Act, 1963.
                                                                      E
    29. The Rules, 1963, have been enacted in exercise of the
powers conferred by section 57 of the Act, 1963. Rule 54 of
the Rules, 1963, reads as follows:

     "54. Liability of Court of Wards, Official Trustee etc.-
                                                                      F
     In the case of business, owned by a dealer whose estate
     or any portion of whose estate is under the control of Court
     of Wards, the Administrator General, the official trustee or
     any Receiver or manager (including any person whatever
     be his designation, who in fact manages the business on          G
     behalf of the dealer) appointed by, or, under any order of
     a Court, the tax shall be levied upon and recoverable from
     such Court of Wards, Administrator General, Official
     Trustee, Receiver or Manager in like manner and on the
     same terms as it would be leviable upon and recoverable          H
    116       SUPREME COURT REPORTS                [2015] 1 S.C.R.


A         from the dealer if he were conducting the business himself,
          and all the provisions of the Act and Rules made there
          under shall apply accordingly."

       30. The aforementioned Rule contemplates a scenario
  wherein a business, owned by a dealer, is under the control of,
8
  inter alia, the official trustee or receiver or manager, including
  any other person who manages the business of the said dealer,
  who is appointed by an order of a Court. In such an event, tax
  would be recoverable from such a person who controls the
  business of the dealer in the same or like manner, as would
C have been recoverable from the dealer itself.

    DISCUSSION:-

       31. At the outset, it would be necessary to make reference
0 to the  Statement/Affidavit filed by the Special Government
  Pleader (Taxes), appearing for the Revenue, before the learned
  Single Judge of the High Court. In the said Statement/Affidavit,
  the Revenue has stated that a sale by the Official Liquidator,
  whether by auction or otherwise, is a sale by the Central
E Government and therefore the Official Liquidator becomes a
  dealer under the Act, 1963. It was further stated that although
  tax may be collected only by a registered dealer, the Central
  Government is empowered to collect tax in the manner a
  registered dealer is entitled to. The Revenue, in its conclusion
  therein, has stated that the Official Liquidator would be liable
F to pay tax at the relevant rate, whether he had collected the
  same or not.

       32. To appreciate the stand of the Revenue, it would be
  profitable to refer to Section 2(viii) of the Act, 1963 which
G defines the expression "dealer" as any person who carries on
  the business of buying, selling, supplying or distributing goods,
  executing works contract, transferring right to use any goods
  or supplying by way of or as part of any service, any goods
  directly or indirectly. The aforementioned activities are carried
H out for the payment of consideration, in the form of cash,
  ASSISTANT COMMISSIONER, ERNAKULAM v. HINDUSTAN              117
     URBAN INFRASTRUCTURE LTD. [H.L. DATTU, CJI]

deferred payment, commission, remuneration, etc. Thus, the           A
emphasis under this clause of "carrying on business" is to be
understood in a wide sense and not merely restricted to the
activity of buying and selling.           , ..

      33. The expression "business" has been given a wide and        8
inclusive definition, whereby 'any business, trade, commerce
or manufacture or any activity of the said nature, whether or not
it is carried on with a motive for profit' has been expressly
included. It further includes any transaction in connection with
such trade, commerce, etc. including within its purview, all         C
ancillary or incidental activities in connection with any trade,
commerce, etc.

      34. Section 2(viii)(f) further expands the definition of
"dealer" enabling a far wider class of persons to fall within its
ambit. It includes any person who transfers any goods, transfers     D
property in goods involved in the execution of a works contract,
delivers any goods on hire purchase or any system of payment
by installments, transfers the right to use any goods for any
purpose and lastly, any food or beverage supplier or service
provider, fit for human consumption. The Explanation 1 to sub-       E
clause (f) includes a society, club, firm or an association or
body of persons, whether incorporated or not. Explanation 2
includes the Central Government, State Government and any
of its apparatus within the scope of this section.
                                                                     F
     35. Therefore, given the exceptionally wide scope of the
definition, prima facie, it can be concluded that any person or
entity that carries on any activity of selling goods, could be
categorized as a "dealer" under the Act, 1963. To test the
aforesaid conclusion in the context of the issue at hand, we
would delve into the interpretation ascribed by this Court to the    G
term "dealer". A careful reading of the definition of "dealer"
under the Act, 1963, would make it evident that the legislature
intended to provide for an inclusive criterion and broaden the
ambit of the said classification. The legislature did riot propose
to restrict the scope of the term as perceived in common             H
    118         SUPREME COURT REPORTS                    [2015] 1 S.C.R.


