TMI Blog2014 (7) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... cost. The price, as contended by learned counsel for the University, of the prospectus during the relevant period was ranging from ₹ 350-Rs.500. We have perused the prospectus for the relevant period, which, in our opinion, was on the higher side. Therefore, it cannot be stated that there was no profit motive as claimed by the University. Merely because, the University was established for imparting education does not mean that it is not indulging in the business so as to make profit out of the sale of prospectus and application forms. Their intention to make profit is clear from the facts and figures placed on record. Having regard to meaning of the word "prospectus", we have no doubt that the prospectus of the University cannot be treated as "book" or "book meant for reading". It is a printed document which could be called a brochure or a catalogue or a printed document detailing the courses, facilities etc. of their colleges. In any case, it cannot be treated as a book meant for reading as is known in common parlance. The prospectus of the University cannot be treated even as periodical or journal. sale of prospectus and application forms would fall under Entry 71 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ier, the order of the Assessing Authority was thereafter confirmed by the Appellate Authority and so also by the Tribunal. 3. The petitioner is a registered dealer, both under the provisions of the Act and Central Sales Tax Act, 1956 (for short 'CST Act'). The certificate issued under the Act was in Form VAT 7 under Rule 9(1) of the Karnataka Value Added Tax Rules, 2005 (for short the Rules). The TIN Number issued to the petitioner was 29040451525, both for the Act and CST Act. In the Form VAT 7, which is a prescribed form of the certificate, it is clearly stated that M/s. Manipal University has been registered as a dealer under Section 22 of the Act and its principal place of business is Manipal E.D.U., Madhava Nagar, Manipal-576104 . The certificate further mentions the additional places of business. 4. It is against this backdrop, the following questions of law fall for our consideration: (i) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in upholding the view taken by the authorities below that the University is engaged in the activity of the sale of prospectus and application forms so as to attract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther High Courts in State of Tamil Nadu v. Board of Trustees of The Port of Madras [1999] 114 STC 520 (SC), CST v SAI Publication Fund [2002] 126 STC 288(SC), Morarji Bros (Import Export) (P.) Ltd. v. State of Maharashtra [1995] 99 STC 117 (Bom), State of Gujarath v. Raipur Mfg. Co. Ltd. [1967] 19 STC 1 (SC) and Mahatma Gandhi Kashi Vidyapeeth v. State of U.P [2013] 64 VST 271 (All). 6.1 In the alternative, she invited our attention to Entry 11 of the First Schedule to contend that sale of prospectus and application forms is exempted from tax under sub-section (1) of Section 5 and, therefore, it is not liable to be taxed. Further, she invited our attention to Entry 71 in the Schedule to contend that printing and selling of prospectus, in any case would not fall under Entry 71 which speaks about printed material other than the books meant for reading and stationery articles mentioned therein. She submitted that the prospectus are books meant for reading, and therefore, would not fall under this entry. 7. On the other hand, Smt.Sujatha, learned Government Advocate submitted that after having registered as a dealer under Section 22 of the Act and under the provisions of CST Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a trader. Though the University in their application Form-VAT-1 under Rule 4(i) of the Rules mentioned certain items/goods for which they sought registration, from plain reading of the provisions of the Act and in particular Rule 9(1), it cannot be stated that the registration certificate was granted for sale of any particular commodities/items/goods. 9. Section 2(12) defines 'dealer', which means any person who carries on the business of buying, selling and supplying or distributing goods, directly or otherwise, whether for cash or for deferred payment, or for commission, remuneration or other valuable consideration and it includes several other categories as mentioned in this provision. Section 2(34), defines 'taxable turnover' to mean that the turnover on which a dealer shall be liable to pay tax as determined after making such deductions from his total turnover, and in such manner as may be prescribed. 'Total turnover' is defined by Section 2(35) to mean the aggregate turnover in all goods of a dealer at all places of business in the State. Section 2(36) defined turnover' to mean the aggregate amount for which goods are sold or distributed or d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elling of any particular commodity or goods, but it is general in nature. Once a dealer obtains such certificate, he is obliged to file return in Form VAT 100 of the Act in respect of turnovers of all sales made by it/him. The dealer, on its/his own cannot decide to exclude sale of any particular commodity/item. In the instant case, the University being a registered dealer, is liable to be taxed for all sales made by it. In other words, every transaction of sale should reflect in the return filed in Form VAT 100. It was not open to them to exclude prospectus from the return. 