1991 (1) TMI 408 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of the term "business" in the Gujarat Sales Tax Act, 1969 in relation to the activity of buying newsprint, printing-ink, and other materials necessary for printing and publishing a newspaper.

Detailed Analysis:

The judgment pertains to a reference made by a private limited company, engaged in the publication and sale of a newspaper, to determine whether it qualifies as a "dealer" under the Gujarat Sales Tax Act, 1969. The company sought clarification on whether its activities of purchasing materials for printing and publishing a newspaper fall within the definition of a dealer as per the Act. The Deputy Commissioner of Sales Tax initially ruled in favor of considering the company as a dealer, a decision which was upheld by the Gujarat Sales Tax Tribunal after an appeal by the company. Subsequently, the company applied for a reference to the High Court, leading to the present judgment.

The core issue before the court was the interpretation of the term "business" as defined in the Act, specifically in the context of whether it should be narrowly construed to cover only goods as defined in the Act or be understood more broadly to include activities related to articles beyond goods. The court emphasized that the definition of "goods" in the Act excludes newspapers due to constitutional provisions. However, the definition of "business" is inclusive and encompasses activities beyond goods. The court highlighted that the legislature did not expressly exclude activities related to articles other than goods from the purview of business under the Act.

The court rejected the contention that business activities related to newspapers should be excluded from the definition of business, stating that such an interpretation would amount to rewriting the statute, a function reserved for the legislature. The court emphasized that the literal interpretation of the statute, without imposing restrictions, aligns with the legislative intent of not subjecting newspapers to sales tax. Additionally, the court dismissed the argument that interpreting business narrowly would lead to tax evasion, asserting that such an interpretation would be absurd and not in line with the legislative objectives.

Ultimately, the court upheld the Tribunal's decision, affirming that the company's business activities related to purchasing materials for printing and publishing a newspaper do not fall outside the scope of the definition of a dealer under the Gujarat Sales Tax Act, 1969. The court answered the reference in the affirmative, with no order as to costs, indicating the company's status as a dealer for tax purposes.