A   parlance.

       36. The definition of a dealer under various sales tax
  legislations has been given a wide import by several decisions
  of this Court. In Chowringhee Sales Bureau (P) Ltd. v. CIT,
B (1973) 1 sec 46, inter alia, a challenge was made to the
  explanation to the definition of "dealer" under the Bengal
  Finance (Sales Tax) Act, 1941 on the ground that is sought to
  levy a tax on a person who is neither a seller nor a purchaser.
  A three-Judge Bench of this Court, rejecting the said challenge,
  held that the term "dealer" would include an auctioneer who
c carries on the business of selling and who has in the customary
  course of business authority to sell goods belonging to the
  principal. It was further observed that the given explanation
  sought to tax a transaction of sale of goods. It was held that, a
  statutory provision providing for a levy of sales tax on a person
D such as an auctioneer, would be permissible, if there is a close
  and direct connection between the transaction of sale and the
  person made liable for the payment of sales tax.

       37. In State of UP. v. Union of India, (2003) 3 SCC 239,
E this Court held that the Central Government, when involved in
  the business of buying and selling, could be treated as a
  "dealer" under the U.P. Sales Tax Act, 1940. The Court observed
  as follows:

          "11 .... It is thus clear that in regard to a transfer of the right
F         to use any goods both a person and a Government will be
          within the ambit of the definition of "dealer'' subject to the
          following distinction: a person to be a "dealer" should carry
          on the business of buying, selling etc., whether regularly
          or otherwise, but a Government which buys, sells ~tc.
G         (whether in the course of business or otherwise) will be a
          "dealer" for purposes of the U.P. Act. Inasmuch as the
          definition of "sale" includes any transfer of property in the
          goods and a transfer of the right to use any goods for any
          purpose, DoT which engages in transfer of right to use any
H         goods will be a "dealer" within the meaning of sub-clause
 ASSISTANT COMMISSIONER, ERNAKULAM v. HINDUSTAN               119
    URBAN INFRASTRUCTURE LTD. [H.L. DATTU, CJI.]

    (iv) of clause (c) of section 2 of the U.P. Act."                 A

    38. In State of TN. v. Shakti Estates, (1989) 1 SCC 636,
this Court while ascertaining whether the assessee could be
treated as a dealer gave a wide import to the term under the
Tamil Nadu General Sales Tax Act, 1959. The Court observed            8
as follows:

    "10. Moreover, we have also to give full effect to the
    definitions in the statute we are concerned with. The
    definition of a "business" also includes "any transaction in
    connection with or incidental to or ancillary" to a trade and     C
    thus, even on the assessees' own arguments, these
    activities were incidental and ancillary to the business
    which the assessee was carrying on or definitely intended
    to carry on. It is also immaterial, on this definition that the
    assessees may not have had a "motive of making a profit           D
    or gain" on these sales though on the facts, it is clear that
    such motive must have existed and, in any event, could not
    be ruled out. The reference to a "casual" dealer in the
    second definition also renders it immaterial that the
    assessees may not have intended to be regular dealers             E
    in sleepers, timber, firewood or charcoal but that this was
    something casual or incidental to the acquisition and
    exploitation of a forest for running a plantation."

     39. In State of TN. v. M.K. Kandaswami, (1975) 4 SCC
745, this Court while determining the interpretation of the term
                                                                      F
"dealer" under the Madras General Sales Tax Act, 1959 gave
a broad interpretation to include a person who not only carries
on business of "selling, supplying or distributing" goods but also
the one who carries on the business of "buying" only.
                                                                      G
     40. In Karya Palak Engineer, CPWD v. Rajasthan
Taxation Board, (2004) 7 SCC 195, this Court held that a
contractor, despite not being the owner but merely the custodian
of the goods, as a dealer under the Rajasthan Sales Tax Act,
1994.                                                                 H
    120       SUPREME COURT.REPORTS                  [2015] 1 S.C.R.


