1971 (11) TMI 151 - HC - VAT and Sales Tax

Summary

Issues: Whether the activity of the managing committee, in selling bhog, constitutes business?

Analysis:
The judgment pertains to a reference made under the U.P. Sales Tax Act regarding the activity of a managing committee selling bhog at a temple. The appellate authority found that the primary objective of the committee was to provide for the worship of the Deity, with the offering of bhog being incidental. It was observed that devotees did not come to the temple with the intention of making purchases, and there was no bargaining involved in the transaction. The quantity of bhog offered did not correlate with the cash deposited by the devotees, indicating a lack of intention for buying and selling. However, the judge in revision held that the continuous activity of selling bhog constituted a business, making the committee liable for tax.

The court analyzed the definitions of "dealer" and "sale" under the U.P. Sales Tax Act to determine tax liability. It was highlighted that for the committee to be assessed, it must be shown that they sell bhog and carry on the business of selling bhog to devotees. The court emphasized that a sale involves a contract, which necessitates a bargain between parties. In this case, the absence of negotiation and settlement regarding the quantity of bhog offered indicated a lack of a contractual agreement. The court inferred that devotees made cash offerings to the Deity and received Prasad in return, emphasizing the spiritual nature of the transaction rather than a commercial sale.

Furthermore, the court examined whether the managing committee engaged in the business of selling bhog. It was noted that the activity of providing bhog was incidental to the worship and offerings at the temple, with no commercial motive involved. Drawing parallels to a previous case involving the sale of religious literature, the court emphasized that a non-commercial objective does not transform into a commercial activity based on the means employed. Ultimately, the court concluded that the committee was not a dealer under the Sales Tax Act and did not conduct the business of selling bhog, thereby ruling in favor of the assessee.

In conclusion, the judgment provides a detailed analysis of the nature of the transaction involving the sale of bhog by a temple managing committee. By interpreting the legal definitions and considering the absence of a commercial motive, the court determined that the committee's activities did not amount to a taxable sale or business under the U.P. Sales Tax Act.