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PATNA HIGH COURT
V.Ramaswami and Sarjoo Prasad JJ.
Mohammad Amin Brothers, Ltd.
Versus
Province Of Bihar
Miscellaneous Judicial Case No. 155 of 1948 ;
Decided On : MARCH 7, 1951
BIHAR SALES TAX ACT, 1944 - S. 2(C), 2(G), 4(1), 4(2), 10(5) - INTERPRETATION - SALE OF DEHYDRATED MEAT - LIABILITY TO PAY SALES TAX - PENALTY.
Fact of the Case:
The assessee, a dealer in dehydrated meat, challenged the imposition of sales tax and penalty under the Bihar Sales Tax Act, 1944. The assessee contended that it was not a dealer within the meaning of the Act, that the sale of dehydrated meat was not a sale within the meaning of the Act, and that it was not liable to pay sales tax for certain quarters. The assessee also claimed that the penalty imposed was not justified.
Finding of the Court:
The court held that the assessee was a dealer within the meaning of the Act, that the sale of dehydrated meat was a sale within the meaning of the Act, and that the assessee was liable to pay sales tax for the quarters in question. However, the court held that the penalty imposed was not justified.
Issues: 1. Whether the assessee was a dealer within the meaning of S. 2(c) of the Bihar Sales Tax Act, 1944? 2. Whether the assessee was liable to pay sales tax in respect of the quarters ending 31-12-1944 and 31-8-1946? 3. Whether the assessee was liable to pay the penalty.
Ratio Decidendi: 1. The court held that the assessee was a dealer within the meaning of S. 2(c) of the Act because it was carrying on the business of selling or supplying goods in Bihar, whether for commission, remuneration, or otherwise. 2. The court held that the assessee was liable to pay sales tax for the quarters in question because it was liable under S. 4(1) read with S. 3(c) of the Act to pay sales tax on sales effected after the date notified by the Provincial Government. 3. The court held that the penalty imposed was not justified because the assessee had a bona fide belief that the sale of dehydrated meat was not liable to be charged with sales tax.
Final Decision: The court answered the questions in favor of the revenue and against the assessee, except for the question of penalty, which was answered in favor of the assessee.
Ramaswami, J.
1. In pursuance of an order of the High Court, this reference is made by the petitioner under 8. 25 (8), Bihar Sales Tax Act, 1917.
2. The questions formulated for the determination of the High Court are :
(1) "Whether in the circumstances of the case the assessee was a dealer within the meaning of 8. 2(c), Bihar Sales Tax Act, 1914, (2) whether the assesses was liable to pay sale tax in respect of the quarters ending 31 12 1944 and 31-8-1946, and (3) whether the assessee was liable to pay the penalty."
3. As regards the first question, it was contended by Mr. S. N. Dutt on behalf of the assessee that according to the agreement dated 23-3 1944, the actual work of production of dehydrated meat in the Digha Factory was entrusted to a separate concern. In support of his argument learned counsel referred us to paras. 7 and 9 of the deed of partnership which is printed at p. 23 of the paper-book. But the argument of the learned counsel is not tenable since on a perusal of all the terms of the deed of partnership it would appear that tbe agreement was more in the nature of an administrative arrangement for supervision of the Digha Factory on the basis of a local directorate subject to certain terms about remuneration including commission to the partners concerned. The contract which the assessee executed with the Government cf India for supply of dehydrated meat has not been printed on behalf of the assessee. According to the statement of the case it appears that the contract was signed by Messrs Amin Brothers who continued to be responsible to the Government of India for supply of dehydrated meat in spite of the circumstance that the assessee had entered into a deed of partnership with other parties. Upon these facts it is clear that the assessee was a dealer within the meaning of S. 2 (c), Bihar Sales Tax Act.
4. On the second question, Mr. S. N. Dutt stressed the argument that the assessee was a mere labour contractor and he had not entered into any contract with the Government of India for sale of goods within the meaning of 8. 2 (g), Bihar Sales Tax Act. As I have mentioned, the contract between the assessee and the Government of India has not been printed but the findings of the Board of Revenue are that according to the terms of the contract the plant and machineries were provided by the Government, dressed goat meat was supplied to the assessee by another contractor at a fixed price on certain terms agreed to between the Government of India and that contractcr. It is important to notice that the assessee himself paid for the dressed meat at a price fixed by the Government and that the assessee was entitled to receive payment from the Government of India according to a fixed scale for the dehydrated meat including the cost of containers and packing. The Board of Revenue has found that according to the stipulation of the contract an inclusive price was fixed for process meant to be packed in sealed containers at a prescribed rate. To my mind there in no doubt that there was a transfer of property for valuable consideration and therefore a sale" within the meaning of S. 2 (g) of the Bihar Sales Tax Act. The contention of the assessee on this point fails.
5. It was argued on behalf of the assessee that he was not liable to pay sales tax for the quarters ending 31.12-1944 and 31 3-1945 since s. 4 (2) of the Act enacts that the dealer shall be liable to pay tax
"with effect from three months after the commencement of the year immediately following that during which his gross turnover first exceeded Rs. 5000."
In this case it was pointed out that the assessee started the business of manufacturing dehydrated meat at Digha Ghat on 17-4-1944. The Bihar Salea Tax Act received assent of the Governor. General on 29-5-1944 and was published in the Bihar Gazette of 16-6-1944, from which date it came into force. If was argued that under S. 4 (2) of the Act, the assessee was not liable to pay tax in 1944-45 but that he
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