Judgment :- U.P. Singh, C.J. These Writ Appeals have been filed against the common judgment in O.P. Nos. 9508/94,1339/93,963/93 and 926/93 (1997 KLJ (Tax Cases) 164). While the appellant in W.A. 633/97 is Lord Krishna Bank Ltd., the appellant in W.A. No. 634/97 is the Federal Bank Ltd.- The South Indian Bank and the Catholic Syrian Bank are the appellants in the other cases. All these Banks are Scheduled Banks and are Banking Companies as defined in the Banking Regulation Act, 1949. The cause of action which gave rise to the filing of the Original Petitions is the notice issued by the Sales tax Officer, requesting the Banks to intimate the turnover with regard to the sale of gold ornaments by the Banks. As part of the banking activities, the appellants grant different kinds of loans. Some loans are granted on the security or pledge of gold ornaments. If the pledges did not repay the amount as promised, the Banks sell the pledged goods and appropriate the amount obtained by the sale towards the debt due to them. If the amount obtained by sale exceeds the amount due, the balance amount is returned to the pledgers, while if the amount obtained is less than the amount due to it, the Bank is entitled to realise the balance amount from the respective debtors. According to the Assistant Commissioner (Assmt.) Sales tax, Special Circle, Trissur, if the sale of the jewellery or gold or ornaments is in exercise of the right which the Banks obtained as a result of the pledge, the Banks are liable to pay tax under S.5 of the Kerala General Sales Tax Act (hereinafter referred to as 'the Act'). It is that notice which is challenged in the Original Petitions. 2. The contention of the Banks is that they are not engaged in the business of selling or buying goods. According to them, under the Banking Regulation Act, they are engaged in Banking business. Granting of loans is incidental to the business of Banking. The loans are given on the basis of the security. The amounts are realised by the sale of the security. It cannot be said that the Banks are dealers under the Act. Hence, they are not liable to be assessed under the Act. 3. Granting of loans is incidental to the business of Banking. The loans are given on the basis of the security. The amounts are realised by the sale of the security. It cannot be said that the Banks are dealers under the Act. Hence, they are not liable to be assessed under the Act. 3. A counter affidavit has been filed by the respondents in which they have justified the action taken by the Assistant Commissioner of Sales Tax. According to the Government, in so far as the sale is effect of the pledged goods, the turnover of such sales should be assessed under the Act. Further it is submitted that as per the definition of 'business' and 'casual dealer' in the Act, it is not necessary that the business should be done for profit. The provisions of the Act apply if the sale is incidental to the main business of the Bank. The learned Single Judge, who heard the Original Petitions, dismissed the same. Hence, these Writ Appeals have been filed and they are disposed of by this judgment. 4. Before we deal with the rival contentions of the parties, let us look at the relevant provisions of the Banking Regulation Act, 1949. 'Banking' has been defined under S.5(b) of the Banking Regulation Act as follows: "Banking" means the accepting, for the purpose of lending or investment of deposits of money from the public, repayment on demand or otherwise, and withdraw able by cheque, draft, order or otherwise." 5.6(1) of the Banking Regulation Act deals with the forms of business in which the Banking Companies may engage while S.6(2) says that no banking company shall engage in any form of business other than those referred to in sub-s.(1). S.6(1) of the Banking Regulation Act is as follows: "6. S.6(1) of the Banking Regulation Act is as follows: "6. Forms of business in which banking companies may engage - (1) In addition to the business of banking, a banking company may engage in any one or more of the following forms of business, namely: (a) the borrowing, raising, or taking up of money; the lending or advancing of money either upon or without security the drawing, making, accepting, discounting, buying, selling, collecting and dealing in bills of exchange, hundreds, promissory notes, coupons, drafts, bills of lading, railway receipts, warrants, debentures, certificates, scripts and other instruments, and securities whether transferable or negotiable or not; the granting and issuing of letters of credit, traveler's cheques and circular notes; the buying, selling and dealing in bullion and specie; the buying and selling of foreign exchange including foreign bank notes; the acquiring, holding, issuing on commission, underwriting and dealing in stock, funds, shares, debentures, debenture stock, bonds, obligations, securities and investments of all kinds; the purchasing and selling of bonds, scripts or other forms of securities on