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BHAILAL AMIN GENERAL HOSPITAL Versus STATE OF GUJARAT AND 1

2016 (8) TMI 670 - GUJARAT HIGH COURT

Scope of the term Dealer - a public charitable trust running and maintaining a public hospital - Held that:- Since the appellant being a charitable trust, is doing the activity of purchasing, selling and supplying medicines to patients in order to achieve its avowed objects, it is not engaged in business activity and therefore, the appellant is not a dealer within the meaning of Exception (iii) to section 2(10) of the Act. In that view of the matter, we answer the question in favour of the appel .....

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2003, ( the Act for short) the appellant has challenged the order of the Gujarat Value Added Tax Tribunal (hereinafter referred to as the Tribunal ) whereby the Tribunal has held that the appellant is dealer within the meaning of section 2(10) of the Act. 2. These appeals were admitted by this court for consideration of the following substantial questions of law: Tax Appeal No. 1673 of 2009: Whether the Gujarat Value Added Tribunal substantially erred in law in upholding Determination Order date .....

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rovisions embodied in section 2(10) of the Gujarat Value Added Tax Act, 2003 so as to hold that the appellant would not be entitled to the exemption from the definition of dealer thereunder vide Exception (iii) thereof? Tax Appeal No. 2478 of 2009: (1) Whether the Hon ble GVAT Tribunal was right in law in upholding the order of the Jt. Commissioner, holding the appellant as a dealer within the meaning of section 2(10) of the GVAT Act and is not covered by Explanation (iii) (2) Whether the Hon bl .....

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, the appellant is not a dealer: Exception - The following shall not be deemed to be a dealer within the meaning of this clause, namely, (I) and (ii) xxxxxxxx (iii) a charitable, religious or educational institution, carrying on the activity of manufacturing, buying, selling or supplying goods, in performance of its functions, for achieving its avowed objects, which are not in the nature of business . 3.1 He has further contended that the appellant being a charitable trust is not engaged in busi .....

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very person is not "dealer" but only those persons "who carry on the business" by buying or selling goods are regarded as "dealers". From the very definition of dealer, it follows that a person would not be a dealer in respect of the goods sold or purchased by him unless he carries on the business of buying and selling such goods. "Dealer" and "person" are separately defined in Section 2(11) and Section 2(19) of the Act respectively. "Person .....

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t is clear from charging Section 3 that every dealer, whose turnover of sale or purchase during any year 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. Fr .....

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e 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 message of Saibaba and not to any business as such even without profit motive and it is in a way a means to achieve the object of the Trust through which message of Saibaba is spread. It is clear from .....

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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 ac .....

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ence of trade, commerce etc. The definition of "dealer" contained in Section 2(11) of the Act clearly indicates that in order to hold a person to be a "dealer", he must carry on business and then only he may also be deemed to be carrying on business in respect of transaction incidental or ancillary thereto. We have stated above that the main and dominant activity of the Trust in furtherance of its object is to spread message. Hence, such activity does not amount to "busi .....

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not pharmaceutical activity but hospital activity and therefore, the appellant is not engaged in business and not a dealer. In that view of the matter, the order of the Tribunal is required to be reversed. He submitted that pharmaceutical activities are carried out at concessional rate, making loss. 4. Learned Assistant Government Pleader Mr. Hardik Vora appearing for the respondent State has contended that the trust, doing the activity of buying, selling and supplying of medicines to the patien .....

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