Case: State of Orissa Vs. Messrs Orissa Road Transport Company Limited, Chief Accounts Officer

In these appeals by special leave what arises for consideration is whether the respondent is liable to pay sales tax and to be registered as a dealer under the relevant provisions of the Orissa Sales Tax Act, 1947 (hereinafter referred to as the saidrespondents main business is of running of buses and providing transport facilities to the travelling public. Along with these services the respondent has been disposing of unserviceable, old, obsolete and unutilised parts from its stores. These parts used to be disposed of at yearly intervals. The respondent did not get itself registered as a dealer under the said Act. According to it, no business was being carried on in respect of which any sales tax could have beenSales Tax Officer considered that the respondent was liable to pay tax. He accordingly made an order of assessment under Section 12 [5] of the said Act seeking to tax respondents turn-over on the sale of unserviceable old parts, obsolete parts, spare parts, sale of fuel, oil and supply of material utilised in body building to the State Transport service. The Assessing Authority also levied penalty inasmuch as the respondent had failed to get itself registered under therespondent filed an appeal against the aforesaid decision before the Assistant Commissioner, Sales Tax, but was not successful. Second appeal was then preferred to the Additional Sales Tax Tribunal, Cuttack. The Tribunal accepted the contention of the respondent and came to the conclusion that the respondent could not be regarded as a dealer within the scope of the said Act for the purpose of levyingan application being filed the Tribunal referred the following three questions of law to the HighWhether on the facts and in the circumstances of the case, the Member, Addl. Sales Tax Tribunal, was legally correct in holding that in respect of the transactions in spare parts and sale of fuel, oil etc. at cost the assessee is not a dealer as per Section 2 [c] of the Orissa Sales Tax Act, 1947?[b] Whether on the facts and in the circumstances of the case, the Member, Addl. Sales Tax Tribunal is correct to hold that purchases of new spare parts and accessories of such vehicles as Ford, Chevrolet, Despot, Dodge, etc. were not made with an intention to carry on business of selling the same?[c] Whether on the facts and in the circumstances of the case, Member, Addl. Sales Tax Tribunal, is legally correct to hold that the assessee is not a dealer as per Section 2 [c] of the Orissa Sales Tax Act, 1947 in respect of the sale turnover of unutilised new spare parts?"High Court vide its judgment answered all the aforesaid questions in favour of the respondent and held that it had not carried on any business as a dealer and, therefore, was not liable to payment of sales tax.

Reasoning: It cannot be denied that the respondent is a business organisation whose activity is that of providing road transport. In the course of its carrying on of the said business some obsolete parts, spare parts etc. are not required by it. As a prudent business organisation the said items, which were obviously used or intended for use in its business, are sold when there is no requirement for them. We find it difficult to accept that such sales cannot even be regarded as occasional sales of a business nature which would make the respondent a casual dealer within the meaning of that expression occurring in Section 2[bb] of the saidis true that apparently the attention of the High Court was not drawn to Section 2[bb]. This, however, can be of no assistance to the respondent because on the facts as found by the Tribunal it is evident that the provisions of Section 2[bb] are clearly attracted to the instant case. If the High Court has ignored a relevant statutory provision and then come to a wrong conclusion that cannot be a ground for the respondent to contend that Court should also not refer to the said sub-section. The contention of the respondent would have been correct if the applicability of Section 2 [bb] depended on the investigation of facts and that had not been done. However, the facts as found here clearly disclose that the respondent has to be regarded at least as a casual dealer. The mere fact that the High Court over-looked the said provision cannot be a ground for the respondent to contend that this Court should not go into thatour opinion the High Court was not right in concluding that the respondent was not a dealer who was liable to pay sales tax on the sales of the spare parts etc. made by