1990 (12) TMI 298 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the sales of tender forms by the assessee during the assessment years 1978-79, 1979-80, and 1980-81 are exigible to sales tax under the Rajasthan Sales Tax Act, 1954.

Issue-wise Detailed Analysis:

1. Nature of Business Activity:
The primary issue is whether the sale of tender forms by the assessee, M/s. Hindustan Zinc Limited, constitutes a business activity subject to sales tax. The assessee argued that selling tender forms is not part of its business activities and that the forms are not marketable goods with a profit element. The Rajasthan Sales Tax Act's definition of "business" includes any trade, commerce, or manufacture, and any transaction incidental or ancillary to such activities, regardless of profit motive.

2. Relevant Case Law:
- Madhya Pradesh Electricity Board v. Commissioner of Sales Tax [1968] 21 STC 202 (MP): The Madhya Pradesh High Court concluded that the sale of tender forms was not a business activity. However, this case was based on the unamended definition of "business," which is different from the current definition under the Rajasthan Sales Tax Act.
- Commissioner of Sales Tax v. Madhya Pradesh Electricity Board [1970] 25 STC 188 (SC): The Supreme Court upheld the Madhya Pradesh High Court's decision regarding the non-taxability of tender forms, but this was also based on the unamended definition of "business."
- Board of Trustees of the Visakhapatnam Port Trust v. Commercial Tax Officer [1979] 43 STC 36 (AP): The Andhra Pradesh High Court held that the activities of the Port Trust, including offering tender documents, did not make it a dealer under the Andhra Pradesh General Sales Tax Act.
- Royal Talkies v. Employees' State Insurance Corporation AIR 1978 SC 1478: The Supreme Court observed that activities incidental to the primary business, such as maintaining a cycle stand in a cinema theatre, are connected to the business.
- State of Tamil Nadu v. Binny Ltd. [1982] 49 STC 17 (SC); AIR 1980 SC 2038: The Supreme Court held that running a store for employees is incidental to the primary business of manufacturing textiles.
- H. Anraj v. Government of Tamil Nadu [1986] 61 STC 165 (SC); AIR 1986 SC 63: The Supreme Court ruled that lottery tickets are "goods" and their sale is subject to sales tax.

3. Statutory Interpretation:
- Section 2(cc) of the Rajasthan Sales Tax Act: Defines "business" to include any trade, commerce, or manufacture, and any incidental or ancillary transaction, regardless of profit motive.
- Section 2(f) of the Rajasthan Sales Tax Act: Defines "dealer" as any person engaged in the business of buying, selling, supplying, or distributing goods.

4. Application of Law:
The court examined whether the sale of tender forms is incidental or ancillary to the assessee's primary business of dealing in non-ferrous items. The definition of "business" under the Rajasthan Sales Tax Act is broader and includes activities incidental to the main business. The court found that the sale of tender forms is connected to the assessee's business activities, as these forms allow potential suppliers to participate in bids, which is essential for the assessee's procurement process.

5. Conclusion:
The court concluded that the sale of tender forms by the assessee is incidental and ancillary to its primary business and is therefore subject to sales tax. The revision petitions filed by the assessee were dismissed, and the imposition of sales tax on the sale of tender forms was upheld.

Final Judgment:
The revision petitions filed by the petitioner were dismissed, and the court upheld the imposition of sales tax on the sale of tender forms, concluding that such sales are incidental and ancillary to the assessee's primary business activities.