STATE OF ORISSAversusM/S ORISSA ROAD TRANSPORT CO. LTD. ETC. ETC.

A                          STATE OF ORISSA
                                  v.
                 M/S ORISSA ROAD TRANSPORT CO. LTD.
                              ETC. ETC.

                                 AUGUST 28, 1997
B
           (SUHAS C. SEN, B.N. KIRPAL AND K.T. THOMAS, JJ.)

          Sales Tax:

C          Orissa Sales Tax Act, 1947-Sectio11s 4 a11d 2(c)(iv), (bb) &
    (b )-Liability to pay sales tax-State Tra11spo11: Compa11y disposi11g of U11Ser-
    viceable, old, obsolete a11d unutilised pans from its store periodically-Held,
    Tra11spo11: Compa11y is a dealer canyi11g 011 the busi11ess of selli11g such pans
    without being registered as a dealer under the Act-Hence liable to pay sales
    tax:          '
D
          Practice & Procedure ;

         New plea-Omissio11 on the pan of the State to point out the relevant
  statutory provision, culminating in a wrong decisio11 by High Coun-/'lea thus
E was a legal one-Held, it ca11not be contended that this Courl: also should
  not refer to that provision-However, the contentio11 would have been co"ect
  if applicability of the legal provisio11 depended on the investigation offacts.
          The respondent company's main business was providing transport
F facilities to the travelling public by way of plying buses. Apart from that
  it was disposing of unserviceable, old, obsolete and unutilised parts from
  its stores at yearly intervals. The respondent did not get itself registered
  as a dealer under the Orissa Sales Tax Act. The Sales Tax Officer made
  an order of assessment under Section 15 (5) of the Act seeking to tax the
  respondent's turnover on such sale, and also levied penalty as the respon-
G dent had failed to get itself registered under the Act. The appeal filed by
  the respondent before the Assistant Commissioner, Sales Tax was dis-
  missed. Second appeal was then filed by the respondent before the Addi-
  tional Sales Tax Tribunal which accepted the contention of the respondent
  that it was not a dealer within the scope of the Act for the purp{;se of
H levying tax. However the Tribunal referred the matter to the High Court
                                           592


                                                                                        ..
               STATEv. ORISSAROADTRANSPORTCO.LTD.                        593

and the High Court held that respondent was not a dealer and was not            A
liable to pay sales tax. Hence this Appeal by the State.

      Allowing the appeal, the Court

      HELD : 1. In the course of carrying on its business of providing
transport, some obsolete parts, spare parts etc., are not required by the       B
respondent company. As a prudent business organisation, the respondent
sells such items, which were obviously used or intended for use in its
business, when there was no rec1uirement for them. It cannot be accepted
that such sales cannot even be regarded as occasional sales of a business
nature which would make the respondent a casual dealer within the               C
meaning of that expression occurring in Section 2(bb) of the Orissa Sales
Tax Act, 1959. Hence, the respondent will have to be regarded as a dealer
carrying on the business of selling spar~ parts etc. and, therefore liable to
pay sales tax on the sale of such items. [597-H, 598-A-B, DJ
                                                                                D
       State of Tamil Nadu v. Bunnah Shell Oil Storage and Distributing Co.
of Il1dia Ltd., (1973) 31 STC 426 and Distlict Controller of Stores, Northem
Railway, Jodhpur v. The Assistant Commercial Taxation Officer & Anr.,
(1976) 37 src 423, relied on.

      State of Gujarat v. Raipur Mmmfactwing Co. Ltd., (1967) 19 STC 1,         E
distinguished.

      Andhra Pradesh State Road Transport C01poration, Hyderabad v. 171e
Commercial Tax Officer, (1971) 27 STC 42 and The State ofAndhra Pradesh
v. Andhra Pradesh State Road Transpo1t Corporation, (1989) 74 STC 336,          F
referred to.

      2. It is true that apparently the attention of the High Court was not
drawn to Section 2(bb). This, however, can be of no assistance to the
respondent assessee because on the facts as found by the Tribunal it is
evident that the provisions of Section 2(bb) are clearly attracted to the G
instant case. If the High Court has ignored a relevant statutory provision
and then come to a wrong conclusion that cannot be a ground for the
respondent to contend that this Court also should not refer to that
provision. The contention of the respondent would have been correct if the
applicability of Section 2(bb) depended on the investigation of facts and H
    594                   SUPREME COURT REPORTS (1997) SUPP. 3 S.C.R.

