JUDGMENT
K.A. Swami, C.J.
1. This appeal is preferred against the order dated 30th March, 1994 passed by the learned single Judge dismissing Writ Petition No. 5509 of 1994, in which the notice issued to the petitioner on February 8, 1994 by the Commercial Tax Officer, Harbour-I, to furnish the details of the auction sales conducted during the year 1993-94 from April 1, 1993 was challenged.
2. The learned single Judge has taken the view that the decision in State of Madras v. Trustees of the Port of Madras [1974] 34 STC 135 (Mad.) wherein it has been held that the Port Trust cannot be held to be a “dealer” as defined in the Tamil Nadu General Sales Tax Act, 1959 (hereinafter referred to as “the Act”) does not hold good, having regard to the amendment to section 2(g) of the Act. According to the learned single Judge, the amendment is wide enough to take in its fold the Port Trust also and, therefore, the aforesaid Division Bench decision cannot be held to hold good after the amendment. Accordingly, the learned single Judge dismissed the writ petition.
3. In Trustees of the Port of Madras v. State of Madras [1960] 11 STC 224, a Division Bench of this Court has held in categorical terms that the Port Trust Act does not constitute the Board of Trustees of the Port Trust for the purpose of carrying on any business in buying and selling with a view to make a profit. Therefore, there will be no liability on its part to pay sales tax in respect of the charges levied and collected by them for water supplied to the ships.
4. Similarly, in State of Madras v. Trustees of the Port of Madras [1974] 34 STC 135, another Division Bench of this Court has taken the same view. It has been held that the Port Trust is a statutory body constituted by the Madras Port Trust Act, 1905, and though it is subject to certain control by the Central Government under the provisions of the Madras Port Trust Act, it cannot be said to be a department of the Central Government and, therefore, the Port Trust cannot be brought within explanation (2) to section 2(g) of the Act. Even if the Port Trust is taken to be a local authority under section 2(g)(i), still it cannot be treated as a dealer unless it carries on the business of buying and selling, etc. It is also further held that the Port Trust at no time became the owner of the goods nor did it effect the sales as per the directions of the owners of the goods. The sales had been effected by the Port Trust only in exercise of its statutory right to recover its dues by enforcing its right of lien on the goods and the sale proceeds never became the property of the Port Trust. It cannot be said that the Port Trust had sold the unclaimed goods either as a commercial venture or as a dealer. Even in the face of the amended definition of “business”, unless the Port Trust is treated as a dealer carrying on the business of selling, supplying or distributing the goods as a commercial venture its sales in the course of the course of the exercise of its statutory duties are not assessable to tax. Therefore, the sales of unclaimed or uncleared goods by the Port Trust could not be considered as sales effected by a dealer and were not liable to sales tax.
5. A similar view is also taken by the High Court of Andhra Pradesh in Board of Trustees of the Visakhapatnam Port Trust v. Commercial Tax Officer, Visakhapatnam [1979] 43 STC 36.
6. In addition to that, it may also be pointed out that a Division Bench of this Court, while dealing with a case relating to Cement Research Institute of India in State of Tamil Nadu v. Cement Research Institute of India [1992] 86 STC 124 (Mad.) following the decision in Deputy Commissioner (C.T.) v. South India Textile Research Association [1978] 41 STC 197 (Mad.) has held that the Cement Research Institute of India cannot be said to be doing any business in the nature of trade or commerce within the meaning of section 2(d) of the Tamil Nadu General Sales Tax Act, even though the organisation pays excise duty on its manufacture of cement, and, therefore, is not liable either for sales tax or for purchase tax under section 7-A of the Tamil Nadu General Sales Tax Act. The relevant portion of the judgment reads as follows :
“In Deputy Commissioner (C.T.) v. South India Textile Research Association [1978] 41 STC 197 (Mad.) it has been held that where an organisation is constituted solely and exclusively for the purpose of carrying on research, the purchase of products by that organisation for the purpose of carrying on research, the purchases of products by that organisation for the purpose of carrying on research and the sale of the resulting products by that organisation cannot be said to be in the nature of trade or commerce so as to bring it within the definition of the term ‘business’ contained in section 2(d) of the Act.