A       41. In State of Orissa v. Titaghur Paper Mills Co. Ltd.,
    1985 Supp SCC 280, while ascertaining whether the Central
    Government or its agents could be treated as be "dealer", this
    Court observed as follows:

          "26. What is pertinent to note about the new definition of
B
          "dealer" is that in the case of the Central Government, a
          State Government or any of their employees acting in
          official capacity on. behalf of such Government, it is not
          necessary that the purchase, sale, supply or distribution of
          goods should be in the course of business, while in all
c         other cases for a person to be a dealer he must be
          carrying on the business of purchasing, selling, supplying
          or distributing goods."

       42. In Food Corporation of India v. State of Kera/a, (1997)
D 3 SCC 410, this Court was ascertaining whether the
  procurement of food grains by the Food Corporation of India,
  pursuant to levy orders could amount to sale or purchase to
  incur sales/ purchase tax liability as levied by the States. This
  Court held that since there was no statutory compulsion in the
E matter of sale or purchase of fertilizers and parties had the
  discretion to enter into consensual contractual agreements
  subject minimal restrictions such as price fixation, quota
  requirements, etc., there is no hesitation in holding that the
  activity of distribution of fertilizers, pursuant to levy orders would
F amount to sale which is eligible to incur tax liability. This Court
  stated that supply or distribution of goods need not be in course
  of business to be considered a sale.

        43. Thus, on perusal of the aforesaid decisions of this
  Court, we are of the view that the definition of "dealer'' under
G various sales tax legislations has been given a broad and
  inclusive interpretation. It would be gainsaid to siate that 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, it can
H be concluded that the definition of a "dealer" under the Act,
  ASSISTANT COMMISSIONER, ERNAKULAM v. HINDUSTAN               121
     URBAN INFRASTRUCTURE LTD. [H.L. DATTU, CJI.]

1963, would include persons, if they are involved in carrying on       A
any business or trading activity, such as the sale of machinery
as in the present case. Therefore, as a necessary sequitur, the
Company in liquidation, whose assets are sold by way of an
auction, would be a "dealer" under the Act, 1963.
                                                                       B
     44. Section 5 of the Act, 1963 is the charging provision
with regard to imposition of sales tax. It envisages levy of tax
on sale or purchase of goods by a dealer. Section 5(1) of the
Act, 1963 imposes liability on every dealer whose total turnover
for one year is not less than Two Lakh rupees. Section 5(1)(i)         C
enumerates tax liability in case of goods specified in the First
or Second Schedule to the Act, 1963 at the rates and only at
the points specified against such goods in the said Schedules.
Serial No.84(i) of the First Schedule stipulates the rate of tax
payable on sale of, inter a/ia, machinery. In this regard, the point
of levy of sales tax is at the point of first sale in the State by a   D
dealer who is liable to tax under section 5 of the Act, 1963.

     45. Thus, 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       E
against such goods in the said 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   F
sale, as per section 5 read with the First Schedule of the Act,
1963. In light of the above, we are of the considered opinion
that the transaction in question in the present appeal would be
exigible to tax under Section 5(1) of the Act, 1963.

     46. Section 5-A of the Act, 1963 stipulates certain               G
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 aforesaid provision
however will apply only in circumstances when no tax is payable        H
    122        SUPREME COURT REPORTS                [2015] 1 S.C.R.


A   under sub-sections (1),(3),(4),(5) of section 5. However, as
    noticed hereinabove, the given transaction is exigible to tax
    under Section 5(1) of the Act, 1963, and therefore tax liability
    under Section 5A of the Act, 1963 would not apply to the said
    transaction.
8
       47. Before delving into whether the Official Liquidator could
  also be treated as a "dealer" under the Act, 1963, it would be
  apposite to take into account the powers of the Official
  Liquidator, as provided under the Act, 1956. The Official
C Liquidator, in generic terms, is an officer appointed to conduct
  the proceedings and to assist the Court in the winding up of a
  company.