behalf of constituents or others, the negotiating of loans and advances; the receiving of all kinds of bonds, scripts or valuables on deposit or for safe custody or otherwise; the providing of safe deposit vaults; the collecting and transmitting of money and securities; (b) acting as agents for any Government or local authority or any other person or persons; the carrying on of agency business of any description including the clearing and forwarding of goods, giving of receipts and discharges and otherwise acting as an attorney on behalf of customers, but excluding the business of a managing agent or secretary and treasurer of a company; (c) contracting for public and private loans and negotiating and issuing the same; (d) the effecting, insuring, guaranteeing, underwriting, participating in, managing and carrying out of any issue, public or private, of State, municipal or other loans or of shares, stock, debentures or debenture stock of any company, corporation or association and the lending of money for the purpose of any such issue. (e) carrying on and transacting every kind of guarantee and indemnity business. (e) carrying on and transacting every kind of guarantee and indemnity business. (f) managing, selling and releasing any property which may come into the possession of the company in satisfaction or part satisfaction of any of its claims; (g) acquiring and holding and generally dealing with any property or any right, title or interest in any such property which may form the security or part of the security for any loans or advances or which may be connected with any such security; (h) undertaking and executing trusts; (i) undertaking the administration of estates as executor, trustee or otherwise; 0) establishing and supporting or aiding in the establishment and support of associations, institutions, funds, trusts and conveniences calculated to benefit employees or ex-employees of the company or the dependents or connections of such persons; granting pensions and allowances and making payments towards insurance; subscribing to or guaranteeing moneys for charitable or benevolent objects or for any exhibition or for any public, general or useful object; (k) the acquisition, construction, maintenance and alteration of any building or works necessary or convenient for the purposes of the company; 0) selling, improving, managing, developing, exchanging, leasing, mortgaging, disposing of or turning into account or otherwise dealing with all or any part of the property and rights of the company; (m) acquiring and undertaking the whole or any part of the business of any person or company, when such business is of a nature enumerated or described in this subsection; (n) doing all such other things as are incidental or conducive to the promotion or advancement of the business of the company; (o) any other form of business which the Central Government may by notification in the Official Gazette, specify as a form of business in which it is lawful for a banking company to engage". S.6(1)(f) states that the business of Banking extends to managing, selling and releasing any property which may come into the possession of the company in satisfaction or part satisfaction of any of its claims. S.6(1)(f) states that the business of Banking extends to managing, selling and releasing any property which may come into the possession of the company in satisfaction or part satisfaction of any of its claims. The other relevant Section is S.8 of the Banking Regulation Act, which is as follows: "Prohibition of trading.- Notwithstanding anything contained in S.6 orin any contract, no banking company shall directly or indirectly deal in the buying or selling or bartering of goods, except in connection with the realisation of security given to or held by it, or engage in any trade, or buy, sell or barter goods for others otherwise than in connection with bills of exchange, received for collection or negotiation or with such of its business as is referred to in clause (i) of sub-s.(1) of S.6". Thus, under this Section, the Banking Company is prohibited from trading in any goods except in connection with the realisation of security given to or held by it. 5. So far as pledge is concerned, the right to sale is contained in S.176 of the Indian Contract Act. It is as follows: "If the pawn or makes default in payment of the debt, or performance, at the stipulated time of the promise, in respect of which the goods were pledged, the pawnee may bring a suit against the paw nor upon the debt or promise, and retain the goods pledged as a collateral security; or he may sell the thing pledged, on giving the pawnor reasonable notice of the sale". If the proceeds of such sale are less than the amount due in respect of the debt or promise, the pawnor is still liable to pay the balance. If the proceeds of the sale are greater than the amount so the pawnee shall pay over the surplus to the pawnor". Pollock & Mulla on Indian Contract Act and Specific