A that is not the case herein. [599-F]

          CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 2034-38
    of 1982 Etc.

          From the Judgment and Order dated 28.10.81 of the Orissa High
B Court in S.J.C. Nos. 90, 175, 194, 195-196 of 1977.

         Raj Kumar Mehta for G.S. Chatterjee, Raj Kumar Mehta, P.N. Misra
    and Mrs. Kirti Mishra for the appearing parties.

C         The Judgment of the Court was delivered by

          KIRPAL, J. In these appeals by special leave what arises for con-
    sideration is whether the respondent is liable to pay sales tax and to be
    registered as a dealer under the relevant provisions of the Orissa Sales Tax
    Act, 1947 (hereinafter referred to as the 'said Act').
D
           The respondent's main business is of running of buses and providing
    transport" facilities to the travelling public. Along with these services the
    respondent has been disposing of unserviceable, old, obsolete and ·un-
    utilised parts from its stores. These parts used to be disposed of at yearly
E   intervals. The respondent did not get itself registered as a dealer under the
    said Act. According to it, no business was being carried on in respect of
    which any sales tax could have been levied.

          The Sales Tax Officer considered that the respondent was liable to
    pay tax. He accordingly made an order of assessment under Section 12(5)
F   of the said Act seeking to tax the respondent's turn-over on the sale of
    unserviceable old parts, obsolete parts, spare parts, sale of fuel, oil and
    supply of material utilised in body building to the State Transport service.
    The Assessing Authority also levied penalty inasmuch as the respondent
    had failed to get itself registered under the Act.

G         The respondent filed an appeal against the aforesaid decision before
    the Assistant Commissioner, Sales Tax, but was not successful. Second
    appeal was then preferred to the Additional Sales Tax Tribunal, Cuttack.
    The Tribunal acce1Jted the contention of the respondent and came to the
    conclusion that the respondent could not be regarded as a dealer within
H   the scope of the said Act for the purpose of levying tax.
      STATEv. ORISSAROADTRANSPORTCO.LTD. [KIRPAL,J.]                      595

      On an application being filed the Tribunal referred the following A
three questions of law to the High Court :

        "(a) Whether on the facts and in the circumstances of the case, the
        Member, Addi. Sales Tax Tribunal, was legally correct in holding
        that in respect of the transactions in spare parts and sale of fuel,     B
        oil etc. at cost the assessee is not a de~ler as per Section 2 ( c) of
        the Orissa Sales Tax Act, 1947?

        (b) Whether on the facts and in the circumstances of the case, the
        Member, Addi. Sales Tax Tribunal is correct to hold that pur-
        chases of new spare parts and accessories of such vehicles as Ford,      C
        Chevrolet, Despot, Dodge, etc. were not made with an intention
        to carry on business of selling the same?

        (c) Whether on the facts and in the circumstances of the case, the
        Member, Addi. Sales Tax Tribunal, is legally correct to hold that
        the assessee is not a dealer as per Section 2 (c) of the Orissa Sales    D
        Tax Act, 1947 in respect of the sale turnover of unutilised new
        spare parts?"

      The High Court vide its judgment answered all the aforesaid
questions in favour of the respondent and held that it had not carried on        E
any business as a dealer and, therefore, was not liable to payment of sales
Lax.

      On behalf of the appellant it is contended that though the main
business of the respondent was of carrying passengers but the sale of spare
parts and other items must be regarded as being incidental to that business      F
and, therefore, the turn-ovftr in respect of the said sales was liable to tax.

      Mr. P.N. Misra, learned counsel for the respondent, however, sub-
mitted that respondent was not in the business of selling goods and,
therefore, such sales could not form part of its taxable turn-over and the
respondent was not obliged to register itself as a dealer under the said Act. G
Our attention was drawn to a few decisions in an effort to show that the
respondent could not be regarded as carrying on business of selling the
spare parts etc. The first case which was relied upon was that of State of
Gujarat v. Raipur Manufacturing Co. Ltd., (1967) 19 STC 1. In that the
company was carrying on the business of manufacturing cotton textiles, sale H
    596                         SUPREME COURT REPORTS (1997) SUPP. 3 S.C.R.

