2016 (9) TMI 1223 - HC - VAT and Sales Tax

Scope of the term Dealer - a public charitable trust running and maintaining a public hospital - Bombay Public Trust Act - The hospital has a medical store in the premise from where the medicines and other pharmaceutical drugs and equipments are sold - requirement of registration of this medical store as a dealer for the purpose of the Gujarat Sales Tax Act, 1969 - identical issue came up in the case Bhailal Amin General Hospital vs. State of Gujarat and anr 2016 (8) TMI 670 - GUJARAT HIGH COURT where it was held that the definition of term dealer contained in Section 2(10) of the Gujarat Value Added Tax Act would not include the medical store. Section 2(10) of the Gujarat Sales Tax Act - Section 2(10) of the VAT Act - is the petitioner coming within the definition of dealer under GST Act? - Held that - on all material counts the definitions in both the Acts are similar. Only minor difference being that in the GST Act in the exception, the words which are not in the nature of business are added, which forms part of perimateria Explanation II to section 2(10) of the GST Act. If at all, this explanation is wider than the Exception III of 2(10) of the VAT Act, it may be possible to argue that the later expression of which are not in the nature of business is only by way of a clarification and there is no material change between the two definitions. - In any case, the petitioner must get the benefit of judgement of this Court in case of Bhailal Amin General Hospital. Petitioner not a dealer - petition disposed off - decided in favor of petitioner.

Summary

Issues:
Interpretation of the term 'dealer' under the Gujarat Sales Tax Act in relation to a charitable institution running a medical store.

Analysis:
1. The petition raised the question of whether the respondent, a charitable institution with a medical store, should be considered a 'dealer' under Section 2(10) of the Gujarat Sales Tax Act. The institution argued that the medical store was part of its charitable activities and not a separate commercial venture. The Tribunal ruled in favor of the institution, prompting the government's petition.

2. The counsel for the institution cited a previous case involving a similar issue, where the court held that a charitable trust engaged in selling medicines to achieve its charitable objectives did not qualify as a 'dealer' under the VAT Act. The court emphasized that engaging in such activities did not constitute a business activity, thus exempting the institution from being classified as a dealer.

3. The court compared the definitions of 'dealer' in the VAT Act and the Gujarat Sales Tax Act, noting a minor difference in wording regarding activities not in the nature of business. However, the court concluded that the institution should benefit from the precedent set in the previous case, where a charitable institution's activities were deemed non-commercial and exempt from the 'dealer' classification.

4. Ultimately, the court ruled against the government, dismissing the tax appeal and the associated application. The judgment reaffirmed that engaging in activities such as selling medicines to further charitable objectives does not amount to being a 'dealer' under the Gujarat Sales Tax Act, aligning with the interpretation established in the earlier case.

This detailed analysis of the judgment highlights the key legal arguments, precedents, and interpretations made by the court in addressing the issues raised regarding the classification of a charitable institution operating a medical store under the Gujarat Sales Tax Act.