10. We have, as stated earlier, perused the definitions of 'business' , 'dealer', 'sale', 'taxable turnover' and 'total turnover'. The definitions of these expressions in the Act and the Value Added Tax Act of several other States are similar, in particular Tamil Nadu General Sales Tax Act and Bombay Sales Tax Act. The Supreme Court in Board of Trustees of the Port of Madras (supra), had an occasion to deal with these definitions and other relevant provisions of the Tamil Nadu Government Sales Tax Act. In this judgment, the Supreme Court also considered the expres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Sai Baba of Shirdi for spreading his message, could be held to be a dealer, in respect of sale books, booklets, pamphlets, photos, stickers and other publications containing message of Sai Baba and the turnover on such publication could be assessed to sale tax under the Bombay Sales tax Act. The following observations made by the Supreme Court in this case in paragraph-11 are relevant for our purpose, which read thus : No doubt, the definition of business given in section 2(5A) of the Act even without profit-motive is wide enough to include any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture and any transaction in connection with or incidental or ancillary to the commencement or closure of such trade, commerce, manufacture, adventure or concern. If the main activity is not business, then any transaction incidental or ancillary would not normally amount to business unless an independent intention to carry on business in the incidental or ancillary activity is established. In such cases the onus of proof of an independent intention to carry on business connected with or incidental or ancillary sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... frequency, continuity and regularity of transactions of sale and purchase are satisfied in the instant cases.. (Emphasis supplied) 13. The Allahabad High Court in Mahatma Gandhi Kashi Vidyapeeth (supra) after considering the definition of 'dealer' and 'business' on the facts of that case observed that the element of business, i.e., motive on the part of the University to indulge in any business activity was totally lacking and statutorily impossible. The University in that case was established under the U.P. State Universities Act, 1973 to impart education in various discipline of higher education and research. In that case, the High Court observed that, it was a matter of mere convenience for students and university to get the forms printed for a price and not more than that and thus, the University was not a 'dealer' within the meaning of Section 2(h) of the U.P. Value Added Tax Act and, its activities of printing and selling of admission forms to the students did not amount to business within the meaning of Section 2(e) of the Act. 14. It is well settled that if the main activity is not business, then the connected, incidental or ancillary activit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sold the prospectus and application forms at cost. The price, as contended by learned counsel for the University, of the prospectus during the relevant period was ranging from Rs.350-Rs.500. We have perused the prospectus for the relevant period, which, in our opinion, was on the higher side. Therefore, it cannot be stated that there was no profit motive as claimed by the University. Merely because, the University was established for imparting education does not mean that it is not indulging in the business so as to make profit out of the sale of prospectus and application forms. Their intention to make profit is clear from the facts and figures placed on record. 16. That apart, once having registered as a dealer under Section 22 of the Act the total turnover would mean aggregate turnover in all goods of a dealer at a place of business in the State, whether or not the whole or any portion of such turnover is liable to tax. The University cannot conveniently take a stand that they were registered as dealer and certificate issued by the concerned authority was only for the sale of medicines and equipments in the hospital and not for the sale of prospectus and application forms. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther relevant information about them. Even in common parlance, the word prospectus is understood to mean a written catalogue or brochure or printed document that offers a plan as of school/college courses to take. The idea of a prospectus is to offer a variety of options and the plan of action in order to attract a desired participation. In our opinion, 'prospectus' is not a book. 20.2 The word book fell for consideration of the High Court of Kerala at Ernakulam, in Swaraj Printers v. State of Kerala [1973] 31 STC 559. Kerala High Court considered the question whether these 'books' are books meant for reading or for reference . The books in question were giving details regarding various blends of tea, estates from where they are available and the quantities available in each estate. While dealing with this question it was observed in a taxing statute, particular words have to be given their ordinary meaning. When a person uses the word book , an ordinary person understands by that expression a book meant for reading purposes. In the explanation referred to earlier, the object is made clear by expression meant for reading or reference. The object is further ..... 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