Sikri, J.— This appeal by special leave is directed against the judgment of the Kerala High Court in Tax Revision Petition No. 49 of 1963, dismissing the revision filed by the Deputy Commissioner, Agricultural Income Tax and Sales Tax, Quilon. The High Court held that the respondent, Travancore Rubber and Tea Co., hereinafter referred to as “the assessee”, was not a “dealer” within Section 2(b) of the Central Sales Tax Act, 1956.
2. The facts on record are scanty. In the assessment order in respect of Assessment Year 1960-61 with which we are concerned, the Sales Tax Officer, Special Circle, Alleppey, determined the turnover of the assessee at Rs 6,14,713: 92, but did not discuss the question whether the assessee was a “dealer” or not within the Central Sales Tax Act. The Additional Appellate Assistant Commissioner of Agricultural Income Tax and Sales Tax, in the appeal filed by the assessee, dealt with the point raised by the assessee that it was not a dealer, as follows:
“My reading of the relevant definitions under the Act and the records and the Rules issued thereon leads me to the conclusion that the Officer has perfectly considered the aspect and the appellant is a ‘dealer' as defined in the Act and the Sales effected from him is liable for tax.”
The Full Tribunal in the second appeal framed the question for consideration as follows:
“Whether on the admitted facts of the case, namely, the appellants only selling rubber sheets produced by conversion of latex obtained from trees grown on lands belonging to them, they could be held to be dealer's within the definition in Act?”
The Tribunal, following the decision of the Kerala High Court in Muhammed v. Sales Tax Office, Kozhikode held that the assessee was not a “dealer”. It observed:
“Now the definition in the Central Sales Tax Act is the same as the definition in the General Sales Tax Act as it was before the amendment. It would follow therefore that applying the principles laid down in the decision quoted above the definition in the Central Sales Tax Act being what it is, the appellant cannot be held to be a dealer liable to be taxed. In this view we hold that the appellant is not liable to be taxed in respect of the sale by him of rubber sheets produced by conversion of latex collected from rubber trees grown by him”.
3. We may mention that the Kerala High Court in the above case had held that “the mere sale by a person of rubber sheets produced by conversion of latex collected from rubber trees grown by him is not sufficient to constitute him a dealer.” But the learned Judge, S. Velu Pillai, J., went on to observe:
“But if, for example, in addition to rubber produced by trees grown by him, he collects or buys latex or rubber sheets from other growers or suppliers and sells them, he may be said to engage himself in the business of selling, depending on the nature of such activity; in other words, in addition to being an agriculturists, using that term in its wide and generic sense, and not as one growing what is agricultural produce as defined in the Act, he can be a dealer, as envisaged by the proviso above referred to, in the same commodity, but this is a question of fact.”
4. The only fact mentioned in the judgment of the High Court are as follows:
(1) All that the company does is to convert the latex tapped from its rubber trees into sheets and effect a sale of those sheets to its customers;
(2) Latex is an opaque liquid resembling milk, the usual method of selling it is after converting it into sheets, and that the conversion is not manufacturing process but a process essential for the transport and marketing of the produce concerned.
On these facts, the High Court held as follows:
“We take the view that an agriculturist selling his own produce either as gathered or after subjecting it to the minimum requirements necessary for transport and marketing cannot be considered to be a person engaged in the business of selling. The sale which he effects, as we see it, is only the culmination of his agricultural operations; it is not separate and distinct from his agricultural avocation; and he cannot be considered to be a person carrying on a business of selling simply because he affects a sale of his own agricultural produce.”
The Department had formulated the questions of law for decision by the High Court as follows:
“(i) Whether a person who regularly sells rubber sheets produced by conversion of latex obtained from trees grown on his own lands is a dealer under Section 2(b) of the Central Sales Tax Act, 1956?
(ii) Whether the Sales of rubber sheets by such a person is a business carried on by him?
(iii) Whether the decision of the learned Single Judge of this Hon'ble Court in Muhammed v. Sales Tax Officers, Kozhikode reported in 13 STC 54 lays down the correct law and whether the principles laid down in that decision require reconsideration?”
5. The answer to these questions depends on the true interpretation of the word “dealer” as defined in the Central Sales Tax Act. Section 2(b) provides:
“ ‘dealer' means any person who carried on the business of buying and selling goods and includes a government which carries on such business”.
We are not concerned with the definition in the State Act as the assessment is being done under the Central Act. This Court had occasion to consider a similar definition contained in Section 2(6) of the Bombay Sales Tax Act (3 of 1953) which reads as follows:
“ ‘dealer' means any person who carried on the business of selling goods in the State of Bombay whether for commission, remuneration or otherwise ....”