In the instant case also, on facts it has been found by the Tribunal, the final fact-finding authority, that the objects of the organisation are to promote research and other scientific works and that laboratories and workshops are maintained by the organisation to conduct experiments. It is also found as a fact that the assessee consumed the raw materials in the course of their research work only. The Tribunal found that the cement which was produced as a result of the research work was sold but that sale was considered as not a trading or a commercial activity. It was found that there was no commercial activity at all carried on by the assessee in respect of the cement manufactured by it. On these facts, the Tribunal considered whether the activity of the assessee can be said to be covered by the definition of the term ‘business’ as contained in section 2(d) of the Tamil Nadu General Sales tax Act, 1959, and found in the negative.
In our opinion also, the assessee cannot be said to be doing any business in the nature of trade or commerce and, therefore, the transactions cannot be brought within the definition of the term ‘business’ as contained in section 2(d) of the Act. The mere fact that excise duty was charged and paid would not go to show that the assessee is a dealer within the meaning of the expression under the Sales Tax Act. An event attracting the excise duty is manufacture and since manufacture of cement during the research activities has taken place, the exigibility of the excise duty was well-based. But the mere fact that excise duty had been paid, without any further evidence that the assessee indulged in activities covered by section 2(d), cannot advance the case of the Revenue to hold that the assessee carried on any trade or commercial activity in the sale of cement manufactured during research activities. The judgment of this Court in Deputy Commissioner (C.T.) v. South India Textile Research Association [1978] 41 STC 197, is fully applicable to the facts of this case and we are in agreement with the view expressed by the Division Bench in that case.
Considered in the totality of the circumstances and on the facts of the present case, we are of the opinion that the Tribunal did not commit any error of law in coming to the conclusion that the assessee was not a dealer and, therefore, was neither exigible to the levy of sales tax nor the purchase tax under section 7-A. The appeals filed by the assessee were rightly allowed by the Tribunal and the enhancement petition was also rightly dismissed. We therefore do not find any cause to interfere. All the three revisions therefore fail and are dismissed. There shall be no order as to costs.”
7. We may also point out here that the decision in Deputy Commissioner (C.T.) v. South India Textile Research Association [1978] 41 STC 197 (Mad.), which is followed in State of Tamil Nadu v. Cement Research Institute of India [1992] 86 STC 124 (Mad.), referred to above, has been affirmed by the Supreme Court in the sense that S.L.P. (Civil) No. 2966-70 of 1981 filed by the State of Tamil Nadu were dismissed on March 19, 1984. The principles laid down in the said decision have already been reiterated.
8. From the aforesaid decisions it emerges that in order to hold that an organisation or an institution or an individual, dealing with the goods, is a “dealer” it/he must deal with them as a trader or as a businessman, on a commercial basis. The venture must be a commercial venture. Of course, we have considered the expression “dealer” occurring in the Tamil Nadu General Sales Tax Act in W.P. Nos. 1196, 1197, 1694, 1695, 1696, 1697, 3066 and 3067 of 1990 and 16150 to 16155 of 1991 [Kanyakumari District Planters Association v. Deputy Commercial Tax Officer (Nagarcoil Rural), Nagarcoil] decided on August 12, 1986 [Reported in [1998] 108 STC 31 (Mad.) supra]. That was a case in which a rubber planters’ association known as “Kanyakumari District Planters Association” was the petitioner. A notice issued to the rubber planters to register themselves as dealers under the provisions of the Tamil Nadu General Sales Tax Act was challenged by their association. It was held that they can file their objections to the notices and the authority can decide the objections. It may be pointed out here that in that case, the rubber plantation was a commercial plantation. Therefore, the very activity of the members of the petitioner association was a commercial activity. As such the said decision cannot be applied to the facts of the present case. Here is a case in which this Court, as already pointed out, on examining the provisions of the Major Port Trusts Act, has been taking a view that the Port Trust cannot be considered to be a commercial venture.
9. The definition of the word “dealer” as it stood on the date the notice dated February 8, 1994 was issued to the petitioner-Port Trust to furnish the details of the auction sales conducted by it during the year 1993-94 from April 1, 1993 is as follows :
“2. …………….
