TaxTMI 
TaxTMI 
2017 (11) TMI 529
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....that the provisions of the explanation to Section 2(11) of the said Act are unconstitutional, ultra vires, null and void. The Writ Petition also seeks appropriate orders and directions from this Court prohibiting the Respondents from levying or collecting, demanding or recovering sales tax under the said Act on sales effected by the Petitioner under Section 61 and 62 of the Port Trust Act. 3. The Petitioner in exercise of powers conferred on them under the Port Trust Act has been recovering rates for services rendered by them and recovering rent in respect of its properties. In the event such rates or rents remain unpaid, the Petitioner takes recourse to recovery of the same by sale of the goods which are in their custody in terms of Section 61 of the Port Trust Act. Further, when goods are placed in their custody after landing of the goods and that the goods are not removed within a particular period, the Petitioner disposed of the said goods under Section 62 of the Port Trusts Act. Sections 61 and 62 of the said Act read thus:- 61. Sale of goods after two months if rates or rent are not paid or lien for freight is not discharged.- (1) A Board may, after the expiry of two mont....
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....n to send such notice, nor shall any such purchaser be bound to inquire whether such notice has been sent. (4) Notwithstanding anything contained in this section, arms and ammunition and controlled goods may be sold at such time and in such manner as the Central Government may direct. Explanation.-In this section and section 62- (a) "arms and ammunition" have the meanings respectively assigned to them in the Arms Act, 1959 (54 of 1959); (b) "controlled goods" means goods the price or disposal of which is regulated under any law for the time being in force. 62. Disposal of goods not removed from premises of Board within time limit.- (1) Notwithstanding anything contained in this Act, where any goods placed in the custody of the Board upon the landing thereof are not removed by the owner or other person entitled thereto from the premises of the Board within one month from the date on which such goods were placed in their custody, the Board may, if the address of such owner or person is known, cause a notice to be served upon him by letter delivered at such address or sent by post, or if the notice cannot be so served upon him or his address is not known, cause a notice to be....
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.... give notice of removal of such goods although the period of one month or, as the case may be, of two months specified in sub-section (1) has not expired or give such shorter notice of sale and in such manner as, in the opinion of the Board, the urgency of the case requires; (b) arms and ammunition and controlled goods may be sold in accordance with the provisions of sub-section (4) of section 61. (5) The Central Government may, if it deems necessary so to do in the public interest, by notification in the Official Gazette, exempt any goods or classes of goods from the operation of this section. 4. The Petitioner's main contention in the Writ Petition is that the sale of goods by the Petitioner is in pursuance of their statutory functions under the Port Trusts Act and these sales are not executed by the Petitioners as a matter of business for commercial enterprise but by way of administering and managing the port of Bombay. The Petitioner has accordingly submitted that they are not carrying on any business of buying or selling goods. The Petitioner has accordingly contended in the Petition that they are not entitled to pay tax on the sale of goods effected by them under the ....
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....any other corporation, company, body or authority owned or set-up by, or subject to administrative control of, the Central Government or any State Government. He has submitted that the words "Port Trust" included in the explanation to Section 2(11) was added by way of amendment vide Mah.11 of 1992 and brought into force by Mah. 18 of 1994 with effect from 1st April 1994. He has submitted that the explanation was added by Mah.24 of 1985 with effect from 16th August 1985. He has also drawn this Court's attention to Section 9 of the said Act, which provides for levy on turnover tax on goods of certain 'dealers' and the rate at which turnover tax is to be levied where the turnover of either all sales or all purchases by any dealer liable to pay tax is within the specified amounts. He has submitted that Section 22 of the said Act provides for registration and that no "dealer" is liable to pay tax for carrying on business as a dealer unless he possesses a valid certificate of registration as provided by the said Act. Mr. Makhija has relied upon the judgment of the Supreme Court in the case of State of T. N. Vs. Board of Trustees of the Port of Madras in support of his conten....
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....goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made. 7. He has submitted that in the definition of Section 2(11) a dealer means any person who carries on "business" of buying and selling of goods in the State. Business is defined under Section 2 (5A) of the said Act and includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture and any transaction in connection with or incidental or ancillary to, such trade, commerce, manufacture, adventure or concern. He has submitted that the sale which is contemplated under Sections 61 and 62 of the Port Trust Act is a sale by exercise of a statutory right. He has contended that Article 366(29A) of the Constitution of India which provides for tax on sale or purchase of goods include the tax on the transfer otherwise than in pursuance of a contract of property in any goods for cash, deferred payment or other valuable consideration cannot contemplate such sale by the Port Trust under Sections 61 and 62 of the Port Trusts Act. He has placed rel....
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....reme Court Bhopal Sugar Industries Ltd. M.P. Vs. D.P. Dube in support of this contention. It has been held in that decision that a transaction which does not confirm to the definition of sale of goods within the meaning of the Sale of Goods Act, the State legislature is not competent to impose liability for payment of tax. He has also relied upon the judgment of the Supreme Court in the case of M/s. New India Sugar Mills Ltd. Vs. Commissioner of Sales Tax, Bihar which has gone into the definition of sale. Mr. Makhija has relied upon decision of the Supreme Court in M/s. Sunrise Associates V. Govt. of N.C.T. Of Delhi & Ors. to contend that for a transfer of goods under the said Act, there must be a transfer of title or ownership in the said goods. This decision was in the context of a Lottery Tickets and it was held that a sale of lottery ticket did not involve the sale of goods under the said Act. He has relied upon the judgment of the Supreme Court in M.P. Cement Manufacturers' Association Vs. State of M.P. & Ors. in support of his contention that an explanation cannot be read as changing or interfering with the incidence of the levy. He has submitted that by virtue of the exp....
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.... scrap surplus, old or obsolete goods or discarded material or waste products whether by auction or otherwise directly or through an agent for cash or for deferred payment or for any other valuable consideration, notwithstanding anything contained in the T.N. GST Act, it shall be deemed to be a dealer for the purpose of the Act. Therefore, by the Amendment Act the legislature has specifically brought in Port Trust also within the definition of "dealer" under Section 2(g) of the Act and thus, the substratum of the judgment in Madras Port Trust case has been lost". 10. He has submitted that the explanation to Section 2 (11) of the said Act brought about by the amendment contains a non-obstante clause and by which inter alia, the port trust is deemed to be a dealer, notwithstanding anything contend in Clause (5A) or any other provisions of the said Act. This would, therefore, imply that, the port trust would be deemed to be a dealer despite the port trust not carrying on business. The judgment in Madras Port (Supra) has accordingly been held by the Supreme Court in Cochin Port Trust (Supra) to have lost its substratum. The learned APP has relied upon the judgment of this Court in the....
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....of the view that the 46th Amendment of the Constitution by which 29(A) has been made a part of Article 266 provides for a tax on the sale or purchase of goods, includes a tax on the transfer, otherwise then in pursuance of the contract of property in any goods for cash, deferred payment or other valuable consideration. This would encompass a sale of goods by the Port trust under the Major Port Trust Act. Sections 61 and 62 of the Major Port Trust Act contemplates a sale of goods, either where the the rates or rents are not paid or where the goods are not removed from its premises within a particular period. These sales clearly come within Article 366 (29A) of the Constitution. The explanation to Section 2 (11) of the said Act is resultant from the 46th amendment to the Constitution of India by which the Bombay Port Trust has been included in the definition of dealer. We are, therefore, of the view that the definition of dealer in Section 2(11) has been made wider by virtue of the deeming fiction brought about by the explanation and which has resulted in various entities mentioned in the explanation, being included in the definition of dealer. These entities include: (a) Port Tru....