1988 (8) TMI 395 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the Devasthanam can be considered a "dealer" under section 2(1)(e) of the Andhra Pradesh General Sales Tax Act.
2. Taxability of sales of food and drink in the canteens run by the Devasthanam.
3. Taxability of sales of motor parts as scrap.
4. Taxability of sales of human hair.

Detailed Analysis:

1. Whether the Devasthanam can be considered a "dealer" under section 2(1)(e) of the Andhra Pradesh General Sales Tax Act:
The primary issue was whether the Devasthanam qualifies as a "dealer" under the Act. The court examined the definitions under the Andhra Pradesh General Sales Tax Act, particularly section 2(1)(e) which defines "dealer" and section 2(1)(bbb) which defines "business." The court noted that the Devasthanam is primarily a religious and charitable institution governed by the Andhra Pradesh Charitable and Hindu Religious Institutions and Endowments Act. The Devasthanam's activities are predominantly religious and charitable, and its main objective is not commercial or trading in nature. The court concluded that the Devasthanam does not carry on business activities as defined under the Act, and hence, cannot be considered a dealer.

2. Taxability of sales of food and drink in the canteens run by the Devasthanam:
The court examined whether the sales of food and drink in the canteens run by the Devasthanam could be considered a business activity. The Devasthanam argued that the canteens were run to provide affordable food to pilgrims, preventing exploitation by private hoteliers, and not for profit. The court found that the running of the canteen was an integral part of the Devasthanam's charitable activities, aimed at serving the needs of pilgrims. Citing precedents, the court held that such activities, though they might constitute business in isolation, escape sales tax due to their functional integrality with the main charitable and religious activities of the Devasthanam.

3. Taxability of sales of motor parts as scrap:
Regarding the sale of motor parts as scrap, the Devasthanam contended that these sales were incidental to its main activities of providing transport facilities to pilgrims. The court noted that the disposal of unserviceable motor parts was necessary to avoid storage problems and maintain hygiene. It was held that this activity, while it might constitute business in isolation, was functionally integral to the Devasthanam's main activities. Therefore, the turnover from the sale of motor parts as scrap was not subject to sales tax.

4. Taxability of sales of human hair:
The court addressed the sale of human hair, which pilgrims offered in fulfillment of their vows. The Devasthanam sold the hair periodically to avoid storage issues and maintain cleanliness. The court concluded that this activity did not constitute commercial activity. The sale of human hair was seen as a necessary disposal measure rather than a business activity. Consequently, this turnover was also not subject to sales tax.

Conclusion:
The court dismissed the tax revision cases, holding that the Devasthanam is not a "dealer" under the Andhra Pradesh General Sales Tax Act. The sales of food and drink in the canteens, motor parts as scrap, and human hair were all found to be functionally integral to the Devasthanam's charitable and religious activities and not subject to sales tax. The petitions were dismissed with no costs, and an advocate's fee of Rs. 300 was awarded in each case.