TMI Blog2014 (6) TMI 793X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of an educational institution is a business nor can it be called a trade since no trading activities are being carried out. Main activity of the petitioner is imparting education and is not business. Any transaction, namely, supply of foodstuff to its residential students which is incidental would not amount to "business" since the main activity of the petitioner could not be treated as a commerce or a business. The incidental activity of supplying foodstuff would not come within the meaning of the word "business" as defined under section 2(6) of the Act. Consequently, since no business is being carried out and there is no sale, the petitioner would not come within the meaning of the word "dealer" as defined under the Act. - issuance of notice proposing to make an assessment under the Act on the supply of foodstuff to the residential students is patently without jurisdiction. The said notices are consequently quashed - Decided in favour of assessee. - 1642, 2019,2026,2160,2227 of 2009 - - - Dated:- 7-7-2011 - TARUN AGARWALA, J. TARUN AGARWALA J. This group of petitions raises a common question and is being decided together. For facility, the facts of Writ Petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale under the Act. The petitioner submitted a reply dated September 14, 2009 indicating therein that the petitioner is not a dealer nor doing any business in supply of food and is only imparting education to the students for which the supply of food is only an incidental. The petitioner, being aggrieved by the issuance of the notice, has filed the present writ petition praying for the quashing of the notice dated June 2, 2009 for the assessment years 2005-06, 2006-07, 2007-08 and 2008-09 and for a direction restraining the respondents from making any assessment pursuant to the notice dated June 2, 2009. Similar petitions, claiming similar relief, have been filed by the other petitioners. The contention of the petitioner is, that the primary and predominant activity of the petitioner is to impart education to the students, which is not a business activity and that the supply of foodstuff to its residential students is only an incidental activity which does not amount to a sale nor such activity amount to business as contemplated under the Act. The petitioner contends that the petitioner is not carrying on the business of foodstuff and is not a dealer carrying on the busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 3 which provides that a sale made by a dealer or a person who carries on the business of taxable goods is liable to pay tax at such rates provided under the Act. The relevant portion of section 3 of the Act is extracted hereunder: 3. Incidence of tax. (1) Tax shall be levied and charged in accordance with the provisions of this Act on every sale made within the State by a dealer or a person; (2) Every person who is registered or is liable to be registered under the provisions of this Act shall be a taxable person and liable to pay tax in the manner provided in the Act. (3) Subject to provisions of sub-section (4) or sub-section (5) as may be applicable, every dealer or a person shall pay from the date he becomes so liable, a tax for each assessment year on his turnover, to be determined in the prescribed manner, of all sales inside the State, made on or after the date he becomes liable to pay tax at such rates as provided by or under section 4 of the Act. (4) Where a dealer carries on the business of (a) sale of any taxable goods in the course of inter-State trade or commerce; or (b) sale of any taxable goods in the course of export out of the terri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod) for cash, deferred payment or other valuable consideration; (e) a supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration; (f) any supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or drink (whether or not intoxicating) where such supply or service is for cash, deferred payment or other valuable consideration; (g) a transfer of property in goods by an auctioneer referred to in clause (g) of sub-section (11) or sale of goods by any dealer in the course of any other activity in the nature of banking or insurance, who in the course of his main activity also sells goods repossessed or reclaimed; And such delivery, transfer or supply of any goods under clauses (a) to (g) above shall be deemed to be the sale of those goods by the person making the delivery, transfer or supply, and purchaser of those goods shall be the person to whom such delivery, transfer or supply is made; Explanation 1. A sale or purchase shall not be deemed to have taken place inside the State if the goods are sold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith a motive of profit. Person has also been defined under section 2(27) which is extracted hereunder: 2. (27) Person includes (a) an individual; (b) a joint hindu family; (c) a company or a corporation; (d) a firm; (e) an association of persons or a body of individuals, whether incorporated or not; (f) the Central Government or the Government of Uttaranchal or the Government of any other State or Union Territory in India; (g) a local authority, a club, a society or trust; Business has been defined under section 2(6) of the Act which is extracted hereunder: 2. (6) Business includes any trade, commerce or manufacture; or (b) any adventure or concern in the nature of trade, commerce