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TMI Blog1979 (10) TMI 211X X X X Extracts X X X X X X X X Extracts X X X X ..... he sales turnover of the canteen in the assessment year in question was Rs. 1,10,961.12 and the Sales Tax Officer imposed a tax of Rs. 2,219.22 on these sales applying a rate of two per cent. The assessee appealed, its contention being that the turnover of sales at the canteen was not liable to tax. The contention failed. On a revision being filed, the revising authority following the decision of this Court in Swadeshi Cotton Mills Company Ltd. v. Sales Tax Officer[1964] 15 S.T.C. 505., held that canteen sales were liable to tax. The reference then came up before a learned single Judge of this Court. Attention of the court was invited to the decision of the Calcutta High Court in the case of Fort Gloster Industries Ltd. v. Member, Board of Revenue, West Bengal[1970] 26 S.T.C. 141., of the Karnataka High Court in the case of Motor Industries Co. Ltd. v. State of Mysore[1971] 27 S.T.C. 379. and of the Delhi High Court in the case of Delhi Cloth General Mills Company Ltd. v. Union of India [1976] 38 S.T.C. 403; S.T.I. 1976 Delhi 1., wherein the view had been taken that the canteen sales were not liable to tax. On a consideration of these cases he took the view that the authority of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing effect: "Clause (aa). 'Business of buying or selling' includes such business carried on without the motive of making profit." Thus, as a result of this definition a person, who indulged in the business of buying or selling goods whether actuated by profit-motive or not came within the definition of the word "dealer". In view of this amendment it was held in Swadeshi Cotton Mills[1964] 15 S.T.C. 505., that even though the canteens were maintained under a statutory obligation and the goods sold without any profitmotive, the sales will be liable to tax. Oak, J., held that maintaining of canteen was a part of the general activity of a mill, and should be considered as a part of general business. Satish Chandra, J., as he then was, more or less took the same view, and held that the maintenance of canteen was a step-in-aid of the manufacturing business. In the assessment year 1968-69, the definition of the word "dealer" was further amended and read as under: "'Dealer' means any person or association of persons carrying on the business of buying or selling goods in Uttar Pradesh whether for commission, remuneration or otherwise and includes any firm or Hindu joint family an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ories Act as is here. The word "business" had been defined in section 2(1a) and (b) of the Sales Tax Act of the State as under: "In this Act, unless there is anything repugnant in the subject or context, business includes- (i) any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture, whether or not such trade, commerce, manufacture, adventure or concern is carried on with the motive to make profit and whether or not any profit accrues from such trade, commerce, manufacture, adventure or concern; and (ii) any transaction in connection with, or ancillary or incidental to, such trade. commerce, manufacture, adventure or concern." It will be noticed that the definition of the word "business" there was wider than the definition given to the word "business of buying and selling goods" by section 2(aa) of the U.P. Act, because not only was profit-motive excluded, but it included also any transaction, which was ancillary or incidental to the trade, commerce, manufacture or adventure or concern of the assessee. The Calcutta High Court following the decision of the Madras High Court in the case of Deputy Commissioner of Commercial T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that as the running of the canteen was not a commercial activity, the turnover of sales effected in the canteen could not be brought to tax. It is necessary at this stage to refer to a decision of our own Court in the case of Managing Committee, Temple Sri Bankey Behari Ji, Virindaban, Mathura v. Commissioner, Sales Tax, Lucknow[1972] 29 S.T.C. 685., where a view similar to that expressed by the Calcutta and the Karnataka High Courts has been taken, but in a different set of circumstances. In that case, the managing committee of the temple Sri Bankey Behari Ji, Virindaban, Mathura, used to provide bhog to devotees out of the bhog bhandar of the temple and the devotees were required to donate such amounts as they desired to the temple, which, however, had no relation to the amount of bhog issued. The taxing authorities had held that the transaction amounted to a sale, and further that the managing committee was a dealer as defined in the Act as it stood in the assessment years 1957-58 to 1965-66. It was held that there was no sale of the bhog, as neither the devotees nor the person in-charge of the bhog bhandar negotiated or concluded a bargain, because there was no settlement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to make profit, when such motive has been expressly declared unnecessary by the legislature. We think that under both parts of the definition, profit-motive is now immaterial and the concept of 'business' in the commercial sense put forward and accepted in the earlier cases must now be abandoned. We, therefore, hold that in the present cases too, in view of the definition of 'business' introduced into the Andhra Pradesh Act by the Amendment Act of 1966, proof of profit-motive is unnecessary to constitute business." It also repelled the contention that the activity of the assessee was not a business, and no sales were effected as it was being done under a compulsion, as in case the canteen was not run as required by the Factories Act penal consequence would result. The Supreme Court considered the taxability of canteen sales under the Madras General Sales Tax Act (1 of 1959) in State of Tamil Nadu v. Burmah Shell Oil Storage and Distributing Co. of India Ltd. [1973] 31 S.T.C. 426 (S.C.). Section 2(d) defined the word "business" in the following terms: "Section 2. (d) 'business' includes- (i) any trade, commerce or manufacture or any adventure or concern in the nature of trade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court their Lordships held that the decision of the Andhra Pradesh High Court in Hyderabad Asbestos Cement Products Ltd.[1972] 30 S.T.C. 26. was correct, and partly reversed the decision of the Madras High Court. However, they upheld the decision of the Madras High Court for the period 1st April, to 31st August, 1964, which covered canteen sales for the period 1st April, to 31st August, 1964. It is necessary to refer to the reasons given by the Supreme Court for dismissing the appeals for the period 1st April, 1964, to 31st August, 1964. Dealing with the appeals for these periods the Supreme Court observed: "................. In so far as the business turnover for the first part of the assessable year 1964-65 is concerned, it is not denied that the Act of 1959 prior to its amendment in 1964 is applicable. The contention that the 1964 amendment has retrospective operation was negatived in State of Tamil Nadu v. Thirumagal Mills Ltd.[1972] 29 S.T.C. 290 (S.C.). but before this judgment was rendered the Sales Tax Tribunal had held that that part of the assessment is also covered by the 1964 amendment. But the learned Advocate for the appellant none the less submits that even under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee, and the sales turnover as a result of an incidental or ancillary activity would not be liable to tax. Further that canteens run by companies do not constitute its business but an incidental or ancillary activity. It is clear from a perusal of this decision that the canteen sales were excluded only on this premise. In the assessment year in question transactions which were incidental or ancillary to the business of buying and selling were not included in the definition of the words "business of buying and selling" under the U.P. Act. The amendment came later, and as a result the U.P. Act became in pari materia with the Sales Tax Act of the other States, which have been noticed earlier. It is not disputed that the business of the assessee was the manufacture of fertilisers, not of running canteens. Canteens were being run by the assessee in the discharge of its statutory obligation. They were incidental or ancillary to this business. This being so, the turnover could not be brought to tax. In view of the pronouncement of the Supreme Court we are unable to agree, with respect, with the earlier decision of this Court given in Swadeshi Cotton Mills' case[1964] 15 S.T.C. 505. On this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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