Dealer status for film producers turns on whether finished cinematograph films are saleable commodities under sales tax law.

Motion picture producers are treated as dealers under section 2(11) of the Bombay Sales Tax Act, 1959 only if their purchase of raw film is part of a continuous commercial business activity involving buying and disposal. The definition does not require buying and selling the same commodity; raw materials may be purchased for use in manufacturing another commodity for sale. The controlling test is whether the transaction forms an integrated business nexus and whether the finished cinematograph films are saleable or marketable. On that basis, producers qualify as dealers only if the films they produce are found to be a saleable commodity.

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Issues: Whether motion picture producers were dealers within the meaning of section 2(11) of the Bombay Sales Tax Act, 1959, in respect of their purchase of raw films.

Analysis: The definition of dealer requires a person to carry on the business of buying or selling goods, and business connotes a continuous commercial activity with a profit motive. A person need not buy and sell the same commodity, and goods may be bought in the course of business for use in manufacturing another commodity for sale. The controlling test is whether the purchase forms part of an integrated activity of buying and disposal and whether the commodity produced is saleable or marketable. Raw films used in producing cinematograph films may satisfy this nexus only if the finished films are found to be saleable commodities.

Conclusion: The applicants would be dealers under section 2(11) only if the cinematograph films produced by them are found to be a saleable commodity.

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