Case: Commissioner of Sales Tax, Bombay Vs. Amandi Private Limited

S. P. BHARUCHA, J. The High Court at Bombay rejected the sales tax application made on behalf of the Commissioner of Sales Tax, Maharashtra, to direct the Sales Tax Tribunal to refer to the High Court the following question : "Whether the Tribunal was correct in holding that in purchasing materials for the construction of the barges intended for use in the business of sea transport the opponent-company was not carrying on the business of buying goods and hence was not a dealer as defined by clause (11) of section2 of the Bombay Sales Tax Act, 1959 ?" * The High Court rejected the application in limine stating that the Sales Tax Tribunal had been right in holding that the case was covered by the High Courts decision in Famous Cine Laboratory and Studio Ltd. v. State of Maharashtra. The Commissioner of Sales Tax has been given special leave to appeal. The assessee (respondent) carries on the business of hiring out barges. It owns two barges, both of which were built by the assessee itself after purchase of the requisite raw materials. The Deputy Commissioner of Sales Tax held, upon an application made to him by the assessee under section52 of the Bombay Sales Tax Act, 1959, that the assessee was a dealer within the meaning of section2(11) of the Act. The decision of the Deputy Commissioner was set aside by the Sales Tax Tribunal, reliance being placed upon the aforementioned judgment in the case of Famous Cine Laboratory and Studio Ltd. Basing itself upon the same judgment, the High Court, as aforesaid, declined to call for a reference. The Famous Cine Laboratory and Studio Ltd. owned a film studio and a film laboratory and hired out the studio and equipment to film producers for shooting films. It purchased materials such as bricks, wood, plaster, paint, etc., and utilised them in the maintenance of the studio and in the making of film sets. It was held that in processing the said goods for the said purposes what the assessee was doing was either making additions to its capital assets or providing itself with further capital assets and it was, accordingly, not carrying on the business of buying goods and was not a dealer within the meaning of section 2(11).Learned counsel for the Commissioner of Sales Tax has drawn our attention to the judgment of the same High Court, delivered just a day earlier, in the case of Commissioner of Sales Tax v. D. V. Save. This was a case where the assessee purchased building materials in the course of its business as building contractor and consumed them in the construction of buildings or in carrying out repairs to buildings. It was held that the assessee was a dealer within the meaning of section 2(11). Learned counsel submitted that to the facts of the case before us it was the judgment in D. V. Saves case which was applicable. Having heard counsel we are of the view that the question aforementioned is a question of law and that it requires consideration in the light of the judgment in D. V. Saves case, which, prima facie, appears to us to be more on point than the judgment in the case of Famous Cine Laboratory and Studio Ltd.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]Having heard counsel we are of the view that the question aforementioned is a question of law and that it requires consideration in the light of the judgment in D. V. Saves case, which, prima facie, appears to us to be more on point than the judgment in the case of Famous Cine Laboratory and Studio Ltd.