1975 (1) TMI 74 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the respondent is considered a dealer under the Bombay Sales Tax Act, 1959?

Analysis:
The judgment delivered by the Bombay High Court pertains to a reference under section 61(1) of the Bombay Sales Tax Act, 1959. The case involved a public charitable trust conducting an institution called Udyog Griha, managed by a committee of the trust. The trust's main objective was to provide employment to poor and distressed women by preparing and selling eatables. The Deputy Commissioner of Sales Tax initially concluded that the trust was a dealer as profits were made continuously, exceeding prescribed limits. However, the Sales Tax Tribunal overturned this decision, stating that the trust's activities were not commercial but charitable in nature. The Tribunal emphasized that profits were utilized to extend relief activities for the destitute women, not for commercial gain. The main issue was whether the respondent could be classified as a dealer under the Act.

The definition of a "dealer" under section 2(11) of the Act requires a person to be engaged in buying or selling goods as a business. The Court considered the motive behind the trust's activities, emphasizing that the purpose was to ameliorate the living conditions of destitute women, not for profit-making. The Court referred to precedents like State of Andhra Pradesh v. Abdul Bakshi & Bros. and State of Gujarat v. Surat Panjarapole to support its decision. These cases highlighted that activities carried out with a charitable motive, even if resulting in profits, do not constitute business activities for tax purposes.

Additionally, the Court cited V.K.S.V. Sangh Ltd. v. State of Maharashtra, where a society transporting fish was not considered a dealer for selling ice incidentally. Similarly, in the present case, the trust's activities were in direct furtherance of its charitable objectives, making any profits incidental. The Court distinguished the case from Commissioner of Commercial Taxes v. Evangelical Literature Service, where profit-making was the primary aim, unlike the charitable activities in the current scenario.

In conclusion, the Court held that the trust's activities did not amount to business dealings under the Act. The trust was not considered a dealer as its actions were primarily charitable, with any profits being utilized for extending relief activities. Therefore, the question of whether the respondent was a dealer under the Act was answered in the negative, affirming the Tribunal's decision.