Madras High Court
Kanyakumari District Planters ... vs Deputy Commercial Tax Officer ... on 12 August, 1996
Author: A.R. Lakshmanan
Bench: A.R. Lakshmanan
ORDER K.A. Swami, C.J.
1. In all these petitions, the only question that arises for consideration is, whether the petitioners, who claim to be the growers of rubber, can be called upon to register themselves as dealers under the provisions of the Tamil Nadu General sales Tax Act, 1959 (hereinafter referred to as "the Act"). The contention of the petitioners is that as the petitioners are not doing any business in rubber and they are only selling rubber, as grown by them, they cannot be considered to be the dealers and at any rate their activities as agriculturist in producing rubber cannot be considered to be a business activity. If the matter was open to fresh consideration, probably we would have approached the matter in greater detail. But the subject-matter is fully covered by a Division Bench decision of this Court in M. Nagamony Sastha v. State of Tamil Nadu represented by Secretary to Government (Order dated July 13, 1992 in W.A. No. 836 of 1992). The said appeal was preferred by the writ petitioners against the order of the learned single Judge dismissing W.P. No. 4329 of 1992. In that writ petition, the petitioner had sought for issue of a writ of mandamus to the State of Tamil Nadu, Commissioner, Commercial Taxes and the Deputy Commercial Tax Officer, Nagercoil, directing them to forbear from compelling him to register himself as a dealer under the Tamil Nadu General Sales Tax Act on the ground that he was not dealing in rubber, but he was producing rubber as an agriculturist and his activities, could, at the most, be described as agricultural activities and not commercial activity. Learned single Judge went into this aspect of the matter in detail and held as follows :
"Heard, Mr. V. Selvaraj, learned counsel for the petitioner. The learned counsel stated in unmistakable terms that so far as the liability to tax is concerned, he does not dispute that the transaction of sale of the produce is liable to tax. But at the same time, the learned counsel would dispute the petitioner's liability to get registered as a dealer, even though he is not one such under the law, as it stands. According to the learned counsel for the petitioner, the sale by the petitioner is taxable at the purchase point and irrespective of the taxability of the sale or otherwise, the issue in question regarding the liability to get himself registered as a dealer has to be decided with reference to the definition of 'dealer' and 'business' under the Act. Argued the learned counsel that the amendment does not have the effect of making every one of the grower whose product is sold and which attracted levy, a dealer himself. Reliance is also placed on the decision reported in [1965] 16 STC 760 (Mad.); (1965) 2 MLJ 493 (State of Madras v. Tiruchengode Co-operative Marketing Society Ltd.).
The claim of the petitioner, in my view, cannot be countenanced. Dealers include even a casual trader and a casual trader is defined as a person who has, whether as principal, agent or in any other capacity, occasional transactions of a business nature involving the buying, selling, supply or distribution of goods in the State, whether for cash, or for deferred payment, or for commission, remuneration or other valuable consideration. The fact that the transactions of the petitioner, viz., the sales of the natural rubber latex and raw rubber of all varieties are liable to sales tax though at the purchase point is not in dispute. The registration contemplated under the Act is meant to keep track of the assessable transactions and the persons who deal in such transactions to ensure effective levy and collection of tax. The mere fact that a person is registered as a dealer does not render his transaction liable to tax and the question as to whether a person incurs liability to an impost or liable to pay the tax or not in a particular year is wholly immaterial for the purpose of registration. The definition of "casual trader" makes it very clear that there need not be any plurality of transactions to make a person a casual dealer. There is nothing in law to indicate that an agriculturist can never be a dealer and the fact that an agricultural produce is being sold by an agriculturist confers any immunity from registration particularly when the sale of the product has been held to be taxable though at the purchase point. The decision reported in [1965] 16 STC 760 (Mad.); (1965) 2 MLJ 493 (State Madras v. Tiruchengode Co-operative Marketing Society Ltd.) does not in any way help the petitioner to get out of his liability to get himself registered as a 'dealer' and in my view the impugned communication in question cannot be said to be without the authority of law and there is no justification to issue a writ of mandamus as prayed for. It turned on the interpretation to section 2(r) and the tax liability of the transaction as such. The writ petition, therefore, fails and shall stand dismissed."
2. In the appeal, the Division Bench agreed with the view expressed by the learned single Judge and held as follows :
"We agree with the learned Judge that the appellant cannot be permitted to object to the notice calling upon him to register himself as a dealer under the provisions of the Tamil Nadu General Sales Tax Act. There is no dispute that sales of rubber would be liable to tax at purchase point. As per the definition of 'dealer' in section 2(g) of the said Act, even a person carrying on business of selling goods as a casual trader will be a dealer and 'a casual trader' as per section 2(e) is one, who has occasional transactions of business nature involving selling of goods in the State. It would therefore follow that even with reference to the casual traders falling within the definition of 'dealer' it becomes necessary to register themselves with a view to keep track of the assessable transactions for the purpose of effective levy as well as collection of sales tax. Merely because the appellant had been called upon to register himself as a dealer under the provisions of the Tamil Nadu General Sales Tax Act, it does not follow that all his transactions would be liable to tax. Even as a dealer, it will be open to the appellant to establish before the concerned authorities that particular transactions are exempt from sales tax or do not attract sales tax at all. For that purpose, the appellant cannot object to the registration itself. The writ appeal is, therefore, dismissed."
