1956 (2) TMI 45 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Definition and interpretation of "business of selling or supplying goods" under section 2(c) of the Bombay Sales Tax Act.
2. Determination of whether the Ahmedabad Education Society qualifies as a "dealer" under the Act.
3. Consideration of profit motive in defining business activity.

Issue-wise Detailed Analysis:

1. Definition and Interpretation of "Business of Selling or Supplying Goods" under Section 2(c) of the Bombay Sales Tax Act:
The judgment delves into the connotation of "business of selling or supplying goods" as used in section 2(c) of the Bombay Sales Tax Act. The court emphasized that the activity must be more than just selling; it must constitute carrying on the business of selling or supplying goods. The court noted that the Legislature intended to tax business activities rather than mere acts of selling. It was highlighted that the definition of "dealer" includes entities engaged in the business of selling or supplying goods, and not just any sale or supply of goods. The court rejected the Advocate-General's argument that continuous or serious selling activities, devoid of a business characteristic, could be taxed under this provision.

2. Determination of Whether the Ahmedabad Education Society Qualifies as a "Dealer" under the Act:
The court examined the activities of the Ahmedabad Education Society to determine if they constituted carrying on the business of selling or supplying goods. The society's primary objective was to construct buildings for educational purposes, and it set up a brick factory and lime kilns to economize on construction costs. The court found that the society's intention was not to sell bricks but to use them for its own construction projects. The surplus bricks were sold to prevent deterioration, and importantly, these sales were made at cost price without any profit. The court concluded that these activities did not amount to carrying on the business of selling or supplying goods, thus the society did not qualify as a "dealer" under section 2(c).

3. Consideration of Profit Motive in Defining Business Activity:
The court addressed the question of whether a profit motive is essential for an activity to be considered a business. Although the Tribunal had opined that the absence of a profit motive means the activity cannot be regarded as a business, the court found it unnecessary to decide this issue definitively for this case. The court observed that the absence of profit motive was a significant factor but not the sole determinant. The crucial factor was the absence of any intention to sell the goods at the time of their production or importation. The court noted that if the society had intended to sell the bricks or steel from the outset, the situation might have been different, but this was not the case here.

Conclusion:
The court upheld the Tribunal's view that the Ahmedabad Education Society could not be declared a "dealer" within the meaning of section 2(c) of the Sales Tax Act. The reference was answered in the negative, and the applicant was ordered to pay the costs. The judgment emphasizes the importance of the intention behind the activities and the distinction between business activities and mere acts of sale, especially in the context of taxing statutes.