       48. In A. Ramaiya, Guide to the Companies Act, 16th
  Edition (2004), while interpreting the powers of the Official
D Liquidator under section 457 of the Act, 1956 observed as
  follows:

          "A liquidator is an agent employed for the purpose of
          winding up of the company. His principal duties are to take
          possession of assets, to make out the requisite lists of
E
          contributors and of creditors, to have disputed cases
          adjudicated upon, to realise the assets subject to the
          control of the court in certain matters and to apply the
          proceeds on the payments of the company's debts and
          liabilities in due course of administration, and having done
F         that, to divide the surplus amongst the contributories and
          to adjust their rights."

       49. Section 457(3) of the Act, 1956 expressly states that
  the powers of the liquidator are subject to control by the court.
G The powers conferred upon the liquidator can be exercised by
  him alone and he cannot authorise any other person to exercise
  those powers. The expression 'control by court' was discussed
  by this Court in Navlakha & Sons v. Ramanuja Das, (1969) 3
  sec 537, wherein it was observed that when the liquidator
H exercises or proposes to exercise any of the powers, a creditor
  ASSISTANT COMMISSIONER, ERNAKULAM v. HINDUSTAN           123
     URBAN INFRASTRUCTURE LTD. (H.L. DATTU, CJI.]

or contributory may apply to the Court with respect of such        A
exercise. It is the duty of the Court to safeguard the interests
of the company and its creditors and satisfy itself with the
adequacy of the price fetched. It may also be appropriate to
consider Rule 232 of the Rules, 1959 which enumerates the
duty of an Official Liquidator in the collection and application   B
of the assets of the company, which is discharged by him as
an officer of the Court.

     50. In the case of Hari Prasad Jayantilal & Co. v. V.S.
Gupta, Income Tax Officer, Ahmedabad & Anr., AIR 1966 SC
1481, this Court held that the liquidator is merely an agent of    C
the company to administer its property for the purposes
prescribed by the Act, 1956. The Court held that while
distributing the assets, including accumulated profits, the
liquidator acts merely as an agent or administrator for and on
behalf of the company. The Court observed as follows:              D

     "7 .... The property of the Company does not vest in the
     liquidator: it continues to remain vested in the Company.
     On the appointment of a liquidator, all the powers of the
     Board of directors and of the managing or whole-time          E
     directors, managing agents, secretaries and treasurers
     cease (s. 491 ), and the liquidator may exercise the powers
     mentioned ins. 512, including the power to did such things
     as may be necessary for winding up the affairs of the
     Company and distributing its assets. The liquidator           F
     appointed in a members' winding up is merely an agent
     of the Company to administer the property of the Company
     for purpose prescribed by the statute. In distributing the
     assets including accumulated profits the liquidator acts
     merely as an agent or administrator for and on behalf of      G
     the Company."

     51. In Ajay G. Podar v. Official Liquidator of J.S. & WM.
& Others, (2008) 14 SCC 17, this Court considered the
question pertaining to bar of limitation under the Act, 1956 for
misfeasance proceedings filed by the Official Liquidator. While    H
    124       SUPREME COURT REPORTS                  [2015] 1 S.C.R.


A   discussing the powers of the Official Liquidator under section
    457(1) of the Act, 1956, the Court was of the view that the
    Official Liquidator must be authorised to take steps for recovery
    of assets by the Company Court under the winding up order
    and the said proceedings must be initiated in the name of the
s   company and on behalf of the company to be wound up. This
    Court had further opined that the Official Liquidator derives his
    authority from the provisions of the Act, 1956.

         52. It would be beneficial to notice the views of Courts in
C   England insofar as powers of the Official Liquidator during
    winding up proceedings. In Re Mesco Properlies, (1980) 1 All
    ER 117, the Court of Appeal was ascertaining as to whether a
    company could incur tax liability in consequence of the
    realization of its assets after a winding up order was passed
    and whether the Official Liquidator was the proper officer to
D   incur such liability. The Court, in the Re Mesco Properlies case
    (supra), at p. 120, observed as follows:

