Bombay Cycle Stores Co. (P) Ltd. v. State of Bombay (SC) BS251557
SUPREME COURT OF INDIA

Before:-J.L. Kapur and M. Hidayatutllah, JJ.

Civil Appeals Nos. 495 and 496 of 1960. D/d. 4.10.1961.

Bombay Cycle Stores Co. (P) Ltd. - Appellant

Versus

State of Bombay - Respondent

For the Appellant :- J.M. Thakar, Advocate and S.N. Andley, Rameshwar Nath and P.L. Vohra, Advocates of Rajinder Narain & Co.

For the Respondent :- H.R. Khanna and P.D. Menon, Advocates.

JUDGMENT

Kapur, J. - These appeals by special leave against the judgment and order of the Bombay High Court have been brought by the assessee and relate to sales tax assessments. The respondent is the State of Bombay, now the State of Maharashtra. The appellant the assessee is a private limited company incorporated under the Indian Companies Act and at material times its registered office was in Bombay. It was assessed by the Sales Tax Officer, Bombay, to sales tax for the periods October 1, 1946, to May 31, 1947, June 1, 1947, to March 31, 1949, and April 1, 1949, to October 31, 1952, on certain transactions in which delivery of goods was made by the clearing agents of the assessee to parties in that State. Penalties were also imposed as the assessee had not registered itself in Bombay. An appeal was taken to the Assistant Collector of Sales Tax who allowed the appeal in regard to the first period but dismissed it in regard to the next two. An application for revision was unsuccessfully taken to the Collector of Sales Tax and finally the Sales Tax Tribunal also dismissed the revision applications made to it. The case was stated by the Bombay Sales Tax Tribunal to the High Court on the following two questions of law:

To both the questions the answer was against the appellant and it has come in appeal to this court by special leave.

2. The appellant contended that it was carrying on the business of importing and selling bicycles at Mahal, Nagpur. During the relevant periods, June 1, 1947, to October 31, 1952, the appellant had a clearing agent at Bombay and its case was that the clearing agent, after clearing the goods imported, delivered them to the customers of the appellant in the State of Bombay including the city of Bombay or despatched them to other persons residing outside the State of Bombay according to the instructions of the appellant. The Board of Revenue of the State of Madhya Pradesh had held that in that State the appellant was not liable to sales tax on goods which were delivered directly to the customers in Bombay as they were sales in Bombay and that those sales had to be excluded from the turnover of the appellant in Madhya Pradesh. The respondent's case therefore was that those sales had been held to be not taxable in the State of Madhya Pradesh and therefore they were liable to be taxed within the State of Bombay (now Maharashtra).

3. Now the Additional Collector of Sales Tax in his order made on July 31, 1955, said:

On revision the Sales Tax Tribunal rejected the plea of the appellant that as the contracts of sale, in which the delivery was made in Bombay, were entered into at Nagpur and that as at Bombay the appellant had only a clearing agent for the purpose of clearing the goods, the appellant did not fall within the definition of the word dealer' and the transactions did not fall within the word sale'. The High Court on the reference made to it by the Tribunal treated the finding of the Sales Tax authorities above referred to as one of fact and taking that finding it held that the appellant was a dealer within Section 2(c) of the Bombay Sales Tax Act, 1946.

4. In this Court a great deal of argument was addressed to us on the question whether the appellant was carrying on business of selling or supplying goods within the State of Bombay and was therefore within Section 2(c) of the Bombay Sales Tax Act, 1946. The appellant relied upon certain English and Indian cases wherein the meaning of the words "carrying on business" was decided but in our opinion it is not necessary to go into those cases. In the present case the finding is that the appellant is a limited company with its registered office in Bombay. It has a clearing warehouse in Bombay at Kalbadevi Road. We may add that it was submitted before us that this warehouse belongs to the clearing agent. All the goods from foreign countries received by the appellant company were taken delivery of at Bombay and all the transactions of sale etc. were effected wish the sanction and approval of the Company's Director Mr D.C. Sutaria who, it was admitted before the Additional Collector of Sales Tax visited Bombay every now and then. The appellant had obtained exemption from sales tax in the State of Madhya Pradesh expressly on the ground that the sales were made directly at Bombay. In these circumstances, in our opinion, it has been rightly held that the appellant company is a dealer within the meaning of Section 2(c) of the Act because he carried on the business of selling or supplying goods in the State of Bombay.

5. These appeals are therefore dismissed with costs. One hearing fee.

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