Customs sales tax liability upheld where organised government sales made the Collector a dealer and Article 285 gave no immunity.

The Bengal Finance (Sales Tax) Act, 1941 was construed to treat the Collector of Customs as a dealer because the statutory definitions of dealer and business covered an organised, regular activity of selling goods for consideration, regardless of profit motive. Sales of confiscated and non-confiscated goods were treated as sales exigible to tax, not as transactions in the course of import, because the cash memo or receipt did not amount to a transfer of documents of title. Article 285 did not bar the levy, as sales tax was characterised as an indirect tax and not a direct tax on Union property. The customs sales were therefore held taxable under the Act.

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Issues: (i) Whether the Collector of Customs is a dealer within the meaning of section 2(c) of the Bengal Finance (Sales Tax) Act, 1941; (ii) whether sales of goods made by the Collector of Customs are sales exigible to tax under the Bengal Finance (Sales Tax) Act, 1941, including whether such sales are in the course of import and whether article 285 of the Constitution bars levy of sales tax on confiscated goods.

Issue (i): Whether the Collector of Customs is a dealer within the meaning of section 2(c) of the Bengal Finance (Sales Tax) Act, 1941.

Analysis: The definition of dealer in section 2(c) was construed with its inclusive part and in the light of the expanded definition of business in section 2(1a). The sale activity of the Customs Department was held to be a regular and organised activity of selling goods for consideration, even though profit motive was irrelevant. The expression whether or not in the course of business was read as enlarging the scope of the definition so that the Central Government, acting through the Collector, was covered. The Collector was also treated as a person capable of falling within the definition.

Conclusion: The Collector of Customs is a dealer within section 2(c) of the 1941 Act.

Issue (ii): Whether sales of goods made by the Collector of Customs are sales exigible to tax under the Bengal Finance (Sales Tax) Act, 1941, including whether such sales are in the course of import and whether article 285 of the Constitution bars levy of sales tax on confiscated goods.

Analysis: The sales of confiscated and non-confiscated goods were held to be sales within section 2(g) because they involved transfer of property in goods for consideration and retained the element of mutual assent. The Court rejected the contention that issue of a cash memo or money receipt amounted to a transfer of documents of title so as to bring the transaction within section 5(2) of the Central Sales Tax Act, 1956, and held that the sales were not sales in the course of import. As to article 285, non-confiscated goods were held not to be property of the Union, while confiscated goods vested in the Central Government, but the Court applied the larger Bench view that sales tax is an indirect tax and article 285 does not afford immunity from such levy.

Conclusion: The sales made by the Collector of Customs are exigible to tax under the 1941 Act, and article 285 does not bar levy in the circumstances found.

Final Conclusion: The statutory sales made by the Customs authorities were held taxable under the Bengal Finance (Sales Tax) Act, 1941, and the challenge to the levy failed.

Ratio Decidendi: A government authority can be a dealer where the statutory definition of business is inclusive and the sales are organised and for consideration, and sales tax liability is not excluded by article 285 because it is an indirect tax not amounting to a direct tax on Union property.

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