2007 (4) TMI 642 - HC - VAT and Sales Tax

Summary

Issues Involved: The judgment addresses the issue of whether private educational institutions running hostels for students can be taxed under section 6A of the Andhra Pradesh General Sales Tax Act, 1957 for purchasing foodstuffs from unregistered dealers and providing them to students.

Summary:

The judgment by the Andhra Pradesh High Court, delivered by Bilal Nazki J., pertains to writ petitions and revisions involving private educational institutions running hostels for students. The controversy revolves around the taxation of food purchases made from unregistered dealers and supplied to students under section 6A of the Act. The Sales Tax Appellate Tribunal ruled in favor of the Revenue, leading to the petitions and revisions.

The petitioners argue that the primary objective of these institutions is to provide education, necessitating hostels for student accommodation and food provision. They contend that the institutions are not engaged in business activities as defined under section 2(1)(bbb) of the Act, citing legal precedents such as the judgment in Indian Institute of Technology v. State of Uttar Pradesh [1976] 38 STC 428.

Referring to various court decisions, including State of Tamil Nadu v. Board of Trustees of the Port of Madras [1999] 114 STC 520 and Commissioner of Sales Tax v. Sai Publication Fund [2002] 126 STC 288, the judgment emphasizes the distinction between incidental and integral activities to the main function of an institution. It cites precedents like Deputy Commissioner (C.T.) v. South India Textile Research Association [1978] 41 STC 197 and Visakhapatnam Port Trust v. Commercial Tax Officer [2002] 127 STC 393 to support the view that certain activities, like providing food to students, are not subject to sales tax.

Ultimately, the High Court concludes that purchasing food items for students in hostels cannot be taxed under the Sales Tax Act, aligning with the view that education is a non-commercial activity. Citing University of Delhi v. Ram Nath AIR 1963 SC 1873, the judgment allows the writ petitions and revisions, setting aside the impugned orders without costs.