or manufacture; or (c) any transaction in connection with, or incidental or ancillary to such trade, commerce, manufacture, adventure or concern; or (d) any occasional transaction in the nature of such trade, commerce, manufacture, adventure or concern whether or not there is volume, frequency, continuity or regularity of such transaction, whether or not such trade, commerce, manufacture, adventure or concern is carried on with a motive to make gai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer had no jurisdiction to initiate proceedings for the levy of sales tax. In Swadeshi Cotton Mills Company Limited v. Sales Tax Officer [1964] 15 STC 505 (All); AIR 1965 All 86, the Aligarh Muslim University was maintaining dining halls, wherein it served food and refreshments to its resident students. The Sales Tax Officer held the Aligarh Muslim University to be a dealer under the U. P. Sales Tax Act on the ground that it was selling foodstuff to its students. The Allahabad High Court held that the University is an educational institution and its activities were predominantly academic and was not engaged in the business of supply of food to its students which was only incidental to its main activity of imparting education and, consequently, the university was not a dealer as defined under section 2(c) of the U. P. Sales Tax Act. In University of Delhi v. Ram Nath AIR 1963 SC 1873, the Supreme Court, while considering the question as to whether the University of Delhi was an industry within the meaning of the Industrial Disputes Act, held that the distinctive purpose and objective of education would make it very difficult to assimilate it to the position of any trade, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear exceeds the limits specified therein, is liable to payment of tax under the Act on his turnover of sales or purchases. Although the Act provides for levy of tax on the sales or purchases of certain goods in the State of Maharashtra, the levy is restricted only to sales or purchases made by dealers. As is manifest from section 3 itself, the liability to pay sales tax is only on the dealers. From the combined reading of sections 3, 2(5A) and 2(11) of the Act, it follows that the tax under the Act is leviable on the sales or purchases of taxable goods by a dealer and not by every person. From the facts of the present case, the sole object of the assesseeTrust is to spread the message of Saibaba of Shridi. It is also not disputed that the books and literature, etc., containing the message of Saibaba were distributed by the Trust to the devotees of Saibaba at cost price. There is no dispute that the primary and dominant activity of the Trust is to spread the message of Saibaba. This main activity does not amount to business . The activity of publishing and selling literature, books and other literature is obviously incidental or ancillary to the main activity of spreading messag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er under section 2(11) of the Act. From the aforesaid, it is clear that a tax is leviable on the sale of taxable goods by a dealer where the business of sale of that taxable goods is a primary and a dominant activity. The Supreme Court further held that if the main activity was not a business, then any transaction incidental or subsidiary to it would not amount to a business unless the main intention was to carry on the business. In Visakhapatnam Port Trust v. Commercial Tax Officer [2002] 127 STC 393 (AP), the court held that the activity of the port trust was not a business activity and that the port trust could not be treated as a dealer within the ambit of section 2(e) of that Act nor could it be subjected to a tax liability since the main activity of the port trust was not a business activity. In State of Tamil Nadu another v. Board of Trustees of the Port of Madras [1999] 114 STC 520 (SC), the Supreme Court held (page 528 in 114 STC): 14. The words carrying on business require something more than merely selling or buying, etc. Whether a person carries on business in a particular commodity must depend upon the volume, frequency, continuity and regularity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tivity of the petitioner does not amount to a commercial activity nor is a trade or business as held by the Andhra Pradesh High Court in Gowtham Residential Junior College [2009] 19 VST 305 (AP). In the opinion of the court, such education being imparted by the petitioner is neither a commercial activity nor a trade nor does it amount to business . It cannot be contended that the establishment of an educational institution is a business nor can it be called a trade since no trading activities are being carried out. In University of Delhi AIR 1963 SC 1873, the Supreme Court held that imparting of education was a mission or a vocation rather than a trade or business. This court is of the opinion that imparting education cannot be treated as a trade or business and that education cannot be allowed to be converted into a commerce nor such activity could be a trade or business contemplated under article 19(1)(g) of the Constitution. In the light of the aforesaid, the main activity of the petitioner is imparting education and is not business. Any transaction, namely, supply of foodstuff to its residential students which is incidental would not amount to business since the main acti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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