          " ... It must, in my view, be open to a liquidator to apply to
          the court for guidance upon the question whether, if he
E         discharges a certain liability of the company in liquidation,
          the payment will be a necessary disbursement within the
          meaning of rule 195. That is what the liquidator is doing
          in this case. The company is liable for the tax which is due.
          The tax ought to be paid. The liquidator is the proper officer
F         to pay it. When he pays it, he will clearly make a
          disbursement. In my judgment it will be a necessary
          disbursement within the meaning of the rule. Moreover
          common sense and justice seem to me to require that it
          should be discharged in full in priority to the unsecured
          creditors, and to any expenses which rank lower in priority
G
          under rule 195. The tax is a consequence of the realisation
          of the assets in the course of the winding up of the
          company. That realisation was a necessary step in the
          liquidation; that is to say, in the administration of the
          insolvent estate. The fact that in the event there may be
H
  ASSISTANT COMMISSIONER, ERNAKULAM v. HINDUSTAN                125
     URBAN INFRASTRUCTURE LTD. [H.L. DATTU, CJI.]

    nothing available for the unsecured creditors does not, in          A
    my view, mean that the realisation was not a step taken in
    the interests of all who have claims against the company.
    Those claims must necessarily be met out of the available
    assets in due order of priority. Superior claims may baulk
    inferior ones, but the liquidator's duty is to realise the          B
    assets for the benefit of all in accordance with their rights.
    If in consequence of the realisation, the company incurs a
    liability, the discharge of such liability must, in my judgment,
    constitute a charge or expense incurred in the winding up
    within section 267 of the Companies Act 1948 and must               c
    also, in my view, fall within rule 195."

     53. Further, the House of Lords in Ayerst (Inspector of
Taxes) v. C & K (Construction) Ltd., (1975) 2 All ER 537, held
that a company, pursuant to a winding up order, ceases to have
the custody and control of its assets which are thereafter              D
administered exclusively for the benefit of those persons who
are entitled to share in the proceeds of realisation of the assets.
The House of Lords elaborately discussed the role of the
Official Liquidator in this regard and observed, at p. 177, as
follows:                                                                E

     "The functions of the liquidator are thus similar to those of
     a trustee (formerly official assignee) in bankruptcy or an
     executor in the administration of an estate of a deceased
     person. There is, however, this difference: that whereas the       F
     legal title in the property of the bankrupt vests in the trustee
     and the legal title to property of the deceased vests in the
     executor, a winding-up order does not of itself divest the
     company of the legal title to any of its assets. Though this
     is not expressly stated in the Act it is implicit in the           G
     language used throughout Part V, particularly in sections
     243 to 246 which relate to the powers of liquidators and
     refer to 'property ... to which the company is ... entitled,' to
     'property ... belonging to the company,' to 'assets ... of the
     company' and to acts to be done by the liquidator 'in the
                                                                        H
     name and on behalf of the company."
    126       SUPREME COURT REPORTS                 [2015] 1 S.C.R.


A       54. In light of the aforesaid, we would conclude that an
  Official Liquidator- (i) derives its authority from the provisions
  of the Act, 1956; (ii) acts on behalf of the company in
  liquidation for the purposes prescribed by the Act, 1956; (iii)
  is appointed by and is under the control and supervision of the
B Court while discharging his duties.

        55. Having determined the status of an Official Liquidator
  under the Act, 1963, it would now be appropriate for this Court
  to look into the nature of liability, if any, imposed on the Official
C Liquidator for the purposes of taxation. For this purpose, we
  require to consider Rule 54 of the Rules, 1963 which imposes
  liability, inter a/ia, on a receiver or manager or other person
  appointed by an order of the court, in the event that a business
  owned by a dealer, is under the control of the said receiver or
  manager or person, whatever be his designation, who in fact
D manages the business on behalf of the dealer. The aforesaid
  rule expressly provides that tax shall be levied upon and
  recoverable from such receiver, manager, etc., in the same
  manner, as it would be leviable upon and recoverable from the
  dealer. Such tax liability may be incurred by any person
E managing or conducting the business on behalf of the dealer.
  The tax liability incurred by such person will be equivalent to
  the liability which would be levied upon the dealer if he were
  conducting such business. Further that under Rule 233 of the
  Rules, 1959, for the purposes of acquiring and retaining
F possession of the property of the company in liquidation, the
  Official Liquidator would be in the same position as a receiver.

       56. Since the Official Liquidator is akin to an agent
  employed for the purpose of winding up of a company, he steps
G 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 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
H the official liquidator.
 ASSISTANT COMMISSIONER, ERNAKULAM v. HINDUSTAN              127
    URBAN INFRASTRUCTURE LTD. [H.L. DATTU, CJI.]

