2001 (7) TMI 1271 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether selling drinking water by a port trust to ships constitutes "business" under the Andhra Pradesh General Sales Tax Act, 1957.

Analysis:
The judgment of the High Court of Andhra Pradesh involved a writ petition addressing the issue of whether the activity of a port trust in selling drinking water to ships can be considered as "business" under the Andhra Pradesh General Sales Tax Act, 1957. The petitioner, a port trust, was challenged by a notice from the Commercial Tax Officer demanding payment of tax for the water supplied to ships. The petitioner argued that selling water was an incidental activity and not the primary function of the port trust, citing relevant case law to support their position. On the other hand, the Special Government Pleader for Taxes contended that the notice demanding tax for the water sold was valid, relying on different judgments.

In the judgment, the court referred to a previous case involving the Madras Port Trust to establish the principle that if an activity is incidental and not the dominant business activity, it cannot be considered as "business" for tax purposes. The court analyzed the statutory duties of the port trust, highlighting that providing water to visiting vessels was a statutory obligation and an incidental function, not the primary activity of the port trust. The court also referenced a previous judgment involving the Visakhapatnam Port Trust, which had concluded that the port trust was not a "dealer" under the APGST Act for various activities, including supplying water to vessels. The court distinguished the cited judgments by the Special Government Pleader for Taxes, emphasizing that they did not directly address the specific issue at hand in the current case.

Ultimately, the court allowed the writ petition, quashing the impugned notice and ruling in favor of the port trust. The judgment concluded with a decision in favor of the petitioner, stating that no costs were to be awarded.