Relief Act, Tenth Edition at page 812 states as follows: "A contract of pledge carries with it the implication that the security may be made available to satisfy the obligation, and enables the pledge in possession (though he has not the general property in the thing pledged, but a special property only to sell on default in payment and after notice to the pledger) although the pledger may redeem at any moment upto sale. Once the pawnee, after reasonable notice to the pawn or of his intention to sell the goods pawned, sell them under S.176 of the Contract Act, the pawnor's right of red every is extinguished, but his right to redeem continues upto the sale..." At page 813, the learned author says as follows: "The power conferred on the pledge under this Section to sell the property without reference to the Court does not take away his right to sue the pawnor on the debt or bring a suit for the sale of the property pledged to him". Thus, from a review of the above principles, one can come to the conclusion that the pawnee is not the owner of the property. But he exercises his right to sell the debtor's property for realisation of the debts. He is only a bailee. He is not selling the goods either as an owner or as an agent or any other capacity representing the owner. He is exercising the power because of the right given under the Indian Contract Act. 6.'Business 'is defined under S.2(vi) (a) & (b) of the Act. It is as follows: "business" includes (a) 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 profit accrues from such trade, commerce, manufacture, adventure or concern; and (b) any transaction in connection with, or incidental or ancillary to such trade, commerce, manufacture, adventure or concern". Thus, carrying on the trade, commerce or adventure with or without profit and any transaction which is connected with or incidental to such trade, commerce or manufacture is also a business. "Casual trader" has been defined under S.2(vii) of the Act. It is as follows: "Casual trader" means aperson who has whether as principal, agent or in any other capacity, occasional transactions 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". "Casual trader" has been defined under S.2(vii) of the Act. It is as follows: "Casual trader" means aperson who has whether as principal, agent or in any other capacity, occasional transactions 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". "Dealer" is defined under Clause (viii) of S.2 of the Act as follows: "dealer" means any person who carries on the business of buying, selling, supplying or distributing goods, executing works contract, transferring the right to use any goods or supplying by way of or as part of any service, any goods directly or otherwise, whether for cash or for deferred payment, or for commission, remuneration or other valuable consideration and includes (a) (xxxx) omitted (b) casual trader; (c) a commission agent, a broker or a decreed agent or an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of buying, selling or distributing goods executing works contract, transferring right to use any goods or supplying by way of or as part of any service, any goods on behalf of any principal; (d) a non-resident dealer or an agent of a non-resident dealer, or a local branch of a firm or company or association or body of persons whether incorporated or not situated outside the State; (e) a person who, whether in the course of business or not, sells; (i) goods produced by him by manufacture, agriculture or otherwise; or (ii) trees which grows spontaneously and which are agreed to be severed before sale or under the contract of sale; (1) (f) a person who whether in the course of business or not: (2) transfers any goods, including controlled goods whether in pursuance of a contract or not, for cash or deferred payment or other valuable consideration; (3) transfers property in goods (whether as goods or in some other form) involved in the execution of a works contract; (4) delivers any goods on hire-purchase or any system of payment by instalments; (5) transfers the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration; (6) supplies, by way of or as part of any service orin any other manner whatsoever goods, being food or any other articles for human consumption or any drink (whether or not intoxicating), where such supply or service for cash, deferred payment or other valuable consideration". 