TaxTMI 
TaxTMI 
1967 (4) TMI 124
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....m the American forces after the Second World War. This organisation had several branches under its control. A part of the equipment was appropriated by the Government of India to their own use; some equipment was sold to the State Governments and other autonomous bodies; and the rest was sold to the public. The taxing authorities held that the Directorate was a dealer within the meaning of the Bengal Finance (Sales Tax) Act, 1941, and the High Court of Calcutta in a reference made under section 21(3) agreed with that view. It is common ground that the Government of India paid no consideration for acquiring the equipment: they merely set up an organisation to dispose of the equipment. It is not, and cannot be, argued that because the Government of India received the equipment free of cost it could not set up a business to dispose of that equipment. An owner of goods may commence business in those goods by converting them into stock-in-trade of his business. This sales made by the Government of India through the Directorate were not casual; they were spread over a number of years. The equipment included goods of great diversity which were disposed of with the help of a wide- spread ....
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....ation Association Limited [1931] A.C. 224., the Judicial Committee was called upon to consider whether surplus resulting from sale of wool acquired for the purpose of the First World War was exigible to income tax under the Income Tax Act, 1915 (Victoria, 6 Geo. 5 No. 2668). The judicial Committee agreeing with the Supreme Court of Victoria held that the sale of surplus wool merely resulted in realization of capital assets and no part of it was income chargeable to tax. The assessee-company was incorporated for the purpose of selling surplus wool originally acquired during the war. The Commonwealth Government of Australia transferred to the company its undivided half of the Australian wool, and its share of profits already realized, in consideration of the issue of priority wool certificates and fully paid shares. The company also agreed to sell on behalf of the British Government the rest of the wool for a commission. The proceeds of sale of the half share of the Australian wool exceeded the cost at which it had been taken into the books of the company. After the priority wool certificates were redeemed and the whole of the capital credited as paid on the shares was paid off, a la....
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..... The judicial Committee observed at page 249: "...........in truth and in fact the Association's interest in the wool always was fixed capital and never was circulating capital. Its purpose with reference to It was to realize the asset, having done so to distribute the proceeds among those entitled and then itself to disappear." The Judicial Committee again observed at page 252: "All that its British Board did was to utilize on its behalf the organization under which they had acted when, as committee of the Ministry of Munitions, they were engaged in the same task of realization. In other words, in their Lordships' judgment there is in the special case neither a finding, nor any statement of facts warranting the conclusion that this Association ever indulged in any activity except that of realization which, as Rowlatt, J., has said, 'is not a trade'. Upon the facts stated, any other conclusion would be tant- amount to saying that a realization such as that effected by the Association must be a trade because of the bringing Into existence of a selling organization made necessary only by reason of the mere magnitude of the realization-a proposition not to be entertained." I have....
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....ess of buying and selling and was there- fore not liable to pay any sales tax, but the contention of the appellant was overruled and he was assessed to sales tax for three periods from April 1, 1949, uptil May 31, 1951. The appellant took the matter in appeal to the Assistant Commissioner of Commercial Taxes, Calcutta, who modified the orders of assessment, holding that the supplies made by the appellant were liable to be taxed except those which were proved to be mere transfers to its sister departments in the Government of India. The appellant filed revision petitions to the Commissioner of Commercial Taxes and to the Board of Revenue, but these petitions were dismissed. As directed by the High Court, the Board of Revenue referred the following question of law for the decision of the High Court under section 21(3) of the Act: "Whether the Director of Supplies and Disposals, United States Transfer Directorate, having his office situated at No. 6, Esplanade East, Calcutta, carries on the business of selling goods in West Bengal and Is, therefore, a 'dealer' within the meaning of section 2(c) of the Bengal Finance (Sales Tax) Act, 1941." By its judgment dated November 26, 1....
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....ions that it is intended thereby to carry on business, ordinarily there must exist the characteristics of volume, frequency, continuity and system indicating an intention to continue the activity of carrying on the transactions for a profit. But no single test or group of tests is decisive of the intention to carry on the business. It must be decided in the circum- stances of each particular case whether an inference could be raised that the assessee is carrying on the business of purchasing or selling of goods within the meaning of the statute. In a recent decision of this Court in The State of Gujarat v. Raipur Manufacturing Co. Ltd. [1967] 19 S.T.C. 1., the question arose whether a company which carried on the business of manufacturing and selling cotton textiles was liable to sales tax when disposing of old and discarded items such as stores, machinery, iron scrap, cans, boxes, cotton ropes, rags etc. It was held that the mere fact that the sales of the items were frequent and their volume was large did not lead to the presumption that when the goods were acquired there was an intention to carry on the business in these discarded materials, and a person who sold goods which we....
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....plus left with the Government of India which was either no longer useful or had become obsolete. We are of the opinion that in disposing of this surplus war material the appellant was not carrying on the business of selling goods and the transactions of sale were not liable to be taxed under the provisions of the Act. In our opinion, the appellant was not selling surplus goods for profit but he was merely disposing of the surplus material by way of realization and the transactions were therefore not taxable as sales falling within the provisions of the Act. The view that we have expressed is borne out by the decision of the judicial Committee in Commissioner of Taxes v. British Australian Wool Realization Association, Limited [1931] A.C. 224., in which the respondent-company was incorporated in 1920 in Victoria pursuant to an agreement between the Imperial and Commonwealth Governments, for the purpose of selling the undisposed of surplus wool acquired for the war, and distributing the proceeds. The Commonwealth Government transferred to the company its undivided half of the Australian wool and in cash its share of profits already realized, in consideration of the issue of priority....