1964 (4) TMI 101 - HC - VAT and Sales Tax

Summary

Issues:
Determining whether the petitioner, an evangelical Literature Service Society, is considered a dealer under the Madras General Sales Tax Act based on their sales of religious books.

Analysis:
The dispute in this case revolves around whether the evangelical Literature Service Society qualifies as a dealer under the Madras General Sales Tax Act due to its sales of religious books. The Appellate Assistant Commissioner initially ruled in favor of the petitioner, stating that they were not a dealer. However, the Board of Revenue, utilizing its suo motu powers of revision, disagreed with this decision and reinstated the assessment orders. The crux of the matter lies in whether the Society's activities, particularly the purchase and sale of books for profit, align with the definition of a dealer under the Act.

The Board of Revenue's argument hinged on the profit motive behind the Society's sales activities, emphasizing that the Society engaged in buying and selling books with the intention of earning profit up to 25%. The Board contended that even though the Society's profits were not distributed to its members, the commercial nature of the transactions indicated a dealer status. The Act defines a dealer as someone involved in the business of buying, selling, supplying, or distributing goods for valuable consideration. It is crucial for these transactions to be commercially motivated to fall under the Act's purview.

However, the petitioner's main objective, as outlined in its Memorandum of Association, pertains to printing, publishing, and distributing Christian literature. The Society's name, Evangelical Literature Service, further underscores its non-commercial nature. While the Society's rules permit the adoption of normal business means to achieve its objectives, the primary goal remains non-commercial. The court emphasized that engaging in trade or commerce is a prerequisite for dealer classification, and the Society's activities did not exhibit a commercial motive.

In comparing the present case to legal precedents, the court distinguished the circumstances from previous rulings involving income tax deductions and tanners engaged in commercial activities. The court ultimately concluded that the evangelical Literature Service Society does not meet the criteria to be classified as a dealer under the Madras General Sales Tax Act. Consequently, the assessment orders against the petitioner were quashed, and the petitions were allowed with costs awarded in favor of the petitioner in one petition.