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TMI Blog1973 (3) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... er set aside the assessment. The Board of Revenue set aside the orders of the Appellate Assistant Commissioner and restored the assessment. Against the order of the Board of Revenue, the Evangelical Literature Service filed writ petitions under article 226 of the Constitution in this court. It was heard by a learned Judge of this court. He allowed the writ petitions. The State has preferred these appeals against the said order. The reasoning of the learned Judge is in these words: "Under the Sales Tax Act it is not every sale or purchase that will be liable to tax. The tax is attracted only by the turnover of a person carrying on a business of buying or selling or both. A dealer has been defined by section 2(g) as a person: 'who carries on the business of buying, selling, supplying or distributing goods, directly or otherwise, whether for cash, or for deferred payment, or for commission, remuneration or other valuable consideration'. The expressions 'goods', 'sales' and 'turnover' are also defined in the Act. A reading of these definitions will make it plain that, in addition to the activity of buying and selling, to satisfy the definition of a dealer, the transactions should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said to be carrying on business. There is an exhaustive discussion and it is enough to reproduce a few passages. They observed thus: "There is no element of profit. It was intended merely as a scheme for the amelioration of the workmen and it was in no sense a business of selling goods within the meaning of the definition. 'Business' in the definition does not include every activity which in popular sense is called business. The word 'business' must be understood in a commercial sense as involving an activity designed to earn profit." The learned Judges quote what Fry, L.J., had stated in Graham v. Lewis[1889] 22 Q.B.D. 1 at 5., thus: "Now, I think that the expression 'carry on business' is not ordinarily used in the sense of a person being busy or doing business merely. A butler employed to look after his master's plate and perform the other duties of his occupation may be a very busy man, but he could not be said to be carrying on business. A man who busies himself about science, the volunteer movement, or politics, though he may have a great deal of business to transact in respect of those matters, does not carry on business.........." They then referred to another cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State did not press the appeal in respect of the foodgrains, but pressed the appeal only in respect of the works contract and even then the decision of this court was confirmed-vide State of Madras v. Gannon Dunkerley Co.[1958] 9 S.T.C. 353 (S.C.); [1958] 2 M.L.J. 66 (S.C.). We are mentioning this because the learned Advocate-General of Madras State accepted the correctness of the decision of this court in regard to the foodgrains and the enunciation of law about the essential element of business being a motive to earn profit. In view of these authoritative pronouncements, it is unnecessary to refer to any other decision. In fact, it is this principle which the learned Judge of this court in the judgment under appeal had in mind for the said purpose. He has observed: "A reading of these definitions will make it plain that, in addition to the activity of buying and selling, to satisfy the definition of a dealer, the transactions should be motivated by a commercial and be of a commercial character." But the learned Judge goes on to say that the presence of motive to make profit will not be decisive on the question. With great respect, we are unable to agree with this portion of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sales Tax Act, 1959, for the years subsequent to the assessment years now under consideration-vide item 22 of Notification G.O. Ms. No. 976, Revenue, dated 28th March, 1959. There is no such exemption for the years in question. Apart from principle, there are authorities also laying down that the destination of the profits, which are earned is immaterial in considering the question of liability to assessment. For this purpose, the learned Government Pleader, Sri S. Mohan, had cited two decisions, namely, (i) Commissioners of Inland Revenue v. The Incorporated Council of Law Reporting(1888) 3 Tax Cas. 105. and (ii) Religious Tract and Book Society of Scotland v. Forbes(1896) 3 Tax Cas. 415. In the former case, an association for the preparation and publication at a moderate price of reports of judicial decisions of the Superior and Appellate Courts in England was established. The business was carried on with a view to make profits; but the profits were ploughed back for the accomplishment of the objects of such association and could not be distributed. The decision laid down two propositions, namely, (1) the association was carrying on business because, there was a motive to make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eficit still remaining. The assessee submitted to the assessment of income tax in respect of the bookselling business at Edinburgh and Belfast. The decision, therefore, establishes two things: (1) that even though the ultimate object might be the utilisation of the profits for some charitable purpose, it is immaterial for the assessment to tax; and (2) that even a Christian missionary society could be taxed in respect of its commercial activity or sale of books. The decision was cited before the learned Judge here only for such purposes, but has been explained away thus: "I do not think that the authorities relied on are of assistance to him. The first of them, Religious Tract and Book Society of Scotland v. Forbes(1896) 3 Tax Cas. 415., related to a certain deduction for purposes of income tax, the Court of Exchequer being of the opinion that the colportage was not a trade and the loss incurred in connection with it was not deductible for the purpose of income tax." The real purposes for which the decision was cited have been overlooked by the learned Judge. The learned Government Pleader has also cited before us a decision in Indian Coffee Board v. State of Madras[1954] 5 S.T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at any of these considerations has any relevancy on the question of liability to sales tax. These are considerations which might well have weighed with the Government to grant exemption to the society under section 5 of the Act; but these are not considerations which the court can take note of. The society seems to have approached the Government to grant exemption to them just as they have granted exemption in respect of sale of books by Ramakrishna Mission Society and the request seems to have been turned down; but that would not prevent the society from again approaching the Government for exemption. The learned Government Pleader stated that the object of the Government was more to get this court to recognise the principle that the society is liable to assessment of sales tax. We may say in fairness that the learned Government Pleader himself brought to our notice that the decision under appeal was followed by a Bench of the Allahabad High Court in M.C., Temple Sri Bankey Behari Ji v. Commissioner of Sales Tax[1972] 29 S.T.C. 685. There, a devotee coming to the temple pays some money to an employee of the temple who in turn supplies bhog (sweetmeat) to the priest. The priest t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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