In State of Gujarat v. Raipur Manufacturing Co. Shah, J., speaking for the Court, observed:
“Under the Bombay Sales Tax Act, 1953, the aggregate of the price received and receivable by a person carrying on business of selling goods is liable to be included in his taxable turnover. It follows as a corollary that in the turnover of a person carrying on the business of selling one commodity will not be included the price received by him by sale of another commodity unless he carries on the business of selling that other commodity. That is so because within the meaning of Section 2(6) of Bombay Act 3 of 1953 to be a dealer a person must carry on the business of selling those goods, price whereof is sought to be included in the turnover. In other words, he must carry on the business of selling a commodity before his turnover from sale of that commodity is taxable. As pointed out by this Court in State of Andhra Pradesh v. Abdul Bakshi and Bros. a person to be a dealer must be engaged in the business of buying or selling or supplying goods. The expression “business” though extensively used in taxing statutes, is a word of indefinite import. In taxing statutes, it is used in the sense of an occupation, or profession which occupies the time, attention and labour of a person, normally with the object of making profit. To regard an activity as business there must be a course of dealings, either actually continued or contemplated to be continued with a profit-motive, and not for sport or pleasure. 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. By the use of the expression “profit-motive” it is not intended that profit must in fact be earned. Nor does the expression cover a mere desire to make some monetary gain out of a transaction or even a series of transactions. It predicates a motive which pervades the whole series of transactions effected by the person in the course of his activity. In actual practice, the profit-motive may be easily discernible in some transactions; in others it would have to be inferred from a review of the circumstances attendant upon the transaction: For instance, where a person purchases a commodity in bulk and sells it in retail it may be readily inferred that he has a profit-motive in entering into the series of transactions of purchase and sale. A similar inference may be raised where a person manufactures finished goods from raw materials belonging to him or purchased by him, and sells them. But where a person comes to own in the course of his business of manufacturing or selling a commodity, some other commodity which is not a by-product or a subsidiary product of that business and he sells that commodity, cogent evidence that he has intention to carry on business of selling that commodity would be required. Where a person in the course of carrying on a business is required to dispose of what may be called his fixed assets or his discarded goods acquired in the course of the business, an inference that he desired to carry on the business of selling his fixed assets or discarded goods would not ordinarily arise. To infer from a course of transactions that it is intended thereby to carry on business ordinarily the characteristics of volume, frequency, continuity and regularity indicating an intention to continue the activity of carrying on the transactions must exist. But no test is decisive of the intention to carry on the business; in the light of all the circumstances an inference that a person desires to carry on the business of selling goods may be raised.”
6. We will refer to a few cases in which the assessee sold goods grown by him. In CIT v. Diwan Bahadur S.L Mathias — an income tax case — Sir George Rankin observed as follows:
“Having regard to the assessee's contention that he was not conducting any business in coffee and to certain observations made by the learned Judges of the High Court, it is necessary to state expressly Their Lordships' opinion that the assessee is carrying on a ‘business' within the definition of the word given by Section 2, sub-section (4) and within the meaning of Section 10 of the Act. The observations of the Commissioner in his letter of reference are justified: ‘Such profits as the petitioner in this case derives from his possession of land in Mysore is derived by means of a business; and the fact that agricultural operations form an element in the business does not render it any the less a business.' On the other hand, the mere circumstance that income is to be placed under the head business has no effect to negative its being ‘agricultural income' as defined by Section 2(1) or ‘income from agriculture' under the second proviso to Section 4(2)”.
7. In Raja Visheswar v. Province of Bihar (1951) 2 STC 129 it was held by the Patna High Court that although grains or sugarcane were goods within the meaning of Bihar Sales Tax Act, the mere fact that the plaintiff (question arose in a suit) sold the excess over his requirements could not make him a dealer within the meaning of Section 2(c) of the Bihar Sales Tax Act (6 of 1944), which defined the word dealer to mean a person who carries on the business of supplying goods. Manohar Lall, J., observed;
“It is true he sells agricultural products or goods but he has set up no place of business. The evidence is to the effect that the goods are sold in each village probably in the Khalihan where an agriculturist stores them after harvesting or after they are brought to the granaries except with regard to sugarcane which has to be carted to the mills — this is the normal way in which sugarcane is sold in this province at least. The plaintiff has a vast area of zirat or bakast lands in his cultivation and therefore the amount of goods produced will be large and the bigness of the figures realised by sale thereof is irrelevant.…
In the present case before me all that I find is that the plaintiff owns agricultural zirat lands which he cultivates and from which he produces the goods. This is one operation. Now he cannot consume all the goods and he must sell the excess if he does not require all for his own consumption. How can the mere fact of selling the excess make the plaintiff carry on a business of selling the produce?”