(g) ‘dealer’ means any person who carries on the business of buying, selling, supplying of distributing goods, directly or otherwise, whether for cash, or for deferred payment, or for commission, remuneration or other valuable consideration, and includes –
(i) a local authority, company, Hindu undivided family, firm or other association of persons which carries on such business;
(ii) a casual trader;
(iii) a factor, a broker, a commission agent or arhati, a del credere agent or an auctioneer, or any other mercantile agent by whatever name called, and whether of the same description as hereinbefore or not, who carries on the business of buying, selling supplying or distributing goods on behalf of any principal, or through whom the goods are bought, sold, supplied or distributed;
(iv) every local branch of a firm or company situated outside the State;
(v) a person engaged in the business of transfer otherwise than in pursuance of a contract of property in any goods for cash, deferred payment or other valuable consideration;
(vi) a person engaged in the business of transfer of property in goods (Whether as goods or in some other form) involved in the execution of a works contract;
(vii) a person engaged in the business of delivery of goods on hire purchase or any system of payment of instalments;
(viii) a person engaged in the business of transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration;
(xi) a person engaged in the business of supplying by way of, or as part of, any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service is for cash, deferred payment or other valuable consideration;
Explanation (1). – A society (including a co-operative society), club or firm or an association which, whether or not in the course of business, buys, sells, supplies or distributes goods from or to its members for cash, or for deferred payment, or for commission, remuneration or other valuable consideration, shall be deemed to be a dealer for the purposes of this Act.
Explanation (2). – The Central Government or any State Government which, whether or not in the course of business, buy, sell, supply or distribute goods, directly or otherwise, for cash, or for deferred payment, or for commission, remuneration or other valuable consideration, shall be deemed to be a dealer for the purposes of this Act.”
Clause (g)(iii) of section 2 was the only clause that came to be substituted by Act No. 31 of 1992. The rest of the provisions of clause (g) continue to be the same. The amendment effected is that “dealer” includes “a factor, a broker, a commission agent or arhati, a del credere agent or an auctioneer, or any other mercantile agent by whatever name called, and whether of the same description as hereinbefore or not, who carries on the business of buying, selling, supplying or distributing goods on behalf of any principal, or through whom the goods are brought, sold, supplied or distributed”. In order to attract this provision, it is necessary that one must carry on the business of buying, selling, supplying or distributing goods either as a factor, a broker, a commission agent or arhati, a del credere agent or an auctioneer, or any other mercantile agent, on behalf of any principal, or through whom the goods are bought, sold, supplied or distributed, whereas it has been pointed out in the earlier decisions and is also clear from the provisions of the Major Port Trusts Act that the Port Trust is not carrying on the auction sales either as a principal or as a factor, a broker, a commission agent or arhati, a del credere agent or an auctioneer, or any other mercantile agent. It only performs the statutory functions in bringing those articles for sale as provided under the statute. That position is not changed. The Major Port Trusts Act has not been amended so as to change the very character and nature of the activities of the Port Trust, so as to make it a commercial or a business venture or so as to bring the Port Trust in line with the Railways, which is held to be a commercial organisation. Therefore, we find it very difficult to agree with the learned single Judge that the amendment has taken away the effect of the decision in State of Madras v. Trustees of the Port of Madras [1974] 34 STC 135 (Mad.)
10. We may also point out that section 42 of the Major Port Trusts Act empowers the Port Trust to undertake various types of services to the import/export of cargo. Unlike the Railways, which is carrier of goods, under section 43 of the Major Port Trusts Act, the Port Trust is a statutory bailee of the goods. All the services performed/rendered by the Board and enumerated in section 42 of the Major Port Trusts Act, attract the payment of statutory dues as provided for in the Trust’s scale of rates framed under section 48 of the Major Port Trusts Act and such scales of rates have be declared to have the force of law. As regards the periodic and irregular “sale of scrap and unserviceable goods belonging to the Trust” conducted by the Trust, the Port Trust will not come under the ambit of the expression “dealer”, because it does not do it as a business or as a trade and it is done in the course of rendering service to the port users as well as the maintenance of the Port Trust.
