MEMBER BOARD OF REVENUE, WEST BENGALversusCONTROLLER OF STORES EASTERN RAILWAY CALCUTTA, ETC.

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

                                  APRIL 28, 1989                                     B

'r                    [R.S. PATHAK, CJ, L.M. SHARMA,
'                            AND N.D. OJHA, JJ.]

            Bengal Finance (Sales Tax) Act, 1941: Section2(c).

           "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               E
      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·   F
           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          H
      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

         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.
B
          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       ~
  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         }-
    was disposing scrap and unserviceable material was also a "dealer" for
E   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.

F         CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1069
    of 1975.
                                                                                1
         From the Order dated 18.5.1973 of the Calcutta High Court in
    Matter No. 586 of 1968.

G         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

H         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
                                                                                    A
      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 B
·r       unconnected goods for money consideration. On 1 April, 1952 the
     t_ assessee applied for registration as a dealer under the Bengal Finance
    · (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, c
         1959 the assessee applied to the Commercial Tax Officer for cancella-
         tion of the registration of the assessee as a "dealer" under the Act.
         The Commercial Tax Officer examined the case and did not accept the
         contention that the assessee was not a "dealer". On 6 June, 1959 he
         made an order rejecting the application on the basis that the disposal D
         of Unclaimed goods for valuable consideration was a regular featme of
         the assessee's activities, and that therefore the assessee fell within the
         scope of the Act. The assessee applied in revision before the Assistant
           Commissioher of Commercial Taxes. The only point raised in the
         revision application was whether the assessee could be treated as a
         "dealer" within the meaning of the Act. It was stated on behalf of the E
         assessee that unclaimed or unconnected goods came into possession of
         the assessee but not as a result of any activity of purchase or of man-
         ufacture for sale. It was pointed out that when such good came into
         possession of the assessee it acquired rights over the said goods under
         Section 56 of the Railways Act enabling it tci sell the goods. The.revi-
         sion petition was rejected on 27 January, 1960 on the finding that'the F
        sales.effected by the assessee.were sales Under .the Act andl that the asses-·
'-'· see was a "dealer". The assessee proceeded in further revision the   to
         Commissioner of Commercial Taxes, West Bengal and similar conten-
         tions were raised before him but the revision·application was dismissed
         by the Additional Commissioner of Commercial Taxes, who dealt with
         the case, by order dated 17 June, 1960. The assessee then proceeded in G
         revision before the Board of Revenue, West Bengal. The Board held
         that a transfer of property was involved in the auction held by the
         assessee and that therefore a sale of goods took place. The Board
         further held that the systematic and organised characier of business
         carried on by the assessee clothed him with the status of a "dealer"
       . under the Act. At the instance of the assessee the Board of Revenue H
     780                    SUPREME COURT REPORTS              [1989] 2 S.C.R.

A referred the following question to the High Court at Calcutta for its ')....
  opinion:

                 "Whether the petitioner Railway in so far as it effects sales
                 of unclaimed and unconnected goods under the provisions
                 of Section 56 of the Indian Railways Act, is a dealer within
B                the meaning of Section 2( c) of the Bengal Finance (Sales
                 Tax) Act, 1941?"                                                  'i
                                                                             . j
       The facts and circumstances in the case out of which Civil Appeal ·
  No. 1069 of 1975 arises are substantially similar to those narrated in
  the earlier case, except that the assessee here is the Eastern Railway
  and it is engaged in selling scrap and unserviceable material. The
C question referred at the instance of the assessee to the High Court at
  Calcutta is as follows:                                                  ~


                 "Whether on the facts and in the circumstances of th.e case
                 the Controller of Stores, Eastern Railways is a dealer
b                engaged in the business of selling scrap and unserviceable
                 materials within the meaning of cl. (c) read with Cl. (g) of
                 Section 2 of the Bengal Finance (Sales Tax) Act, 1941."

           The High Court delivered judgment setting forth detailed
     r~.asons therefor in the case relating to the assessee .Sout~ Eastern
E    Railway. It held that the disposal of the goods did not indicate that the
     Railway concerned was carrying on business as a dealer liable to
     assessment under the Act.

          The High Court disposed of the other case on the same basis as
     found favour with it in the earlier case, and answered the question in
fi   favour of the assessee.

          In these appeals the question is whether theassessee Railway in
    each case is a "dealer" for the purpose of assessment under the Bengal
    Finance (Sales Tax) Act, 1941. In the case of·the assessee South
    Eastern Railway, what were sold were unclaimed goods. The Railway
G was a carrier of the goods and if at the stage of delivery goods
    reinained unclaimed for a period the Railway was entitled to dispose
    them of. There can be no doubt that the activity of so disposing of the
    goods was adjunctive to the prinzjpal 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 carrier of the goods. It seems to
fl .us th~t the assessee South Eastern Railway was a "dealer" for the
       BOARD OF REVENUE v. CONTROLLER OF STORES [PATHAK, CJ}               781

~· purposes of the Bengal Finance (Sales Tax) Act, 1941.                          A

            In the other case, the assessee Eastern Railway disposed of scrap
      and unserviceable material lying with it. The case is covered directly
      by the decision of this Court in the District Controller of Stores, Nor·
      thern Railway, Jodhpur v. The Assistant Commercial Taxation Officer
    · and Another, [1976] 37 S.T.C. 423.                       .                  B

             In the circumstances the appeals are allowed, the impugned
       udgment of the High Court in each case is set aside and the questions
      referred to the High Court are answered in each case in the affirma·
      tive, in favour of the revenue and against the assessee. The appellant is
      entitled to his costs in each case.                                         c
/- T.N.A.                                                    Appeals allowed.
                                             '




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