Railway scrap sales as incidental commerce bring the Railways within dealer status under sales tax law.

Railway sales of unserviceable materials, scrap and similar disposals by public auction were treated as taxable business activity because the statutory definition of business covered commerce and transactions incidental or ancillary to commerce. The Court held that the Railways' transportation function was commerce, and the disposal of scrap was incidental to that activity; the statutory inclusion of the Central Government within the definition of dealer and the explanatory amendment reinforced that result. Actual profit was immaterial where the activity was commercial in character and undertaken with profit motive. The Railways was therefore within the definition of dealer under the Bombay Sales Tax Act, 1959 and liable to sales tax on such disposals.

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Issues: Whether the Indian Railways, in respect of sales of unserviceable materials, scrap, and similar disposals by public auction, is a dealer within the meaning of section 2(11) of the Bombay Sales Tax Act, 1959 read with section 2(5A) of that Act.

Analysis: The definition of "business" in section 2(5A) includes trade, commerce, manufacture, and transactions incidental or ancillary to such activity. The Court treated the transportation activity of the Railways as commerce and the sale of unserviceable materials and scrap as incidental or ancillary to that commerce. It followed the earlier Supreme Court ruling on the same assessee and held that the statutory inclusion of the Central Government in the definition of "dealer" and the explanatory amendment fortify the conclusion that disposals of this nature fall within the taxing net. The absence of actual profit was held immaterial where the activity is commercial in character and carried on with profit motive.

Conclusion: The Indian Railways is a dealer within the meaning of section 2(11) read with section 2(5A) of the Bombay Sales Tax Act, 1959 and is liable to sales tax on such disposals.

Ratio Decidendi: Where a statutory definition of business includes commerce and transactions incidental or ancillary to commerce, sales of unserviceable or scrap materials by a railway administration engaged in transportation constitute taxable business activity, making it a dealer under the sales tax law.

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