R.N Misra, C.J:— The Member, Additional Sales Tax Tribunal, Orissa, has stated each of these cases for opinion of the Court under section 24(1) of the Orissa Sales Tax Act, 1947 (hereinafter referred to as the “Act”).
2. In S.J.C Nos. 90 and 175 of 1977, the following question has been referred:
“Whether, on the facts and in the circumstances of the case, the Member, Additional 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?”
3. In S.J.C Nos. 194-196 of 1977, two questions have been referred, namely:
“(1) Whether, on the facts and in the circumstances of the case, the Member, Additional Sales Tax Tribunal, is correct to hold that purchases of new spare parts and assessories of such vehicles as Ford, Chevrolet, Desoto, Dodge, etc., were not made with an intention to carry on business of selling the same?
(2) Whether, on the facts and in the circumstances of the case, the Member, Additional 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 sales turnover of unutilised new spare parts?”
4. The assessee is a public limited company engaged in transport business and the State of Orissa held the major interest therein. The assessee, therefore, is a Government company within the meaning of the Companies Act, 1956. S.J.C No. 90 of 1977 relates to the year 1969-70; S.J.C No. 175 of 1977 relates to the period 1965-66; and S.J.C Nos. 194-196 of 1977 relate to the periods 1966-67, 1967-68 and 1968-69.
5. The assessee is not a registered dealer and all the assessments have been completed under section 12(5) of the Act. The Sales Tax Officer found that the assessee had different units for convenience of business. For accounting purposes, fuel and lubricants when utilised from one unit by another were adjusted against the accounts by treating the same to be sale. The Sales Tax Officer, therefore, treated this as sale and raised demand of tax. He found that the assessee had sold away unutilised spare parts from its stores when it found that there was no demand for the same for its vehicles. That turnover was also treated to be sale price exigible to sales tax. The Sales Tax Officer further found that at annual intervals the assessee had disposed of scrap and other unwanted motor parts for a price. He treated the amount received by the assessee as sale price and raised demand of tax on it.
6. The quantum was not disputed as the Sales Tax Officer adopted the book figures. The assessee, however, did not accept the Sales Tax Officer's assessments by contending that none of these constituted business and amounted to sale. The assessee, therefore, was not a dealer under the Act and could not have been assessed to tax. The first appellate authority sustained the demand. The Additional Tribunal in second appeal, however, held that the assessee was not a dealer and there was no scope for raising any tax demand. Out of these second appellate orders, the two sets of questions arise.
7. It is not disputed that the units of the assessee-company adjusted the value of fuel and lubricants drawn from different units by treating them as sale. It was, however, a case of book adjustment. It is also not disputed that the units belong to the company. Whatever may have been the mode of adjustment, unless a sale takes place, tax is not exigible. Under the scheme of the statute, in order to raise liability for tax under the Act, there must have been an event within the ambit of section 4. Unless there be sale, the liability under the statute would not arise. The Supreme Court in the case of State Of Madras v. Gannon Dunkerley & Co., (Madras) Ltd, [1958] 9 STC 353 (SC); AIR 1958 SC 560, quoted with approval the observations of Benjamin on sale where it was said:
“Hence it follows that, to constitute a valid sale, there must be a concurrence of the following elements, viz.,
(1) Parties competent to contract (2) mutual assent; (3) a thing, the absolute or general property in which is transferred from the seller to the buyer; and (4) a price in money paid or promised.”
8. It is elementary that as long as title has not been transferred from one owner to another, there can be no sale. Admittedly, when fuel and lubricants have been transferred from one unit to the other, there has been no transfer of title, because all the units are owned by the assessee, and as long as the articles belong to the same owner and there is no change of ownership, there can be no sale. The Sales Tax Officer and the first appellate authority clearly went wrong in holding that merely because for accounting purpose the adjustment was treated as sale, such transactions would amount to sale and tax would be exigible.
9. Under the Orissa Act, “business” and “dealer” have been defined. By the amending Act of 1974, the definition of business occurring in section 2(b) was substituted with retrospective effect. The amended definition reads thus:
‘Business’ includes—
(i) any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture, whether or not such trade, commerce, manufacture, adventure or concern is carried on with a motive to make gain or profit and whether or not any gain or profit accrues from such trade, commerce, manufacture, adventure or concern; and
(ii) any transaction in connection with, or incidental or ancillary to such trade, commerce, manufacture, adventure or concern.”
“Dealer” in section 2(c) was defined to mean:
“Any person who carries on the business of purchasing or selling or supplying goods in Orissa, whether for commission, remuneration or otherwise and includes a department of the Government which carries on such business and any firm or a Hindu joint family, and any society, club or association which purchases goods from or sells or supplies goods to its members and also includes a casual dealer as hereinbefore defined.
Explanation …….”
10. This definition has been changed by Orissa Act 24 of 1979, but in view of the fact that we are concerned with a pre-amendment period, the definition given above is relevant.
