9911796707
TMI Blog2003 (1) TMI 667X X X X Extracts X X X X X X X X Extracts X X X X ..... The work order was for a period of two years with effect from January 1, 1995. The case of the petitioner is that they are required to provide meals, snacks, etc., not only to the employees of the BRPL, who are all members of the society, but also to the members of the industrial security staff. So far the meals supplied to the industrial security staff are concerned, the society own their liability to pay sales tax. However, so far the other supplies are concerned, according to the petitioner, this is a mere service only and although they are registered as "dealer" but they are not liable to pay sales tax. However, the concerned authority, i.e., the Senior Superintendent of Taxes, Bongaigaon, assessed the sales tax liability of the petitionersociety for the year 1995-96, vide order dated February 26, 1997 and an appeal was preferred before the Deputy Commissioner of Taxes (Appeals), Guwahati, but the said appeal was rejected, vide, order dated December 4, 1998. Thereafter a revision was preferred by the society before the Commissioner of Taxes and the said revision was dismissed vide the order dated July 12, 1999. Hence, the present writ petition. 4.. The respondent-State has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rce or manufacture. Section 2(r) defining 'taxable turnover' speaks of the dealer's turnover. If sale is not intended and the dominant object is to render service in compliance with the legal mandate, the occupier would not be a dealer indulging in such a business. If the intention is not of sale of food, the transaction would not be liable to be called trade, commerce, manufacture or any adventure or concern of that nature and thus would not be business within the meaning of section 2(bb) of the Act. The occupier would then not be a dealer and the canteen sales cannot be called the dealer's turnover. In each case the taxability or otherwise shall inevitably depend on appreciation of facts." 7.. Following the above Full Bench decision the honourable Madhya Pradesh High Court in the case of Shri Dayabhai v. State of Madhya Pradesh [1999] 116 STC 500 held: "On facts as unfolded, the attempt to distinguish the above quoted authority on the fulcrum of 'association' and 'individual' under contract is thus manifestly infirm and is an exercise which deserves to be greeted with futility. In essence, it is the 'nature' of the activity, rather than the status of actors, which should answ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or ancillary are only an infinitesimal or small part of the main activities. Inother words, the presumption will be that these connected, incidental or ancillary activities of sales are not 'business' and the onus of proof of an independent intention to do 'business' in these connected, incidental and ancillary sales will rest on the department. If, for example, these connected, incidental or ancillary transactions are so large as to render the main activity infinitesimal or very small, then of course the case would fall under the first category referred to earlier." 9.. Learned counsel appearing for the State of Assam, on the other hand, relied on a decision of the apex Court in the case of Deputy Commercial Tax Officer, Saidapet v. Enfield India Ltd. Cooperative Canteen Ltd. [1968] 21 STC 317; AIR 1968 SC 838. The apex Court considering the expression "sale of goods" and the Madras General Sales Tax Act held: "We are not dealing in this case with liability criminal or quasicriminal. The question is one of liability under a taxing statute and the court in determining the liability of the society to pay tax cannot ignore the form and look at what is called the 'substance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nant object of establishing the society and the society is to engage in the business of canteen management and thereby earn profit for its members. If the canteen would have been allowed to run by other hotel or catering company, the profit would have gone to them but the co-operative society has been established to shift that much money to its members. 11.. With due respect to the honourable Madhya Pradesh High Court, I am unable to appreciate the dictum of law laid down in the Dayabhai [1999] 116 STC 500. So far the requirement under section 46 of the Factories Act is concerned, it would have been a different question if the canteen is managed by the owner or occupier of the factory in compliance with the requirement of law, i.e., section46 of the Factories Act. In that case, considering the dominant object for which the factory has been established, it may be held that there was no sale. However, when the factory owner has given the contract to a third party and pursuant to the said contract such third party supplies goods to the factory owner/to its employees on payment of price, it would amount to "sale" by such third party to the factory owner. The liability to pay tax unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contract or lease, or to the setting up of any such business;" 15.. In view of what has been stated above, we find that the society was engaged in the business of preparing and supplying meals against the order placed by BRPL. The prices for meal was fixed and after the meals are supplied to the concerned persons as per the order of the BRPL, the payment used to be released by the BRPL. BRPL may have statutory obligation to provide meals or canteen facilities to its employees but so far the society is concerned, it had no such responsibility or liability and it was merely engaged in business activity in supplying the meals to the BRPL on payment. The purpose for which the meals were procured is irrelevant for the purpose of interpreting the taxing statute. The property in the goods, i.e., the meals, snacks, etc., were transferred to BRPL. Once they are supplied against the coupon the said transaction will amount to sale as it was also for consideration. If a company, manufacturing blankets, donates certain percentage of blankets for charity or any other social cause without payment, the giving of such things may not amount to sale but if a third party purchases such goods from ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
