State as dealer under sales tax law requires proof of business activity and registration; wrongful tax recovery was unsustainable.

The State could be treated as a dealer under sales tax law only if it was shown to be carrying on the business of selling or buying goods in the relevant area. On the record, the Government had not established any business of selling asphalt and was not shown to be a registered dealer. The contract also stated that the materials supplied remained Government property and were not sold to the contractor. In these circumstances, deduction and recovery of sales tax from the contractor was not legally sustainable, and the refund decree in the contractor's favour was left undisturbed.

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Issues: Whether the Government, in supplying asphalt under the contract, could be treated as a dealer and registered dealer under the Bombay Sales Tax Act, 1953 so as to justify deduction and recovery of sales tax from the contractor.

Analysis: The definition of dealer required carrying on the business of selling or buying goods in the relevant area, and included the State Government only if it carried on such business. On the record, the Government was not shown to be carrying on any business of selling asphalt. It was also not shown to be a registered dealer under the statutory provisions governing registration. The contract clause stated that the materials supplied would remain the absolute property of Government and were not intended to be sold to the contractor. In these circumstances, the statutory bar against collection of tax by a person who was neither a dealer carrying on such business nor a registered dealer applied, and the deductions were not legally sustainable.

Conclusion: The Government was not a dealer or registered dealer for the purpose of the transaction, and the recovery of sales tax from the contractor was unlawful.

Final Conclusion: The appeal failed, and the decree in favour of the contractor for refund of the wrongful deductions was left undisturbed.

Ratio Decidendi: The State can be treated as a dealer under the sales tax law only if it is shown to be carrying on the business of selling or buying goods; absent such business activity and registration, tax cannot be validly collected from the purchaser on the transaction.

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