TMI Blog1974 (7) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... y he was reassessed under section 12(8) of the Act for the self-same three years. In the revised assessment orders the receipts from the canteen for supply of food to the workmen were included in the taxable turnover of the petitioner. Sales tax assessed for the supply of food to the workers of the mine for the three years in question was as follows: 1964-65 ... Rs. 3,665.54 1965-66 ... Rs. 2,984.55 1966-67 ... Rs. 2,451.00 Appeals filed by the petitioner before the Assistant Commissioner of Sales Tax challenging the legality of this levy were dismissed. Second appeals were also dismissed on 20th May, 1971, by the Member, Additional Sales Tax Tribunal. The petitioner asked for reference under section 24(1) of the Act of certain questions of law arising out of the appellate order. The Member, Additional Sales Tax Tribunal, made a reference of the following questions of law: "(1) Whether, in the facts and circumstances of the case, the Tribunal erred in holding that the receipts from the canteen received by the applicant under the statutory provisions of the Mining Act and the Rules made thereunder were part of the applicant's business as a dealer? (2) Whether, in the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. Patnaik advanced the following contentions: (i) The sale of food and drink in the canteen set up under compulsion of law being on no-profit basis the petitioner does not run the business of selling food and drink in the canteen and as such it is not a "dealer" within the meaning of section 2(c) of the Act. (ii) The business of the petitioner is mining and not running the canteen. Sales in the canteen do not constitute a component part of the business in mining and, as such, the petitioner is not a dealer in respect of the sales in the canteen. Both the contentions require careful examination. 5.. It would be appropriate to notice the definition of the expressions "dealer", "goods", "sale", "sale price" and "turnover of sales", so far as relevant, as defined in section 2(c), (d), (g), (h) and (i). They run thus: "(c) 'Dealer' means any person who carries on the business of purchasing or selling or supplying goods in Orissa, whether for commission, remuneration or otherwise (d) 'Goods' means all kinds of movable property other than actionable claims, stocks, shares or securities (g) 'Sale' means, with all its grammatical variations and cognate expressions, any transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly continued or contemplated to be continued with a profit motive, and not for sport or pleasure. But to be a dealer a person need not follow the activity of buying, selling and supplying the same commodity. Mere buying for personal consumption, i.e., without a profit-motive, will not make a person dealer within the meaning of the Act, but a person who consumes a commodity bought by him in the course of his trade, or use in manufacturing another commodity for sale, would be regarded as a dealer. The legislature has not made sale of the very article bought by a person a condition for treating him as a dealer: the definition merely requires that the buying of the commodity mentioned in rule 5(2) must be in the course of business, i.e., must be for sale or use with a view to make profit out of the integrated activity of buying and disposal. The commodity may itself be converted into another salable commodity, or it may be used as an ingredient or in aid of a manufacturing process leading to the production of such salable commodity." In that case the definitions of "dealer", "sale" and "turnover" were almost identical with the definitions under the Act. The dealers contended that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the petitioner cannot be said to have the intention to run a canteen with a profit-motive. It cannot, however, be so separately taken. It constitutes an integral part of the commercial activity of mining quarries. Provision for canteens cannot be dissociated from the working of mines. On the aforesaid analysis, we are clearly of opinion that in running the canteen the petitioner carries on business and the receipts from the canteen are to be included in the taxable turnover. 11. It is, however, contended that the canteens are run under compulsion of law on no-profit basis to provide amenities to the workers and unless there is freedom of contract in every aspect, the transaction would not constitute sale. The concept that transactions can constitute sale where freedom of contract is not wholly excluded is no longer res integra. In Salar Jung Sugar Mills Ltd. v. State of Mysore[1972] 29 S.T.C. 246 (S.C.)., a Bench of seven judges reviewed the decisions of the Supreme Court and made the following observations: "These decisions establish that statutory orders regulating the supply and distribution of goods by and between the parties under Control Orders in a State do not absol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... With regard to the factum of compulsion, their Lordships also examined the question with reference to the relevant sections of the Contract Act relating to coercion, undue influence, fraud, misrepresentation and mistake and concluded that the supply of food and drink by the company to its workmen was not the result of "coercion" or "undue influence" as defined in sections 14 and 15 of the Contract Act. It is not necessary for us to repeat the reasons. We accept those very reasonings. 12.. Several decisions have been cited on behalf of the petitioner that sales in canteens on no-profit basis under compulsion of rules do not constitute "sale" within the meaning of the Sales Tax Acts as prevailing in different States. Those decisions are Gannon Dunkerley Co. v. State of Madras[1954] 5 S.T.C. 216 (Mad.)., Sree Meenakshi Mills Ltd. v. State of Madras[1954] 5 S.T.C. 291 (Mad.)., Davanagere Cotton Mills Ltd. v. State of Mysore[1957] 8 S.T.C. 793 (Mys.)., Trustees of the Port of Madras v. State of Madras[1960] 11 S.T.C. 224 (Mad.). , I.C.F. Canteen v. Deputy Commercial Tax Officer[1962] 13 S.T.C. 827 (Mad.)., Deputy Commissioner of Commercial Taxes v. Thirumagal Mills Ltd.[1967] 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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