11. In order to make the assessee a dealer, it was, therefore, necessary that it should have carried on the business of purchasing or selling or supplying goods in Orissa. “Business”, in view of the amended retrospective definition, did not require the element of gain or profit. In the case of State of Gujarat v. Raipur Manufacturing Co. Ltd., [1967] 19 STC 1 (SC), a three-judge Bench of the Supreme Court indicated that whether a person carries on business in a particular commodity must depend upon the volume, frequency, continuity and regularity of transactions of purchase and sale in a class of goods and the transactions must ordinarily be entered into with a profit-motive. The amendment of the definition of “business” takes away the profit-motive. Whether there be motive for profit or not and whether profit is really earned or not, if trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture is carried on, it would constitute business. As has been pointed out by another three-Judge Bench of the Supreme Court in the case of Board of Revenue, Andhra Pradesh v. A.M Ansari, [1976] 38 STC 577 (SC), notwithstanding the deletion of the profit-motive, the other ingredients of the term “business”, namely, volume, frequency, continuity and regularity of transactions of purchase and sale must be satisfied in order that a person could be said to be carrying on business of selling goods. The definition in the Andhra Pradesh Act is the same as in the Orissa Act after amendment. The Supreme Court examined several authorities, both of State High Courts as also its own, and ultimately came to hold that when the other ingredients of business are absent, the transaction would not amount to business. In an earlier case in State of Tamil Nadu v. Burmah Shell Oil Storage and Distributing Co. of India Ltd., [1973] 31 STC 426 (SC), a similar view was also taken.
12. The learned standing counsel, however, brought to our notice a two-judge judgment of the Supreme Court in the case of District Controller of Stores, Northern Railway, fodhpur v. Assistant Commercial Taxation Officer, [1976] 37 STC 423 (SC), where in view of the amended definition of “business” in the Rajasthan Sales Tax Act, disposal of scrap by the District Controller of Stores of the Northern Railway was treated to be business and the demand of tax was upheld. The Bench decision, however, did not take note of any precedent, and on a bare analysis of the definition of “business” came to its conclusion. The latest decision of the Supreme Court referred to above Board of Revenue v. A.M Ansari, [1976] 38 STC 577 (SC), is in consonance with the judicial opinion which has held the field, and in view of what was observed by Bhagwati, J., in the case of Mattulal v. Radhe Lal, (1974) 2 SCC 365 : AIR 1974 SC 1596, the decision of the larger Bench and the latest on the point has to be preferred. We accordingly choose to follow the principle indicated in Board of Revenue v. A.M Ansari, [1976] 38 STC 577 (SC), as governing the field.
13. The assessee's main business is running of buses and providing transport facilities to the travelling public. Though one of the objects related to disposal of its own discarded parts, that certainly was not its business. The disposal was an annual event. The assessee did not devote its time and attention for the purpose of having the transactions of disposal of spares and scraps. There was no frequency or repetition of the dealing. There is some force in the submission of the learned standing counsel that no general guideline can be laid down to deal with cases of every type. Yet, on the facts of the case, we are inclined to agree with the Additional Tribunal that the transactions which have been taken as sales on the footing that they constituted the assessee's business did not really constitute its business and with reference to that the assessee could not be treated as a dealer under the Act. The learned standing counsel contended that even if this did not constitute the assessee's main business, it was really ancillary to business. “Ancillary”, as indicated in the New Oxford Illustrated Dictionary, means: “subservient, subordinate”. The Standard Dictionary, the Lexicon Webster Dictionary and the Oxford English Dictionary also give the same meaning. In Stroud's it has been stated:
“A work was ancillary or incidental to a trade or business when it was not necessary thereto or a primary part thereof, e.g, the business of a railway company is primarily that of carriage of passengers or goods, and it was not responsible for a contractor it employed to build, repair and paint its stations, because such work was merely ancillary, or incidental to, and is no part of its business', as pointed out in Pearce v. London & South Western Railway, [1900] 2 QB 100.
As held in Green v. Britten, [1904] 1 KB 356, a work was properly called “ancillary” to a business “where you are describing something auxiliary or appurtenant to the purpose for which the business is carried on”. We came across a recent decision of the Supreme Court in the case of State Of Tamil Nadu v. Binny Ltd., Madras., [1982] 49 STC 17 (SC); 1980 Supp SCC 686 : AIR 1980 SC 2038 where the meaning of “ancillary” has been indicated. Even if disposals are considered as ancillary, it is necessary that the other tests of “business” should extend to such transactions. On looking at the matter from a broad perspective, we are inclined to agree with the Additional Tribunal that the transactions relating to disposal of scrap and new parts which were no more necessary for the business of the assessee did not constitute business and the assessee could not be treated as a dealer in respect of such transactions.
14. Our answers to the questions referred, therefore, are against the revenue and we hold that the assessee is not a dealer in respect of the dealings referred to above. The assessee shall have its costs. Consolidated hearing fee is assessed at Rs. 300 (three hundred).
B.K Behera, J.:— I agree.