1995 (2) TMI 391 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the trust, Sai Publication Fund, can be considered a 'dealer' under the Bombay Sales Tax Act, 1959.
2. Interpretation of the term 'business' as defined in the Bombay Sales Tax Act, 1959, particularly after the amendments by Maharashtra Act No. 9 of 1989.

Issue-Wise Detailed Analysis:

1. Whether the trust, Sai Publication Fund, can be considered a 'dealer' under the Bombay Sales Tax Act, 1959:

The primary issue was whether the trust, established to spread the message of Saibaba of Shirdi, could be classified as a 'dealer' in respect of its activities of publishing and selling books, booklets, and other related materials. The trust was created by four devotees and its sole object was to spread Saibaba's message. The publications were sold at nominal charges to cover costs, and the proceeds were used only for the trust's objectives.

The Deputy Commissioner of Sales Tax initially determined that the trust's activities amounted to 'business' under section 2(5A) of the Act, making it a 'dealer' under section 2(11) and thus liable for sales tax. The Tribunal, however, disagreed, holding that the trust was not a dealer as its activities did not constitute business in the traditional sense of trade, commerce, or manufacture.

2. Interpretation of the term 'business' as defined in the Bombay Sales Tax Act, 1959, particularly after the amendments by Maharashtra Act No. 9 of 1989:

The definition of 'business' was crucial in this case. Originally, 'business' included any trade, commerce, manufacture, or any adventure or concern in the nature of trade, commerce, or manufacture. The definition was expanded by Maharashtra Act No. 9 of 1989 to include activities carried on without a profit motive.

Despite this broad definition, the court noted that the term 'business' still implied some real, substantive, and systematic activity. The court referenced several Supreme Court decisions to clarify that the mere absence of a profit motive did not automatically classify an activity as business. The activity must still be one that, in ordinary connotation, is regarded as business.

The court concluded that the primary activity of the trust was to spread the message of Saibaba, which is not a business activity. The incidental activity of publishing and selling literature to support this primary objective also could not be considered business. Thus, the trust could not be classified as a 'dealer' under section 2(11) of the Act.

Conclusion:
The High Court answered the reference in the affirmative, holding that the trust, Sai Publication Fund, was not a 'dealer' under the Bombay Sales Tax Act, 1959, and thus not liable for sales tax on the sale of its publications. The court emphasized that the primary and dominant activity of the trust was not business, and the incidental activity of selling literature to further its main objective also did not constitute business. Therefore, no tax could be levied on the amounts received from such sales.