Statutory service charges and sales tax liability: port trust water supply fees were not trading receipts, and recovery suit was timely.

A statutory port trust is not a dealer liable to sales tax merely because it fixes and collects charges for supplying water to ships; the charges were treated as fees for statutory services, and the absence of commercial trading activity or profit motive was decisive. In relation to recovery of tax paid under protest, the special sales tax limitation provision was held inapplicable, and the claim was governed by Article 62 of the Limitation Act, making the suit timely. The ratio emphasizes that sales tax liability depends on commercial buying or selling activity, while suits to recover illegally collected tax follow the ordinary limitation rule for money had and received.

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Issues: (i) Whether the Trustees of the Port of Madras were dealers carrying on business of buying or selling goods so as to be liable to sales tax on charges collected for supply of water to ships; (ii) Whether the suit for recovery of tax paid under protest was governed by section 18 of the Madras General Sales Tax Act or by Article 62 of the Limitation Act.

Issue (i): Whether the Trustees of the Port of Madras were dealers carrying on business of buying or selling goods so as to be liable to sales tax on charges collected for supply of water to ships.

Analysis: The statutory scheme of the Madras Port Trust Act showed that the Board was constituted for regulation, conservancy and improvement of the port, and that the charges levied for water supplied to ships were in the nature of fees for services rendered. The power to fix and increase rates did not convert the Board into a trading body. Under the sales tax law, liability attached only where the person was a dealer carrying on business in a commercial sense, with a profit motive. The supply of water was a statutory duty and not a business undertaken for profit, and the absence of any commercial object was decisive.

Conclusion: The Trustees of the Port of Madras were not dealers and were not liable to sales tax on the charges collected for water supplied to ships.

Issue (ii): Whether the suit for recovery of tax paid under protest was governed by section 18 of the Madras General Sales Tax Act or by Article 62 of the Limitation Act.

Analysis: Section 18 of the sales tax law was held inapplicable to a suit to recover money illegally collected as sales tax. The appropriate limitation period was held to be that provided by Article 62 of the Limitation Act, and on that footing the claim was within time.

Conclusion: The suit was governed by Article 62 of the Limitation Act and was not barred by limitation.

Final Conclusion: The appellant succeeded on both the tax liability issue and the limitation issue, entitling it to recovery of the entire amount claimed.

Ratio Decidendi: A statutory corporation is liable to sales tax only if it carries on buying or selling as a commercial business with a profit motive; charges levied merely for performance of statutory services do not constitute taxable trading activity, and suits to recover tax illegally collected are governed by Article 62 of the Limitation Act rather than the special sales tax limitation provision.

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