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1968 (6) TMI 59 - HC - VAT and Sales Tax
Issues:
1. Whether the opponent is a dealer under the Bombay Sales Tax Act, 1959, and liable for registration? 2. Whether the sales of carcasses of animals, unginned cotton, milk, and dung as fertilizer are taxable under the Bombay Sales Tax Act, 1959? Analysis: 1. The definition of "dealer" under the Acts requires the person to carry on the business of buying or selling goods in the State. Mere buying or selling is not sufficient; there must be a business activity. Legal precedents emphasize the need for a profit motive and a systematic course of activity to constitute a business. The institution in question, a charitable Panjarapole, primarily aims to preserve the lives of animals. The sales of milk, dung, and carcasses are incidental to its charitable activities and do not signify a profit-motivated business. The exception applies to the sale of unginned cotton grown on the institution's land, exempting it from being deemed a dealer. 2. The institution's essential character is charitable, focused on animal welfare, with incidental sales of animal products. The frequency of sales, as argued by the Advocate-General, does not alter the institution's charitable nature. The sales of animal products are not indicative of a business activity but are part of the institution's core charitable purpose. Therefore, the sales of these items do not amount to taxable transactions under the Acts. The balance sheet's disclosure of sales does not change the institution's fundamental charitable nature or convert its activities into profit-driven business operations. Conclusion: The High Court held that the opponent institution is not a dealer under the Acts, given its charitable nature. As a result, the institution is not liable for registration. Additionally, the sales of carcasses of animals, unginned cotton, milk, and dung as fertilizer are not subject to tax under the Bombay Sales Tax Act, 1959. The Court ruled in favor of the institution, and the State was directed to bear the costs of the reference.
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