Agency disposal of surplus war stores was not a taxable trading business under the Bengal Finance sales tax law.

An agent appointed by the Government of India to take over, safeguard and dispose of surplus war stores was held not to be carrying on a business of selling goods in West Bengal for purposes of section 2(c) of the Bengal Finance (Sales Tax) Act, 1941. Applying the principle that disposal of surplus capital assets by the principal is not a trading activity, the Court reasoned that the agent could not be treated as a dealer merely by performing the same disposal function on the Government's behalf. The transactions were therefore outside sales tax liability on the impugned sales.

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Issues: Whether the applicant, while disposing of surplus stores of the Government of India as its agent, carried on the business of selling goods in West Bengal and was a dealer within section 2(c) of the Bengal Finance (Sales Tax) Act, 1941.

Analysis: The applicant was appointed the sole and exclusive agent of the Government of India to take over, retain, safeguard and dispose of surplus war stores, and its remuneration consisted of custody and selling agency fees. The decisive question was whether this activity amounted to carrying on a business of selling goods. The earlier Supreme Court authority concerning disposal of surplus war materials had held that where the principal was merely realising surplus capital assets, the transactions were not in the course of a business of selling goods. Applying that principle, the Court held that if the Government of India itself was not carrying on such business in disposing of the surplus stores, its agent could not be said to be carrying on that business merely by performing the same activity on the Government's behalf.

Conclusion: The question was answered in the negative. The applicant was not a dealer within the meaning of section 2(c) of the Bengal Finance (Sales Tax) Act, 1941, and sales tax was not exigible on the impugned transactions.

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