# STATE OF PUNJAB & ANR v. M/S. BAJAJ El,ECTRICALS LTD

- **Citation:** [1968] 2 S.C.R. 536
- **Court:** Supreme Court of India
- **Decided:** 1967-12-05
- **Case number:** Civil Appeal No. 287 of 1967
- **Bench:** J. C. Shah, V. Ramaswami, V. BllARGAVA
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/state-of-punjab-anr-v-m-s-bajaj-el-ectricals-ltd-4230
- **Pages:** 3

## Headnote

Punjab Professions, Tr<:des, Cal/ingJ and Employment Taxation Act,
(Pun;. 7 of 1956), s. 7-Supp/ying gooib within State against ord<r• outside State-Supplier has no shop, branch or agent within Star~-Uabi/ity
to tax-"Trade", Meaning of.
The respondeot a Joint Ste><:k Company, having oo shop or oftice or
a11eot within the State of Puojab, used to rupply goods witbio the State
pursuant to orders re<;eived and accepted at New Delhi, and alao wed to
receive the price for the goods withio the Sta'e. The Asoesaing Authority,
)Carnal, ... essed the respondent to profesiion tax uoder the Punfab Profeosions, Trades, Calliogs and Employments Taxation Acr,
1956.
The
order "'"-' quashed by the High Court.
!n •ppcal to this C.ourt.,
HELD : The activities of the respondent in the
State were mere
anciUary activit.ies and did not amount to carrying on trade within the
State. [538 C-D)
The expression "trade" is not defined
in the Act. "Trade" in
its
primary meaning is lhc exchanging of goods for goods or goods for
money; in its sccond<1ry meaning it is repeated activity in ,the nature of
businc.c;! carried on with a profit motive, tho activity being manual or
mercantile, as distinguished from the liberal arts or learned professions or
agriculture.
The question whether trade jj carried on by a person at a
given place, though on~ of mixed Jaw and fact, must in each case be
determiocd on a consideration of the nature of the trade, the variou! 1teps
lakeu for carrying on the trade and other relevant facts. [537 H-538 EJ
Grainger and Son v. Gough (Surveyor of TaXLs) 3 T.C. 464, F.L. Smilli
& Co. v. F. Greenwood (Surve,vor of Ta.re.<), 8 T.C. 193 and Firestone
'fyre Co. Ltd. v. Lewr//in, 37 T.C. 111. distinguished.
C1vu. APPELLATE JURISDICTION: Civil Appeal No. 287
of
1967.
Appeal from the judgment and order dated May 29, 196-4 of
the Punjab High Court.in Civil Writ No. 1609 of 1961.
Harba11s Singh and R. N. Sachthey, for the appellants.