11. In Trustees of the Port of Madras by its Chairman v. K. P. V. Sheik Mohamed Rowther & Co. [1963] Supp 2 SCR 915 while dealing with the relationship between the Port Trust and the owner of the ship in loading and unloading the goods to and from the ship, the Supreme Court has observed thus :
“There is no doubt that the ship-owner is the bailee of the shipper, the consignor, and that he is responsible for the delivery of the goods to the consignee or a transferee according to the terms of the bill of lading. This duty the ship-owner discharges only when he has delivered the goods to the consignee or such person who be entitled to take delivery in accordance with the endorsement on the bill of lading. Delivery to the Board is not delivery to the consignee or such person, both because the delivery is to be on the presentation of the bill of lading and because the Act contains no provision which would constitute the Board an agent of the consignee for the purpose of taking delivery of the goods…..
Sub-section (3) of section 39 of the Act empowers the Board to take charge of the goods for the purpose of performing certain services which do not include the taking delivery of goods from the ship-owner. It is true that on the Board’s taking charge of the goods and giving a receipt about it to the ship-owner, the master or the owner of the vessel is absolved from liability for any loss or damage which may occur to the goods which had been landed, but this provision by itself does not suffice to convert the receiving of the goods by the Board after they had been landed by the ship-owner to the Board’s taking delivery of those goods on behalf of the consignee. The Board simply takes charge of the goods on being required by the steamer-agent to take charge of it……Assuming, however, that the consignee cannot take delivery of the goods at the quay from the ship direct, it does not follow that the Board receives the goods as the agent of the consignee. The only reasonable conclusion in the circumstances can be that the place of delivery is shifted from the side of the ship to the warehouses where the Board stores the goods till the consignee appears to take delivery on the basis of the delivery order by the steamer agent which is usually an endorsement on the bill of lading, and the quay be considered a part of the ship. In Hamburg, it is so considered as would appear from the following note at page 37 of the German Law of Carriage of Goods by Sea, by Sieve King :
‘Where goods are shipped from or discharged on to a quay, the question arises whose agent the owner of the quay is. This of course depends upon the wording of the rules and bye laws regulating the passing of goods over the quay. As a rule (in Hamburg for instance) the quay is considered as forming part of the ship; the owner of the quay is the agent of the master. The fact of the shipper having handed the goods over the owner of the quay is tantamount to a receipt for the same on the part of the master; the goods discharged upon the quay are considered as still being in the possession of the master until the consignee has received them from the quay.’
If the Board was an agent of the consignee, it was bound to deliver the goods to the consignee and should not have any rights of retaining the goods till the payment of the rates and other dues for which it had a lien on the goods. The provision of there being a lien on the goods for the payment of the dues of the Board or the freight, makes it clear that the Board did not have the custody of the goods as an agent of the consignee.”
12. Having regard to the aforesaid pronouncement, we find it difficult to accept the contention of learned Additional Government Pleader (Taxes), that the Port Trust can be held to be a “dealer” having regard to the amendment effected by Act No. 31 of 1992 in the definition of the word “dealer”. Even the definition of the word “business” also does not help the learned Additional Government Pleader (Taxes), because, firstly, the Port Trust does not carry on any business, as it is not a business concern. Though the definition of the expression “business” is an inclusive definition, which takes into its fold “any trade, or commerce or manufacture or any adventure or concern in the nature of trade, commerce of manufacture, whether or not such trade, commerce, manufacture, adventure or concern is carried on with a motive to make gain or profit and whether or not any profit accrues from such trade, commerce, manufacture, adventure of concern”. The question is not one whether any profit accrues or not from the functions or the activities carried on by the Port Trust. The question is one as to the nature of the duties required to be discharged and the services required to be rendered by the Port Trust. In none of the duties discharged and services rendered by the Port Trust, there is an element of Trade or business. Therefore, we are of the view that as the provisions of the Major Port Trusts Act and the Tamil Nadu General Sales Tax Act stand today or stood on the dated when the notice was issued to the port Trust, the Port Trust cannot be directed to be registered as a “dealer”. If that be so, it cannot be held that it is bound to furnish the details of auction sales held, for the purpose of making a demand.
13. Accordingly, the writ appeal is allowed. The order dated March 30, 1994 passed by the learned single Judge in W.P. No. 5509 of 1994 is set aside and the writ petition is allowed. The notice dated February 8, 1994 issued by the second respondent is quashed. No costs.
14. C.M.P. No. 11409 of 1994 is dismissed.
15. Writ appeal allowed.