In Girdharilal Jiwanlal v. Assistant Commissioner of Sales Tax (Appeals) Nagpur (1957) 8 STC 732, the Bombay High Court (Nagpur Bench) held that a person does not necessarily fall within the definition of a “dealer” in Section 2(c) of the C.P and Berar Sales Tax Act (21 of 1947) merely because he sells or supplies commodities; in order to bring him within the definition it is additionally necessary to show that he carries on business. It observed:
“We may also point out that while an agriculturist who cultivates his lands no doubt engages himself in the business of agriculture, that is not the same thing as engaging in the business of sale or supply of agricultural produce. Again, an agriculturist may sell the produce from his lands but this activity cannot by itself be regarded as a business of sale or supply of agricultural produce; nor again would the two sets of activities taken together be said to constitute such a business, unless of course his primary intention in engaging himself in such activities was to carry on the business of sale or supply of agricultural produce. As would appear from the observations of Jessel, M.R, an owner of property is entitled to earn an income therefrom and merely because he has engaged himself in certain activities which enable him to earn that income, it cannot be said that he has engaged himself in a particular business. Thus, where an agriculturist carries on certain activities for the purposes of earning an income from his lands, he does not necessarily become a dealer under the definition in Section 2(c) of the Sales Tax Act.
The petitioner in the instant case owns considerable lands which he cultivates and gets agricultural produce from them. He has also a business. The accounts of the two are separately maintained (which fact the Assistant Commissioner admits in his order in Appeal No. 5060.I.A. 6 of 1954) and the income from agriculture can be clearly separated from the income of his other business. There is nothing to show that the petitioner acquired these lands with a view to doing “the business of selling or supplying” agricultural produce. According to him, he is principally an agriculturist who also deals in cotton, coal, oil-seeds and groundnuts. No doubt, he was carrying on agricultural business, but Prima Facie, that was for the purpose of earning income from his fields. There is nothing in the orders of the Sales Tax Authorities to show that the lands were acquired with the primary intention of doing business of selling or supplying agricultural produce. Unless it is established that a person engages himself in the — business of selling or supplying goods, he would not fall within the definition of “dealer” contained in Section 2(c) of the Act. We do not say that in a given case the cultivation of land may not be undertaken with the object or purpose of carrying on a business of selling or supplying agricultural produce, but, as stated, in the instant case there is nothing from which we can so conclude. In all cases of taxation the burden of proving the necessary ingredients laid down by law to justify taxation is upon the Taxing Authority and in the instant case they have failed to prove the essential ingredients viz. the intention of the petitioner to carry on a business of selling or supplying agricultural produce.”
8. The High Court, in the present case, relied on Konduri Buchirajalingam v. State of Hyderabad but in our opinion the Supreme Court in that case only assumed but did not decide that the agriculturist was not a dealer, for at p. 401, Sarkar, J., observed:
“The learned advocate's contention is that the tax is by these sections really levied on a dealer, in respect of his turnover attributable to some of his transactions. He then referred to the definition of a dealer in the Act which is substantially that a dealer is a person engaged in the business of selling or supplying goods. He points out that an agriculturist is not a dealer because his business is not to sell or supply the agricultural produce but to grow them. We will for the purpose of this appeal assume that an agriculturist is not a dealer. We say assume, because it is conceivable that a producer of crops may also engage in the business of selling or supplying and become a dealer within the Act”.
The question then arises whether on the facts found in the case the Department has established that the assessee is a “dealer”. We pose the question in this form for, as observed by Shah, J. in State of Gujarat v. Raipur Manufacturing Co. Ltd., (1967) 19 STC 1 at p.11 “the burden of proving that the company was carrying on business of selling coal lay 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”. We have already mentioned the facts found in this case. Apart from the facts that the assessee converts the latex tapped from its rubber trees into sheets — a process essential for the transport and marketing of the produce concerned — and it sells these sheets, nothing else has been found. No effort has been made to find out the intention with which the assessee was formed, the selling organisation it had set up and other relevant facts. On the facts found in this case it seems to us that the Department has not discharged the onus.
9. The learned Advocate-General prayed that the case be remitted to the Sales Tax Officer to enable him to find fresh facts. We cannot accede to this request. No such request appears to have been made before the High Court, nor is there any mention of it in the statement of the case filed by the Department. Mr S.T Desai, the learned counsel for the respondent, says that he has a number of points to be urged if this new point is allowed to be taken. Under the circumstances we do not allow this new point to be urged at this stage.
10. In the result the appeal fails and is dismissed with costs.