1999 (8) TMI 943 - AT - VAT and Sales Tax

Interpretation of 'dealer' under Sales Tax Act: Resellers not deemed dealers

The case involved determining whether the applicant, M/s. United Distributors, qualified as a 'dealer' under section 8G of the West Bengal Sales Tax Act, ... - Issues Involved:1. Whether the applicant No. 1, M/s. United Distributors, is a 'dealer' within the meaning of section 8G of the West Bengal Sales Tax Act, 1954.2. Whether the impugned order of penalty dated December 4, 1998, passed under section 8G(3) of the 1954 Act, could be validly passed in respect of applicant No. 1.Issue-wise Detailed Analysis:1. Whether the applicant No. 1, M/s. United Distributors, is a 'dealer' within the meaning of section 8G of the West Bengal Sales Tax Act, 1954:The core of the dispute revolves around the definition of 'dealer' as per section 2(b) of the 1954 Act. The applicant No. 1, M/s. United Distributors, contended that they are not a 'dealer' since they do not sell notified commodities manufactured, made, or processed by them in West Bengal, nor do they bring such commodities into West Bengal for sale. The Tribunal noted that the definition in section 2(b) applies unless there is anything repugnant in the subject or context. The respondents argued that the term 'dealer' in section 8G should encompass any person selling and purchasing notified commodities in West Bengal. However, the Tribunal found no repugnancy in the subject or context that would necessitate a departure from the definition in section 2(b). Consequently, the applicants, being re-sellers and not manufacturers or importers, do not qualify as 'dealers' under section 2(b) and, therefore, section 8G does not apply to them.2. Whether the impugned order of penalty dated December 4, 1998, passed under section 8G(3) of the 1954 Act, could be validly passed in respect of applicant No. 1:Given the finding that applicant No. 1 is not a 'dealer' under section 2(b), the Tribunal concluded that section 8G(3) could not be applied to them. The legislative intent was that section 8G had a restricted application to dealers as defined in section 2(b) and did not apply to re-sellers. Thus, the impugned order of penalty dated December 4, 1998, and the consequential notice of demand dated December 17, 1998, were quashed.Supplementary Arguments:The applicants also challenged the vires of section 8G on the grounds of legislative competence. They argued that the State Legislature could not appropriate amounts collected as tax unless it was validly exigible under the statute. However, the Tribunal did not delve into this issue, given their primary finding that section 8G did not apply to the applicants.Dissenting Opinion:One judicial member dissented, arguing that the term 'dealer' in section 8G(1) should include re-sellers. The dissenting opinion emphasized that the context and object of the statute justified a broader interpretation of 'dealer' to include re-sellers, thereby subjecting them to the provisions of section 8G. This view was based on the premise that the Legislature intended to prevent unauthorized tax collections by any seller of notified commodities, including re-sellers.Final Order:According to the majority decision, the application was allowed. The impugned order of penalty under section 8G(3) of the 1954 Act dated December 4, 1998, and the consequential notice of demand dated December 17, 1998, were quashed. No order was made for costs.