Dealer status for sales tax depends on commercial trading intention, not mere convenience-based supply of own construction materials.

A person becomes liable to sales tax only if, in relation to the particular goods, he carries on the business of selling or supplying them in a commercial sense with a profit-making object. Mere passing of property for consideration does not by itself make the transferor a dealer. Where building materials are obtained for own construction and supplied to contractors only for convenience in execution of the work, continuous or repeated supply and account entries debiting contractors do not establish trading activity. The article states that such convenience-based supplies of steel and cement do not amount to taxable sales, because the requisite commercial trading intention is absent.

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Issues: Whether the assessee, in supplying building materials to its contractors for construction of its own buildings, carried on the business of selling or supplying those goods so as to be a dealer liable to sales tax on the transactions.

Analysis: Under the Act, liability to sales tax arises only where the person effecting the transfer is a dealer, and dealer means a person carrying on the business of selling or supplying goods. The mere fact that property in goods passes for consideration does not by itself establish that the seller is a dealer in relation to those goods. The relevant enquiry is whether the assessee carried on continuous trading operations in the relevant commodity with a view to earn profit. Here the materials were obtained for the assessee's own construction work and supplied to contractors as a matter of convenience in execution of the work. Continuous or repeated supply did not, by itself, convert the activity into a business of selling steel and cement. The account entries debiting the contractors, and any incidental excess over purchase price, did not establish a trading intention or a commercial business of selling those materials.

Conclusion: The assessee was not a dealer in steel and cement and the supplies to contractors were not taxable sales under the Act.

Final Conclusion: The reference was answered against the revenue, and the assessee was held not liable to sales tax on the impugned supplies.

Ratio Decidendi: A person is liable to sales tax only if, in relation to the particular goods sold, he carries on the business of selling or supplying them in a commercial sense with a profit-making object; an isolated or convenience-based supply of goods acquired for own use does not make him a dealer in those goods.

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