7. The main contention on behalf of the appellants is that trading in goods is prohibited by S.8 of the Banking Regulation Act. The only exemption is for selling the goods for the purpose of realisation of the security. The sale can be conducted only after issuing notice to the debtor and if the amount is paid before the actual sales take place, the sales cannot be proceeded with. That means, the pawnor has the right to redeem the goods before the actual sale is effected. The sale is effected not because the Bank is the owner of the property, but because of the special interest in the Bank to sell the property. On the other hand, it is submitted by the learned Government Pleader that the Banking business involves the granting of loans on securities. If the amount is not repaid, it necessarily creates a right in the Banking Company to sell the goods. Thus, according to them, the sale of goods is incidental to the main business of the Banks. Learned Government Pleader also submitted that from the definition of 'casual dealer' and 'business', it is very clear that the transaction like the sale of jewellery come within the purview of the Act. He submitted that the Banks have a duty to see that the security given by the pawnor is utilised for the satisfaction of the debts. It is from that angle that the goods are sold. Even though there may be general prohibition in trading, S.8 allows the Banks to sell the goods for realisation of the amounts. Thus, according to the learned Government Pleader, whatever may be the compulsion under which the goods are sold, if they are sold, the Banks are liable to pay tax under the Act. Learned counsel on both sides cited a number of decisions in order to drive home their points. We shall now examine the decisions in order to arrive at a proper answer to the question posed. 8. The learned Government Pleader relied on the following decisions: (1) The District Controller of Stores, Narthern Railway, Jodhpur v. The Assistant Commercial Taxation Officer and Ann - 37 STC 423. This is the decision of the Hon'ble Supreme Court of India. We shall now examine the decisions in order to arrive at a proper answer to the question posed. 8. The learned Government Pleader relied on the following decisions: (1) The District Controller of Stores, Narthern Railway, Jodhpur v. The Assistant Commercial Taxation Officer and Ann - 37 STC 423. This is the decision of the Hon'ble Supreme Court of India. The question which arose was whether the Northern Railway, Jodhpur was liable to pay sales tax on the sale of unserviceable materials, scrap, etc for the period in question, Mathew, J. (as he then was) speaking on behalf of the Bench, held as follows: "the activity of the appellant in the selling of unserviceable material and scrap-iron, etc., would be "business" within clause (i) of the definition of the word "business" introduced by the amending Act. The word "business" according to clause (i) of that definition would include any trade, commerce, or manufacture or any adventure or concern in the nature of trade, commerce, or manufacture whether or not it is carried on with a motive to make gain or profit". The following observations of the Court is also relevant: "We also think that there is no fallacy in thinking that the Railway since it is concerned in the activity of transportation is engaged in commerce within the meaning of clause (i) of the definition and that the sale of unserviceable materials and scrap-iron, etc is transaction in connection with or ancillary to such commerce...." Another decision cited is Member, Board of Revenue, West Bengal v. Controller of Stores, Eastern Railway, Calcutta - 74 STC 5. That is also a decision of the Supreme Court rendered by a Bench of three Judges. In the above case, the South Eastern Railway used to dispose of unclaimed and uncollected goods for money consideration. The point raised was whether the Southern Railway was a dealer and could be assessed under the Bengal Finance (Sales Tax) Act. In rejecting the Railway's contention, the following observations were made by the Supreme Court: "In the case of the assessee, South Eastern Railway, what were sold were unclaimed goods. The Railway was a carrier of the goods and if at the stage of delivery goods remained unclaimed for a period the railway was entitled to dispose them of. In rejecting the Railway's contention, the following observations were made by the Supreme Court: "In the case of the assessee, South Eastern Railway, what were sold were unclaimed goods. The Railway was a carrier of the goods and if at the stage of delivery goods remained unclaimed for a period the railway was entitled to dispose them of. There can be no doubt that the activity of so disposing of the goods was adjunctive to the principal activity of the carriage of goods by the railway. It is an activity which may be regarded as necessarily incidental or ancillary to its business as carrier of the goods". Their Lordship also followed the decision in 37 STC 423. The next decision that was cited was the decision of the Supreme Court in State of Orissa v. Orissa Road Transport Co. Ltd. -107 STC 204. The question arose under the Orissa Sales Tax Act and the question was whether the Orissa Road Transport Corporation was liable to pay tax with regard to the sale of unserviceable, old and unutilized parts from its stores. Their Lordships relied on the decision in 37 STC 423 and held that the Orissa Road Transport Corporation is liable to pay tax. Further the Court also relied on the definition of the words 'casual