Therefore, from the aforesaid decision of the Division Bench, it is clear that the very contention of the petitioners herein has been considered and negatived. A person dealing in a commodity, which is liable to sales tax, is liable to register himself as a "dealer" under the provisions of the Act. That does not mean that all the dealings of such person or dealer will be liable to sales tax exemption. The Act and the Rules provide as to what products could be exempted and in what manner the dealer can seek exemption. Therefore, it will be open to the petitioners, even after registering themselves as "dealers", to claim that the sale or rubber products by them as agriculturists is not liable to sales tax. In that event, the assessing authority would be required to consider the case and decide. That being so, it is not possible to hold that the petitioners are not liable to register themselves as "dealers", unless it is proved that their transactions are such as are liable to sales tax. We are of the view that the relief sought for by the petitioners to restrain the respondents from calling upon them to register themselves as "dealers" under the provisions of the Act cannot at all be granted. Such a relief will deprive the statutory authorities from exercising their power under the Act and will enable the petitioners to cover up many transactions. The court should not become a party to such a situation. Hence, we agree with the view expressed in the aforesaid decision by a Division Bench of this Court and hold that the petitioners are not entitled to the relief sought for.
3. However, the learned counsel appearing for the petitioner placed reliance on the two decisions of the Supreme Court in Deputy Commissioner of Agricultural Income-tax and Sales TAx, Quilon v. Travancore Rubber and Tea Co. [1967] 20 STC 520 and Deputy Commissioner of Agricultural Income-tax and Sales Tax, Quilon v. Midland Rubber and Produce Co. Ltd. [1970] 25 STC 57. The decision in Travancore Rubber and Tea Co. case [1967] 20 STC 520 (SC) has also been considered in Midland Rubber and Produce Co. Ltd.'s case [1970] 25 STC 57 (SC). Both the cases arose out of the assessment orders. The question of law arose as to whether a person or company, who engages in the business of planting and growing rubber and planting into and converting the latex obtained from the trees into rubber sheets and regularly selling the rubber sheets thus produced by them could be called upon to register as dealers or not did not arise for consideration. While considering the question as to whether the sales tax assessed was correct or not, it was held as follows :
"..........The questions of law arising in this appeal have been the subject-matter of consideration by this Court in Deputy Commissioner of Agricultural Income-tax and Sales Tax, Quilon v. Travancore Rubber and Tea Co. [1967] 20 STC 520. It was held in that case that though it was conceivable that a producer of crops might also engage in the business of selling or supplying and become a "dealer", the burden of proving that the assessee was carrying on the business of selling or supplying was upon the sales tax authorities and if they made no investigation and have come to the conclusion merely because of the frequency and the volume of the sales, the inference cannot be sustained. The only fact proved in that case was that the assessee converted the latex tapped from its rubber trees into sheets - a process essential for the transport and marketing of the produce concerned - and that the assessee sold those sheets, but no other facts were found and no effort was made by the authorities to find out the intention with which the assessee was formed, the selling organisation it had set up and other relevant facts. It was therefore held by this Court that, on the facts found, the sales tax department had not discharged the onus and the assessee was not liable to be taxed on the sales in question. The material facts in the present case are almost similar to those in Deputy Commissioner of Agricultural Income-tax and Sales Tax, Quilon v. Travancore Rubber and Tea Co. [1967] 20 STC 520 (SC). In the present case also, the only facts found are that the assessee was a public limited company which was engaged in the business of planting and growing rubber trees and converting the latex obtained from the trees into rubber sheets and regularly selling the rubber sheets thus produced by it. It was argued for the appellant that the company was registered as "dealer" as defied under section 2(b) of the Act. But this fact in itself is not decisive on the question as to whether the turnover of inter-State sales of rubber is taxable under the Act. Otherwise the material facts in the present case are almost identical with those in Deputy Commissioner of Agricultural Income-tax and Sales Tax, Quilon v. Travancore Rubber and Tea Co. [1967] 20 STC 520 (SC) and for the reasons expressed in that case we hold that the sales tax department had not discharged the onus of proving that the assessee was carrying on the business and was therefore a dealer within the meaning of section 2(b) of the Act."
Therefore mere registration of the petitioners as "dealers" will not by itself a decisive fact on the question as to turnover is taxable under the Tamil Nadu General Sales Tax Act. The producer of crops might also engage in the business of supplying and selling and might become a dealer. Therefore, the burden of proving that the assessee was carrying on the business of selling or supplying would be upon the sales tax authorities. Hence, we find it difficult to apply the ratio of the aforesaid decisions at the stage of calling upon the petitioners to register themselves as "dealers" under the Tamil Nadu General Sales Tax Act. As already pointed out even if the petitioners are registered as dealers, the burden of proving that the petitioners carried on the business of selling or supplying the rubber will be upon the sales tax authorities. Therefore, this aspect of the matter is kept open to be considered in the course of assessment proceedings.
4. For the reasons stated above, we dismiss the writ petitions. However, we make it clear that this shall not be taken to have affected the right of the petitioners to claim that their transactions are not liable to sales tax and the assessing authorities are required to decided such an issue. No costs.
5. Writ petitions dismissed.