     57. Having glanced through the settled principles of law,       A
we would revert back to the controversy in the present appeals.
The first issue canvassed before this Court by the learned
counsel for the parties to the /is, is whether the Official
Liquidator herein would fall under the purview of a "dealer" as
defined under the Act, 1963. And secondly, whether the Official      B
Liquidator would be liable to pay sales tax in respect of sales
effected by him pursuant to winding up proceedings.

     58. In the present case, the Official Liquidator had issued
a notice inviting tenders for the sale of the assets of the          C
Company. The offer of the auction purchaser was accepted and
duly confirmed by the High Court. However, the dispute herein
arose in respect to determination of which party would be
exigible to sales tax.

     59. From the discussion in the preceding paragraphs, we         D
can conclude an Official Liquidator is an officer of the Court and
that for the purpose of discharging statutory obligations
imposed under the Act, 1956, the Official Liquidator merely
steps into the shoes of the company in liquidation. By virtue of
the notice issued by the Official Liquidator for inviting tenders,   E
dated 26.11.2001, it is amply evident that the liquidator
intended to conduct a transfer of the said goods in liquidation.
Since the conduct of an auctioned sale involved transfer of
goods, it falls within the wide ambit of section 2(viii)(f) of the
Act, 1963.                                                           F

     60. The observation of the Court of Appeals in the Re
Mesco Properties case (supra), would appear to be squarely
applicable to be present factual matrix, that is, during a winding
up proceedings, if tax requires to be collected from the
Company in liquidation, the liquidator would be the proper           G
officer to pay the same.

      61. This Court has noticed hereinabove that the Company
in liquidation is a "dealer" with regard to the sale of its assets
                                                                     H
    128      SUPREME COURT REPORTS                  [2015] 1 S.C.R.


A by way of an auction under a winding up order. Further, we have
  noticed the settled law that an Official Liquidator steps into the
  shoes of the Director of the company in liquidation and performs
  his statutory functions in accordance with the directives of fhe
  Court. Furthermore, Rule 54 of the Rules, 1963 contemplates
B a situation where a business owned by a dealer, is under the
  control of a receiver or manager or any other person,
  irrespective of his designation, who manages the business on
  behalf of the said dealer. In the said scenario, the said person,
  in-charge of the business on behalf of the dealer, would be
c exigible to sales tax in the same manner as it would have been
  leviable upon and recoverable from the dealer itself. Therefore,
  it can be concluded that the liability to pay sales tax, in the
  present case, would be on the Official Liquidator in the same
  manner as the dealer, that is, the Company in liquidation.
D       62. Pursuant to section 5 of the Act, 1963, the Company
  in liquidation, as a dealer, will incur liability to pay sales tax at
  the point of first sale as incurred by any other dealer under the
  said Act. By placing reliance upon Rule 54 of the Rules, 1963,
  the liability to pay sales tax is borne by the Official Liquidator
E as a manager or receiver of the property of the company in
  liquidation. Therefore, we are of the considered opinion that the
  Official Liquidator would be required to pay the tax payable on
  the sale of the assets of the company in liquidation.

F       63. As regards the liability of the auction purchaser, this
  Court, in an order passed in Civil Appeal No.5048 of 2003, has
  observed that in view of facts and circumstances of the case,
  the auction purchaser would not be liable to pay sales tax. The
  offer of the auction purchaser, as accepted by the Official
G Liquidator and confirmed by the High Court, was inclusive of
  all taxes. It would have been the bounden duty of the Official
  Liquidator to have separated an amount for the payment of
  taxes under the Act, 1963 to avoid any liability. It would be
  gainsaid in repeating that the Special Government Pleader

H
  ASSISTANT COMMISSIONER, ERNAKULAM v. HINDUSTAN            129
     URBAN INFRASTRUCTURE LTD. [H.L. DATTU, CJI.]

(Taxes), on behalf of the Revenue, before the learned Single       A
Judge of the High Court had clearly stated that the liability to
pay sale~ tax would be on the Official Liquidator.

     64. In the result, we allow these appeals and set aside the
impugn~d judgments and orders passed by the High Court.
                                                                   8
     Ordered accordingly.

Nidhi Jain                                       Appeals allowed