dealer' and on that basis held that the respondent was liable to be assessed under the Orissa Sales Tax Act. 9. In the above three decisions, the Hon'ble Supreme Court held that the respective assessees were liable, because the transaction concerned was connected with main trading or commercial activity. In the first two decisions, the Railways were either selling old unserviceable goods or were selling the goods which were not delivered. The Supreme Court held that since the transaction in goods was the main activities of the Railways, the sale of old unserviceable goods also come within that definition. In the case of Orissa Road Transport Corporation also, the Corporation was dealing in the business of running vehicles, which necessitated the purchase of spare parts and goods. 10. The next two decisions which were cited by the learned Government Pleader are (1) Karnataka Pawn Brokers' Association (Regd) & Ann v. State of Karnataka and Ann - 94 STC 243 and (2) Madras Pawn Brokers Association v. State of Tamil Nadu - 98 STC 457. 10. The next two decisions which were cited by the learned Government Pleader are (1) Karnataka Pawn Brokers' Association (Regd) & Ann v. State of Karnataka and Ann - 94 STC 243 and (2) Madras Pawn Brokers Association v. State of Tamil Nadu - 98 STC 457. These two cases were dealing with the question whether the pawn brokers under the Karnataka Pawn Brokers Act and those under the Tamil Nadu Pawn Brokers Act were liable to pay sales tax for the sale of pledged articles. But in these two cases, the court mainly relied on the definition of pawn brokers and their activities. Pawn broker has been defined as a person who carries on business of taking goods on pledge. It is in those circumstances that the activities similar to the one in question in these cases were considered to be a business of activities. 11, The case of Collector of Customs v. State of Kerala & Ann 1993 KLJ (Tax Cases) 337-91 STC 596 - stands on a different footing. Under Explanation 2 to the definition of 'dealer' in S.2(viii) of the Kerala General Sales Tax Act, 1963, it has been clearly stated that the Central and State Governments which buy, sell, supply or distribute goods directly or otherwise and whether or not in the course of business shall be deemed to be dealers for the purpose of the Act. It was because of the provisions introduced above that the Collector of Customs was held liable to pay sales tax for the sale of confiscated goods. United India Insurance Co. Lid. v. Commissioner of Commercial Taxes, Bangalore and Ann - 78 STC 99 - is the decision of the Karnataka High Court. There, the facts are the following:- Certain goods were insured with the Insurance Company. Those goods were damaged in transit. The Insurance Company settled the claim of insured. It then took possession of goods and sold them and realised the sale price by way of salvage. The Karnataka High Court, relying on the decisions of the Supreme Court in Member, Board of Revenue v. Controller of Stores, Eastern Railway - 74 STC 5, New India Assurance Co. Ltd. v. Dy. Commercial Tax Officer - 29 STC -539 - and Indian Insurance Companies Association Pool v. Dy. The Karnataka High Court, relying on the decisions of the Supreme Court in Member, Board of Revenue v. Controller of Stores, Eastern Railway - 74 STC 5, New India Assurance Co. Ltd. v. Dy. Commercial Tax Officer - 29 STC -539 - and Indian Insurance Companies Association Pool v. Dy. Commercial Tax Officer - 24 STC 79, held that the activity comes within the scope of "business' under the Act, 12. The learned counsel for the appellants distinguished the above decisions and also relied on the following decisions: (1) The Board of Trustees of the Port of Madras v. The State of Tamil Nadu & Ann - 1996 (1) MTCR 373. In that case, the question that arose was with regard to the liability of the Port Trust to pay sales tax on auction sales. The Division Bench of the Madras High Court was considering the question whether the Port Trust will be a dealer when it sold the goods which were not claimed. The Division Bench held as follows: "In order to attract this provision, it is necessary that one must carry on the business of buying, selling, supplying or distributing goods either as a factor, a broker, a commission agent etc The learned counsel for the appellants relied on an unreported decision of the Karnataka High Court in Canara Bank v. Commercial Tax Officer & Ors wherein the Division Bench of the Karnataka High Court held that the transaction similar to the transaction which is sought to be assessed in this case cannot be assessed on the Canara Bank. 13. In order to arrive at the correct decision on the question involved in these cases, it is necessary to find out what is the business of the Banking Company. The business of the Banking Company is not trading in goods. It mainly involves the accepting for the purpose of lending or investment of deposits of money from the public and also the granting