VISHWANATH JHUNJHUNWALAversusSTATE OF UTTAR PRADESH AND ANR.

A           ..         VISHWANATH JHUNJHUNWALA
                                   v.
                    STATE OF UTTAR PRADESH AND ANR.

                                 APRIL 16, 2004

B                (S. RAJENDRA BABU AND G.P. MATHUR, JJ.]


          U.P. Sales Tax Act, 1948:

        Ss. 2(aa) and 28-A(l)-"Business "-Import ofcoalin connection with-
C Declaration in Form-31-Firm engaged in refining of oil on its own account
  as also on job work basis-Not allowed to use the coal imported on Form-31
  for job work-Held, concept of business would not exclude processing
  materials-Coal imported/or processing raw material is included in definition
  of "business" under s. 2(aa)-Activities of the firm include job work which
D involve purchase of coal and fall outside exclusionary clause in the definition
   of "business".

        Appellant-firm was engaged in refining of oil on its own account as
  also on job work basis. For this purpose, the appellant was importing coal
  from Central Coal Fields by road. When the appellant applied for issue
E of 1300 Forms-31 as prescribed under U.P. Sales Tax Act, 1948,
  respondent No. 2, the Assistant Commissioner (Assessment), issued a notice
  requiring the appellant to show cause as to why penalty should not be
  imposed on the firm as the coal which was being imported on Form-31
  was being used for job work whereas it should be used for its own business.
  The appellant was directed not to use the coal imported on Form 31 for
F job work. The High Court upheld the order holding that since the coal
  intended to be imported by the appellant for job work was not in
  connection with his business, Form 31 could not be issued for the same.
  Hence the appeals.

G         Allowing the appeals~ the Court

       HELD: ].I. Admittedly coal is purchased and imported by the
  appellant from outside the State of Uttar Pradesh and, therefore,
  necessarily it involves purchase and sale of goods, if not, anything less.
  The concept of "business"· as per the definition would not exclude
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            V. JHUNJHUNWALA v.STATE [RAJENDRA BABU, J.]                 297

'processing materials' inasmuch as the appellant utilizes the coal imported A
by him for processing of raw material and such activity is also included
in the definition of"business" under s.2(aa) of the U.P. Sales Tax Act, 1948.
                                                                   (299-E-Hl

      Ganesh Prasad Dixit v. Commissioner of Sales Tax, Madhya Pradesh,.
[1969) 1SCC492 and The State ofAndhra Pradesh v. H. Abdul Bakshi and B
Bros., 15 STC 644, relied on.

      1.2. When activities of the appellant would necessarily include job,
work done by him and he cannot do this job work except after purchase
of coal, his activities even if stated to be one in the nature of mere service, C
would involve purchase of coal and in that event it falls outside the.
exclusionary clause in the definition of "business". [300-E]

     CIVIL APPELLATE JURISDICTION: Civil Appeal No. 164of1997.

     From the Judgment and Order dated 24.5.96 of the Allahabad High D
Court in C.M.W.P. No. 1065 of 1994.
                                   WITH
     C.A. Nos. 165-166 of 1997.

     Sunil Gupta and Ms. Meenakshi Arora for the Appellants in C.A. No.       .E
64/97.

     Mis. J.B. Dadachanji & Co, (NP) for the Appellants in C.A.Nos. 165-
166/97.

     R.C. Verma, Mukesh Verma and Manish Shanker for the Respondents.          F
     The Judgment of the Court was delivered by

      RAJENDRA BABU, .J. At the outset, we make it clear that the learned
counsel are· not clear as to the amendments that have been effected to the
Statutes in question. We are constrained to proceed upon the material placed
before us and on the basis of the stand taken by them.                       G.
     The appellant before us is a partnership firm registered as a dealer
under the provisions of the UP Sales TaX Act, 1948 (for short 'the Act') and
the Central Sales Tax Act. The firm is engaged in refining of oil on its own
account and also on job work basis. For this purpose the firm required steam H
    298                       SUPREME COURT REPORTS (2004] SUPP. l S.C.R.

A coal in huge quantity to be used as fuel for manufacturing the refined oil. In
    order to bring coal by road from Central Coal Fields, Ranchi to Varanasi,
    where the appellant's factory is situate, the appellant required Form 31 as
    prescribed under the Act and requested the Assistant Commissfoner
    (Assessment) I Trade Tax Varanasi, respondent No. 2 herein, to issue 1300
B   Forms 31, who instead of issuing Form 31 initiated proceedings under Section
     15-A(l)(r) of the Act asking the appellant to show cause as to why penalty
    be not imposed as coal which was being imported by the appellant on Form
    31 was being used on job work while it should be used for his own business.
    The appellant replied to the aforesaid show cause notice and an order was
    passed directing the appellant not to use the coal imported on Fonn 31 for
C   job work.

