2015 (4) TMI 393 - HC - VAT and Sales Tax

Business Activity or not - Imparting of education - Whether a University/Institution, whose dominant activity or the main activity is imparting education to the students merely, by providing cement, iron and steel by it to its contractors for execution of civil work and providing prospectus to the prospective students by it, can be said to be a business activity or otherwise and could the institution be a dealer - Held that - A reading of all the Sections, shows that it prescribes that a person, may be a University or an Institution/Society or otherwise who may carry on any trade, commerce or manufacturing activity or in the nature of trade, commerce or manufacturing and whose even incidental or ancillary activity is in the nature of trade, commerce and manufacturing or even occasional transaction in the nature of such trade, commerce, manufacturing, then it comes within the definition of a business. A dealer has been defined to be any person who carries on business in any capacity of buying, selling or supplying and distributing goods directly or otherwise or making purchases or sales as defined in clause 35 for himself or others, a factor, broker, commission agent etc. etc.. A dealer is one who also can be said to be an importer of goods or manufacturer. If the main activity is not business, then the connected, incidental or ancillary activities would not normally amount to business unless an independent intention to conduct business in these connected, incidental or ancillary activities is established by the revenue. (See Board of Trustees of the Port of Madras) (1999 (3) TMI 500 - SUPREME COURT OF INDIA). In such cases the onus of proof of an independent intention to carry on business connected with or incidental or ancillary would rests on the department. Banasthali Vidyapeeth is also a deemed University and publication of prospectus contains activities of the University, courses, syllabus, applications, fees etc. Making it available to the students for their information, knowledge,consideration and applying for admission to the course found suitable is ancillary, incidental and essential to its main and predominant object to impart education. It is well known that Banasthali Vidyapeeth is first in the State of Rajasthan for girls education and a pioneer institution serving for the last several decades. Its activity of printing and selling of prospectus is not main activity and would not amount to business . Imparting of education cannot be said to be in the nature of business activity, a trade, commerce or manufacture and once the assessee is not carrying on business or a trade or commerce or manufacture and the predominant and main activity is that of imparting education, it cannot be said to be a dealer and once this Court comes to the conclusion that the assessee does not carry on any business and is not a dealer then it is not required to get itself registered under the provisions of RVAT Act and therefore, in view of what has been expressed herein above, the Tax Board was right in coming to the conclusion that the respondent was not required to be granted Obligatory Registration under Section 11 of the RVAT Act - Decided against Revenue.

Summary

Issues Involved:
1. Whether the respondent institution is liable to registration under the Rajasthan Value Added Tax Act (RVAT) for activities such as providing construction materials to contractors and selling prospectuses.
2. Whether the activities of the respondent institution can be classified as business under RVAT.
3. Whether the respondent institution qualifies as a dealer under RVAT.

Issue-wise Detailed Analysis:

1. Liability to Registration under RVAT:
The Revenue argued that the respondent institution should be registered under RVAT due to its activities of providing construction materials to contractors and selling prospectuses. The respondent institution countered that its primary activity is imparting education, not business, and thus it should not be liable for registration. The Tax Board concluded that the institution is not a "dealer" as defined under Section 2(11) of RVAT, as its primary activity is education, not business.

2. Classification of Activities as Business:
The Revenue contended that providing materials like cement, iron, and steel to contractors and selling prospectuses constitutes business activities. They argued that the institution purchased these materials and sold them to contractors, which should be considered a sale under RVAT. The respondent institution maintained that these activities are incidental to its primary educational purpose and do not constitute business. The court emphasized that education is a mission and vocation, not a business. The court cited various judgments, including those from the Supreme Court, stating that educational institutions primarily engaged in imparting education cannot be classified as businesses.

3. Qualification as a Dealer:
The Revenue's position was that the respondent institution falls under the definition of a dealer due to its transactions involving construction materials and prospectuses. The respondent institution argued that it does not engage in trade, commerce, or manufacturing, and thus should not be classified as a dealer. The court referred to definitions under Sections 2(6), 2(11), and 2(35) of RVAT, concluding that the primary and predominant activity of the institution is education, not business. Therefore, the institution is not a dealer and is not liable for registration under RVAT.

Conclusion:
The court held that the respondent institution's primary activity is to impart education, which cannot be classified as a business. Consequently, the institution is not a dealer under RVAT and is not required to register. The court dismissed the Revenue's petition, affirming the decision of the Tax Board. The questions of law were decided in favor of the respondent institution, and the revision petition was dismissed with no orders for cost.