## Text

STATE OF PUNJAB & ANR.
v.
M/S. BAJAJ El,ECTRICALS LTD.
December 5, 1967
[J. C. SHAH, V. RAMASWAMI AND V. BllARGAVA, JJ.)
Punjab Professions, Tr<:des, Cal/ingJ and Employment Taxation Act,
(Pun;. 7 of 1956), s. 7-Supp/ying gooib within State against ord<r• outside State-Supplier has no shop, branch or agent within Star~-Uabi/ity
to tax-"Trade", Meaning of.
The respondeot a Joint Ste><:k Company, having oo shop or oftice or
a11eot within the State of Puojab, used to rupply goods witbio the State
pursuant to orders re<;eived and accepted at New Delhi, and alao wed to
receive the price for the goods withio the Sta'e. The Asoesaing Authority,
)Carnal, ... essed the respondent to profesiion tax uoder the Punfab Profeosions, Trades, Calliogs and Employments Taxation Acr,
1956.
The
order "'"-' quashed by the High Court.
!n •ppcal to this C.ourt.,
HELD : The activities of the respondent in the
State were mere
anciUary activit.ies and did not amount to carrying on trade within the
State. [538 C-D)
The expression "trade" is not defined
in the Act. "Trade" in
its
primary meaning is lhc exchanging of goods for goods or goods for
money; in its sccond<1ry meaning it is repeated activity in ,the nature of
businc.c;! carried on with a profit motive, tho activity being manual or
mercantile, as distinguished from the liberal arts or learned professions or
agriculture.
The question whether trade jj carried on by a person at a
given place, though on~ of mixed Jaw and fact, must in each case be
determiocd on a consideration of the nature of the trade, the variou! 1teps
lakeu for carrying on the trade and other relevant facts. [537 H-538 EJ
Grainger and Son v. Gough (Surveyor of TaXLs) 3 T.C. 464, F.L. Smilli
& Co. v. F. Greenwood (Surve,vor of Ta.re.<), 8 T.C. 193 and Firestone
'fyre Co. Ltd. v. Lewr//in, 37 T.C. 111. distinguished.
C1vu. APPELLATE JURISDICTION: Civil Appeal No. 287
of
1967.
Appeal from the judgment and order dated May 29, 196-4 of
the Punjab High Court.in Civil Writ No. 1609 of 1961.
Harba11s Singh and R. N. Sachthey, for the appellants.
The Judgment of the Court was delivered by
Shah, J.
The respondent-a Joint Stock Company-has its
principal place of business in Bombay, and a branch office in
New Delhi.
The Assessing Aulhority, Kamal, exercising power
under the Punjab Professions, Trades, Callings and Employments
Taxation Act 7 of 1956, assessed the respondent to profession tax
B
c
[)
E
F
G
H
A
B
c
D
E
F
G
H
PUNJAB V. BAJAJ ELECTRICALS LTD. (Shah, /.)
537
for the years 1960-61 and 1961-62 and
issued a
notice
of
demand for the amount so assessed. The High Court of Punjab
quashed the notice; of demand and the assessm~nt orders holding
that the respondent did not carry on trade w1thm the State of
Punjab and was not liable to be assess~d to tax un~er the Act.
The State of Punjab has appealed to ,this Court agamst the order
of the High Court.
Section 3 of Act 7 of, 1956 provides :
"Every person who carries on trade, either by himself or by an agent or representative, or who follows a
profession or calling or who is in employment, either
wholly or in part, within the State of Punjab, shall be
liable to pay for each financial year or a part thereof a
tax in respect of such profession, trade, calling or employment.
Provided
The respondent, it is common ground, has no branch office or
any other place of business in the State of Punjab. It has also .not
appointed any agent or· representative to carry on business on its
behalf within the State.
The respondent supplies goods to the
Government of Punjab and certain "semi-Government bodies" in
the State in execution of orders received at its branch office at
Delhi. The goods are despatched from Delhi by rail or by public motor transport. Pursuant to the terms and conditions of the
"Rate Contract" between the respondent and 1 the Controller of
Stores for the S'.ate of Punjab, the respondent consigns the goods
sold by it to the appropriate Government DepartmenfF.0.R. destination.
Inspection of the goods i; made within the State of
Punjab. The price for the goods sold is colle_cted by presenting
bills or railway receipts through Banks to the consign=.
The Assessing Authority held that the respondent "may reasonably be regarded as selling good> within" the State of Punjab
because it was supplying goods F.O.R. destination.
The High
Court held that the respondent could not in law be regarded as
carrying on trade at the place at which the goods were supplied,
merely because the railway or other receipts were taken out in the
name of the respondent and presented to the purchasers duly endorsed in their favour to se.cure realization of the price of the
goods.
Liability to pay tax under.Act 7 of 1956 arises if a person carries on trade by himself, or through his agent, or follows a profession or is in employment within the State, and not otherwise.
The expression "trade" is not defined in the Act. "Trade" in its
primary meaning is the ,exchanging of goods for goods or goods
for moll,lly; in its secondary meaning it is repeated activity in the
538
SUPREME COURT REPORTS
[1968) 2 S.C.R.
nature of business carried on with a profit motive, the activity
being manual or mercantile, as distinguished from the liberal arts
or learned professions or agriculture.
The question whether
trade is carried on by a person at a given place must be determined on a consideration of all the circ"umstances. No test or set of
tests which is or are decisive for all cases can be evolved for determining whether a person carries on trade at a particular place.
The question, though one of mixed law and fact, must in each
case be determined on a consideration of the nature of the trade,
the various steps taken for carrying on the trade and otht~r relevant facts.
In the prescn! case, the respondent has no shop or office within the State of Punjab.
The respondent supplies goods within
the State pursuant to orders received
and accepted
at New
Delhi, and also receives price for the goods within the State. But
these arc ancillary activities and do not in our judgmcct amount
to carrying on trade within the State of Punjab. We need not refer
in detail to case; such as Grainger and Son v. (iouf?h (Surveyor of
Taxes)('); F. L. Smi!h & Co. v. F. Greenwood
(Surveyor of
Taxes)( 2 ); and Firestone Tyre Co. Ltd v. Lewe/lin,( 8 ) which interpret the expression "trade exercised within the United Kingdom"
in the English Income Tax Acts, for they merely Jay down that
for the purpose of the Income Tax Acts, there is no single, decisive or "crucial" test to determine whether the tax-payer exercises
trade at a given place.
The appeal fails and is dismissed. The respondent has not
appeared at the hearing. There will, therefore, be no order as to
costs.
Y.P.
(I) 3 T.C. 464.
(2) 8 T.C. 193.
(3) 37 T.C. 111.
Appeal dismissed.
A
B
c
D
E
'!l