A of old discarded goods, coal, by-products and subsidiary products. In
  determining with regard to such sales the company could be considered as
  carrying on business, this Court held that whether a person carries on
  business in a particular commodity must depend upon the volume, frequen-
  cy, continuity and regularity of transaction of purchase and sale in a class
B of goods and the transactions must ordinarily be entered into with a profit
  motive. In other words irregular sales of small quantities of old discarded
  goods could not be regarded as carrying on of a business activity. Volume,
  frequency, continuity etc. of purchase and sales in those items was the
  determining factor. This principal has been followed by the Andhra
  Pradesh High Court in Andhra Pradesh State Road Tra11sp01t Corporation,
C Hyderabad v. The Commercial Tax Office1; (1971) 27 STC 42 and the State
  of Andhra Pradesh v. Andhra Pradesh Road Transport Corporation, (1989)
  74 STC 336.

            The relevant provisions of the Orissa Act are first required to be
    examined in order to see whether the aforesaid decisions can support the
D   respondent's contentions. Section 4 of the said Act is a r.harging section.
    It, inter alia, provides that every dealer whose gross turn-over during the
    year exceeds the specified limit shall be liable to pay tax under the said
    Act on the sales and purchases effected by it. The' expression 'dealer' has
    been defined in Section 2( c) of the Act. The relevant portion of the said
E   definition is as follows :

             "(c) 'Dealer' means any person who carries on the business of
             purchasing, selling, supplying or distributing goods (including
             goods used or involved in the execution of works contract, whether
             as goods or in some other form), directly or otherwise, whether
F            for cash or for deferred payment or for commission, remuneration
             or other valuable consideration and includes,-

                (i) ....................................... .

                (ii) .................................... .
G
                (111) .................................. ..

                (iv) a ca·1sal dealer;"

  The expression 'casual dealer' has been defined in Section 2 (bb) and is as
H follows:
      JTATEv. ORISSAROADTRANSPORTCO. LTD. [KIRPAL,J.)                    597

        "{bb) 'Casual dealer' means a person, who has, whether as prin-         A
        cipa~ agent or in any of the ·capacity occasional transactions of a
        business nature involving purchasing, selling, supplying or dis-
        tributing goods in the State whether for commission, remuneration
        or otherwise."

The expression 'business' has been defined in Section 2{b) and is as follows:   B

        "{b) "business" includes -

        (i) any trade, commerce or manufacture or any adventure or
        concern in the nature of trade, commerce or manufacture, whether        C
        or not such trade, commerce, manufacture, adventure or concern
        is carried on with a motive to make gain or profit and whether or
        not any gain or profit accrues from such trade, commerce,
        manufacture, adventure or concern; and

        (ii) any transaction in connection with or incidental or ancillary to   D
        such trade commerce, manufacture, adventure or concern."

       The decision of this Court in Raipur Manufacturing Co. Ltd. case
cannot be made applicable here. In that case this Court considered the
volume, frequency, continuity and regularity of transactions of purchase
and sales being an important element in determining whether a business          E
was being carried out apart from the element of profit making being there.
Hence in the Orissa Act the expression 'dealer' includes a casual dealer.
A casual dealer define in Section 2(bb) is one who has occasional transac-
tions of a business nature involving purchasing, selling, supplying or dis-
tribution or goods, whether for commission, remmuneration or otherwise.         F
This means that even if a person did not have a systematic or 111 organised
business involving regular transactions of purchases and sales he could still
be regarded as a causal dealer if he entered into occasional transactions
of a business nature involving purchases, sales etc. of the goods. In the
cases cited by Mr. Misra there was no consideration of this aspect at all.
                                                                                G
      It cannot be denied that the respondent is a business organisation
whose activity is that of providing road transport. In the course of its
carrying on of the said busines some obsolete parts, spare part etc. are not
required by it. As a prudent business organisation the said items, which
were obviously used or intended for use in its business, are sold when there H
    598                  SUPREME COURT REPORTS (1997) SUPP. 3 S.C.R.