          '-ii The High Court held that Section 28-A sub-section (l) of the Act
    make~ it clear that an importer who intends to bring, import      or otherwise
    receive into the State from any place outside the State any goods liable to tax
    under the Act in such quantity or measure or of such value as provided under
D   this provision in connection with his business, he shall obtain the prescribed
    declaration in Form 31 and if he intends to bring, import or receive such
    goods otherwise than in connection with business, he may, in the like manner,
    obtain the prescribed form of certificate, that is, Form 30. There was nn
    dispute before the Court that transactions of sale and purchase of coal were
E   subject to tax and the appellant was importing coal in excess of the limits
    mentioned under Section 28-A and, therefore, the appellant should have
    obtained Form 31 if he intended to bring or import coal in connection with
    his business and if he intended to bring or import coal otherwise than· in
    connection with his business, he may obtain Form 32.

p          The case set up before the Court by the respondents is that the coal
    imported by the appellant is not only in connection with his business but also
    for job work. Therefore, the High Court, after adverting to the definition of
    "business", held that the appellant is engaged in the business of manufacture
    and sale of refined oil and, in addition, the appellant also refined oil on job
    work basis; that the term "business" would not include job work, that is, an
G   activity which is in the nature of mere service which does not involve the
    purchase or sale of goods; that, similarly, the coal intended to be imported
    by the appellant for being used on job work is not in connection with his
    business and hence Form No. 31 cannot be issued for the same.

            It is against this order of the High Court that the appellant has come up
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             V. JHUNJHUNW ALA v. STATE [RAJENDRA BABU, J.]                  299
in appeal.                                                                          A
      The term "business" is defined under Section 2(aa) of the Act and
reads as follows :-

        "business" in relation to business of buying or selling goods, includes:•
                                                                                    B
        (I) any trade, commerce or manufacture or any adventure or concern'
        in the nature of trade, commerce, manufacture, adventure or concern.
        is carried on with a motive to make profit and whether or not any
        profit accrues from such trade, commerce, manufacture, adventure or
        concern; and
        any transaction of buying, selling or supplying plant, machinery, raw
                                                                                    c
        materials, processing materials, packing materials, empties, consumable
        stores, waste or by-products, or any other goods of a similar nature
        or any unserviceable or obsolete or discarded machinery or any parts
        or accessories thereof or any waste or scrap or any of them (or any
        other transaction whatsoever) which is ancillary to or is connected D
        with or is incidental to, or results from, such trade, commerce,
        manufacture, adventure or concern;
        but does not include any activity in the nature of mere service or
        profession which does not involve the purchase or sale of goods."
                                                                                    E
       The High Court placed emphasis on the fact that the term "business"
would 'not include any activity in the nature of mere service or profession
which does not involve the purchase or sale of goods'. In the present case,
admittedly coal is purchased and imported by the appellant from outside the
State of Uttar Pradesh and, therefore, necessarily it involves purchase and
sale of goods, if not, anything less. The concept of "business" as per the F
definition would not exclude 'processing materials' inasmuch as the appellant
utilises the coal imported by him for processing of raw material and such
activity is also included in the definition of "business".

      In explaining the meaning of expression "business" this Court in Ganesh G
Prasad Dixit v. Commissioner of Sales Tax, Madhya Pradesh, [1969) 1 SCC
492, quoted the following observations made in The State of Andhra Pradesh
v. H. Abdul Bakshi and Bros., 15 STC 644 :-

        "A person to be a dealer must be engaged in the business of buying
        or selling or supplying goods. The expression 'business' though H
    300                    SUPREME COURT REPORTS (2004] SUPP. I S.C.R.

A          extensively used is a word of indefinite import. In taxing statutes it
           is used in the sense of an occupation, or profession which occupies
           the· time, attention and labour of a person, normally with the object
           of making profit. To regard an activity as business there must be a
           course of dealings, either actually continued or contemplated to be
           continued with a profit motive, and not for sport or pleasure. But to
B          be a dealer a person need not follow the activity of buying, selling
           and supplying the same commodity. Mere buying for personal
           consumption, i.e. without a profit motive, will not make a person
           dealer within the meaning of the Act, but a person who consumes a
           commodity bought by him in the course of his trade, or use in
c          manufacturing another commodity for sale, would be regarded as a
           dealer. The Legislature has not made sale of the very article bought
           by a person a condition for treating him as a dealer; the definition
           merely requires that the buying of the commodity mentioned in Rule
           5(2) must be in the course of business, i.e. must be for sale or .use
           with a view to make profit out of the integrated activity of buying
D          and disposal. The commodity may itself be converted into another
           saleable commodity, or it may be used as an ingredient or in aid of
           a manufacturing process leading to the production of such saleable
           commodity."

E         When activities of the appellant would necessarily include job work
    done by him and he cannot do this job work except after purchase of coal,
    his activities even if stated to be one in the nature of mere service would
    involve purchase of coal and in that event it falls outside the exclusionary
    clause in the definition of "business".

p         In that view of the matter, the view taken by the High Court is not
    correct and is set aside and in tum the view taken by the Assistant
    Commissioner (Assessment) also stands set aside. The appeals are allowed.

    R.P.                                                      Appeals allowed.