1982 (12) TMI 169 - HC - VAT and Sales Tax

Summary

Issues involved: Interpretation of the definition of "dealer" and "business" under the A.P. General Sales Tax Act in relation to the operation of a canteen by a government organization.

Summary:
The petitioner, a government organization maintaining a canteen for its employees, contested the taxation of canteen turnover under the A.P. General Sales Tax Act. The contention was that the canteen activity, carried out to comply with a statutory obligation, does not constitute "business" and therefore the petitioner is not liable to pay tax. The Sales Tax Appellate Tribunal upheld the tax liability, leading to the tax revision cases before the High Court.

In interpreting the relevant provisions, the Court considered the definitions of "dealer" and "business" under the Act. The definition of "dealer" includes any person engaged in buying, selling, or distributing goods, while "business" encompasses various commercial activities. The petitioner argued that since its main activity is not business, the canteen operation should not be considered business either. However, the Court disagreed, stating that ancillary activities can still be classified as business even if the main activity is not.

The Court acknowledged that the canteen operation was integral and inseparable from the petitioner's main activity, serving a statutory obligation and forming a minor part of its overall functions. Drawing on precedents involving similar situations, the Court concluded that the canteen transactions, being an integral part of the petitioner's non-business activity, cannot be taxed under the Act. Therefore, the petitioner was not deemed a "dealer" for tax purposes.

As a result of the above reasoning, the tax revision cases were allowed in favor of the petitioner, with no costs imposed. The advocate's fee was set at Rs. 500 consolidated.