TMI Blog1995 (12) TMI 362X X X X Extracts X X X X X X X X Extracts X X X X ..... ases were laid before the Division Bench of this Court where it was pointed out that two Division Bench decisions reported in [1988] 68 STC 378 (MP); (1987) 20 VKN 351 (Commissioner of Sales Tax, M.P. v. Hukumchand Mills Ltd., Indore)-decided on September 4, 1987 and in (1989) 3 TLD 106 (Commissioner of Sales Tax, M.P. v. Gwalior Rayon Silk Mfg. Co. Ltd., Nagda)-decided on November 21, 1988, are in conflict. On that fulcrum the Division Bench ordered on April 12, 1989 to place these cases before larger Bench. This is how these cases were listed before us. 3.. Factual matrix is in narrow compass and is without conundrum. The non-applicant/assessee is a textile mill. It is incorporated under the Companies Act and carries on the of manufacture and sale of cloth and yarn. It has a canteen for its workers located in the premises of the mill. Foodstuff is served in this canteen to its workers. It was assessed to sales tax for the assessment years 1974, 1975, 1976 and 1978. The Additional Assistant Commissioner of Sales Tax, Indore, being assessing authority, held the canteen sales as exigible to sales tax (annexures "B" and "B/1" to "B/3"). First appeals, preferred under section 38(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e affirmative, i.e., against the Revenue. That decision is reported in [1988] 68 STC 378 (MP); (1987) 20 VKN 351 (Commissioner of Sales Tax v. Hukumchand Mills Ltd.). In recording this answer, the court considered the impact of section 46 of the Factories Act, 1948 and rules 77, 77-A, 78, 79, 80 and 82 of the M.P. Factories Rules, 1962 and concluded that the dominant object of running the canteen was to render service, not to sell food, as a welfare measure enjoined by the Factories Act and Factories Rules on price of food fixed under rule 80 on non-profit basis and as such canteen sales were not exigible to sales tax. In a later decision in the case of Gwalior Rayon Silk (1989) 3 TLD 106 (MP), the court considered section 2(bb) of the Act, inserted vide Act No. 16 of 1985 with effect from April 15, 1965, which defined "business" as an activity with or without a motive to make a gain or profit, and held that canteen sales even when shown to be on non-profit basis fell within definition of "business" and were thus exigible after April 15, 1965. Two Bench decisions thus spoke differently. One ruled non-taxability and the other ruled taxability after introduction of section 2(bb) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Sales Tax Act, supply of food and drinks to the workmen in the canteen maintained by the company in pursuance of the Factories Act is held to constitute business. In [1981] 48 STC 45 (MP); [1981] VKN 134 (Commissioner of Sales Tax v. Bhopal Sugar Industries Ltd., Sehore) it is ruled that section 2(bb) has widened the concept of business. In our view the question still is relatable to object. 9.. The concept of dominant object has been highlighted since 1978. By order on review petition in the case of Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi [1980] 45 STC 212 (SC); AIR 1980 SC 674, it was laid down by the Supreme Court that where dominant object was of sale of food and rendering of services was merely incidental, the transaction would undoubtedly be exigible to sales tax. The authorities were required to ascertain facts and determine upon those facts whether a sale of the food supplied was intended. The core question thus was of object and intention. The Supreme Court considered the aforesaid decision in Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi [1978] 42 STC 386 (SC); [1979] 1 SCR 557; 1978 Tax LR 2316; AIR 1978 SC 1591 and order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les, 1962, as a welfare measure indicated in Chapter V of the Factories Act, 1948, carrying insignia of "welfare" can be called a "dealer" in this regard and whether such a welfare measure, obligated by law, can be termed "business" so as to become dealer's turnover as envisaged by section 2(r) of the Act which defined taxable turnover? Logically, the Supreme Court reiterated again and again that "in every case it would be for the taxing authorities to ascertain the facts in making an assessment under the relevant sales tax law and to determine upon those facts whether a sale of the food supplied is intended". [Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi [1980] 45 STC 212 (SC); (1980) 2 SCR 650]. 12.. If sale is not intended and dominant object is to render service in compliance with the legal mandate, the occupier would not be dealer indulging in such a business. Section 2(bb) of the Act is concerned with trade, commerce, manufacture or any adventure or concern of that nature. If intention is not of sale of food, the transaction would not be liable to be called as trade, commerce, manufacture or any adventure or concern of that nature and thus would not be busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de to their meaning." 16.. Material questions then are whether or not (a) dominant object is to sell food or serve food; (b) service part is merely incidental; (c) occupier of canteen is dealer in this activity; and (d) canteen sales are in the nature of business. 17.. Law is luculent. What is required to be ascertained is whether or not assessee is dealer and whether canteen sales are in the nature of business. Tribunal negatived the in oppugnation and held in favour of the assessee. The assessee is dealer in cloth, not of foodstuff through canteen in the face of dominant object of service. 18.. In [1991] 80 STC 396; AIR 1991 SC 1059 (State of Punjab v. Assessing Authority), the Supreme Court reversed the judgment of the Punjab and Haryana High Court in Civil Appeal No. 1419 (NT) of 1975, decided on November 9, 1990, and following the decision in the case of Government Medical Store Depot v. State of Haryana [1986] 63 STC 198 (SC); AIR 1986 SC 1902reversing the decision reported in [1972] 29 STC 7 (P H); AIR 1972 P H 287 (Government Medical Store Depot v. State of Haryana), held that Hospitality Organisation, Punjab, a of State Government running canteens without profit-moti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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