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Issues: Whether the disposal of surplus war material by the Government of India through the Directorate of Disposals amounted to carrying on the business of selling goods in West Bengal so as to make it a dealer within section 2(c) of the Bengal Finance (Sales Tax) Act, 1941.
Analysis: The decisive question was whether the transactions were mere realization of surplus capital assets or an organized business activity. The material showed repeated sales over a period of years, conducted through a widespread selling organisation, with advertisements and auctions, and the sales were made with a profit-motive. Applying the settled test that business requires a course of dealings with continuity, frequency, system and a commercial purpose, the majority held that the totality of circumstances pointed to carrying on business and not merely realizing capital.
Conclusion: The Directorate was carrying on the business of selling goods and was a dealer within section 2(c) of the Act; the answer to the referred question was in the negative against the respondent and in favour of the appellant.
Dissenting Opinion: Shah, J. held that the activity was only realization of surplus war equipment and did not amount to carrying on business. On that view, the appellant would not have been a dealer under section 2(c).
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