A is no requirement for them. We find it difficult to accept that such sales
    cannot even be regarded as occasional sales of a business nature which
    would make the respondent a casual dealer within the meaning of that
    expression occurring in Section 2(bb) of the said Act. In the case of State
    of Tamil Nadu v. Bwmali Shell Oil Storage and Distlibuting Co. of India
B   Ltd. and Anr. (1973) 31 STC 426 this Court was concerned, inter alia, with
    the sale of scrap where the definition of the word business in the Madras
    General Sales Tax Act had done away with motive for making profit as
    being a relevant consideration in determining whether the assessee carried
    on business or not. Section 2(d) of the Madras Act was similar to the
C   present definition in Section 2(b) of the Orissa Act and it included the
    words "whether or not such trade, commerce, manufacture, adventure or
    concern is ·carried on with a motive to make gain or profit and whether or
    not any profit accrues from such trade, commerce, manufacture, adventure
    or concern". In connection with the sale of scrap it was observed at page
    433 as follows :
D
                "In the view we hold that scrap sold is certainly connected with
            the business of the company and the turnover in respect of this
            commodity is liable to tax. It cannot also be said that the turnover
            in respect of the sale of the assessee's advertisement materials at
E           cost price or less than cost price is not connected with the business
            of the assessee. Calendars, wallets and key chains are all given by
            the dealers to its customers for purposes of maintaining and
            increasing the sales of the products of the assessee and is therefore,
            connected with the business. What the assessee is doing is to
            facilitate the dealers to acquire at their cost such advertising
F            materials of a uniform type approved by the assessee-company
             which, instead of allowing each of them to have these separately
             printed or manufactured, itself undertook to do so and supplied
             them to its dealers. The supply of such material is in our view being
             connected with the business is liable to be included in the turnover
G            of the assessee."


          In the Disflict Controller of Stores, N01them Railway, Jodhpur v. 171e
    Assistant commercial taxation Officer and Anr., (1976] 37 STC 423, this
     court was concerned with a question whether the sales of unserviceable
H    material and scrap by the Northern Railway, Jodhpur, was exigible to sales
       STATEv. ORISSAROADTRANSPORTCO. LTD. [KIRPAL,J.]                    599

tax. The Rajasthan Sales Tax Act had been amended and, like the Madras A
Sales Tax Act and the Orissa Sales Tax Act the definition of business had
eliminated the profit making element and keeping this in view this Court
held that the activity of the appellant in selling unserviceable material and
scrap would be business within clause 1 of ihe definition of the word
'business' introduced by the amending Act. This Court held that even if it B
be assumed that the activity involved in selling unserviceable material and
scrap-iron etc. may not amount to carrying on business in the normal
connotation of that term, it would still be business within the meaning of
the expression business occurring in the said Act. Such sales were,
therefore, to be held to exigible to sales tax.
                                                                                 c
      The definition of the word 'business' in the Orissa Act being
peri111ate1ia with the definition of such expression in the Madras Act as well
as the Rajasthan Act, the ratio of the decision in Bumiah Shell case (Supra)
and the District Controller's case (supra) would be clearly applicable in the
instant case and, therefore, the respondent will have to be regarded as a D
dealer carrying on the business of selling spare parts etc. and thereby
become liable to pay sales tax on the sale of such items.

       It was submitted by Mr. Misra that neither the High Court nor the
other authorities had gone into the question as to whether the respondent        E
could be regarded as a casual dealer. It is true that apparently the attention
of the High Court was not drawn to Section Z(bb). This, however, can be
of no assistance to the respondent because on the facts as found by the
Tribunal it is evident that the provisions of Section 2 (bb) are clearly
attracted to the instant case. If the High court has ignored a relevant
                                                                                 F
statutory provision and then come tu a wrqng conclusion that cannot be a
ground for the respondent to contend that this Court should also not refer
to the said sub-section. The co_ntention of the respondent would have been
correct if the applicability of Section Z(bb) depended on the investigation
of facts and that had not been done. However, the facts as found here
clearly disclose that the respondent has to be regarded at least as a casual     G
dealer. The mere fact that the High Court over-looked the said provision
cannot be a ground for the respondent to contend that this Court should
not go into that question.

      In our opinion the High Court was not right in concluding that the H
    600                  SUPREME COURT REPORTS [1997] SUPP. 3 S.C.R.

.A respondent was not a dealer who was liable to pay sales tax on the sales
    of the spare parts etc. made by it. We accordingly allow these appeals and
    answer the questions of law in the negative and against the respondent.
    There will be no order as to costs.

    R.K.S.                                                   Appeals allowed.