of money with security. The Banks advance money or give loans to customers on the basis of security. One type of security that is accepted is the pledge of gold ornaments. When the gold ornaments are pledged, the Bank stands in the shoes of a bailee. The Bank does not become the owner of the goods. The Banks advance money or give loans to customers on the basis of security. One type of security that is accepted is the pledge of gold ornaments. When the gold ornaments are pledged, the Bank stands in the shoes of a bailee. The Bank does not become the owner of the goods. The Bank has got special right in the property or goods to retain it so long as the amount borrowed on its security is not paid. It has also got a right to sell the goods not as an owner or an agent or in any other capacity. It sells goods after giving notice to the pawner and the amount obtained is to be appropriated to the amount due to it. Thus, the entire consideration is not taken by the pawnee, because if the amount obtained exceeds the loan amount, the balance has to be returned to the owner of the goods. The owner of the goods can avoid the sale by redeeming the goods just before the sale is effected. This is a process by which the amount due to the Bank is realised. It cannot be said that because the Bank sells the property for realisation of the debts it stands in the shoes of a dealer who is engaged in the business of buying or selling. No doubt, from the definition of 'business' it is necessary that the sale should be with a profit motive. But even if it is not with a profit motive, the sale, business or trade should be in the course of the activities or business of the assessee or it should be connected with the main business of the assessee. Admittedly, the business of the Bank is not selling of goods or in any way connected with the goods. The business of the Bank is receiving or lending loans. In this context, itis pertinent to notice that in the definition of sale, 'pledge' or 'mortgage' are excluded. It is not necessary that the Bank should take upon itself the act of selling the goods. Instead of selling the goods directly, it could sue and through court realise the amount due to it. Viewed from this angle, it cannot be said that the Bank is carrying on any activities in trade or business in goods. 14. It is not necessary that the Bank should take upon itself the act of selling the goods. Instead of selling the goods directly, it could sue and through court realise the amount due to it. Viewed from this angle, it cannot be said that the Bank is carrying on any activities in trade or business in goods. 14. In this context, the provisions of S.8 of the Banking Regulation Act has to be closely examined. Section opens with a non-obstante clause. It states that no banking company shall deal in buying or selling or bartering of goods. The Section carves out three exceptions and those are; (i) in connection with the realisation of security given to or held by it; (ii) buy or sell goods for others otherwise than in connection with bills of exchange received for collection or negotiation; and (iii) such of the business as is referred to in clause (i) of sub-s.(1) of S.6. The first exception is sale of securities for realisation of the loans. This had to be there because in the absence of sale of securities, the Bank would not be able to recover the loans which were deposited by the customers. It cannot be said that while the securities are sold the Bank is carrying on business in trade or commerce. The expression'sale' as defined in the Act makes it clear that mere transfer of the property in goods by one person to another does not attract the provisions of the Act unless such transfer is in the course of trade or business. Every commercial activities will not attract the expression 'business' and transactions which are incidental or ancillary to trade or commerce cannot take in its sweep the disposal of the security for realisation of loans. The transaction of selling of secured goods is not incidental or main business of the bank. When it is found that the Banks are prohibited from trading in goods it cannot be said that trading in goods is the main business. Hence, it cannot be said that the sale of goods for the purpose of realisation of debts due to the scheduled bank is concerned with the business in goods. Hence the judgment of the learned single judge (1997 KLT (Tax Cases) 164) is set aside. The Writ Appeals are allowed. Hence, it cannot be said that the sale of goods for the purpose of realisation of debts due to the scheduled bank is concerned with the business in goods. Hence the judgment of the learned single judge (1997 KLT (Tax Cases) 164) is set aside. The Writ Appeals are allowed. Respondents are restrained from levying any tax under the Kerala General Sales Tax Act or taking any proceeding under the said Act against the appellants-banks with respect to the disposal of gold ornaments pleaded to the Banks by the borrowers.