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TMI Blog2014 (7) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeal Nos.KVAT/AP/1084 to 1140/09-10 whereby the Appellate Authority confirmed the order dated 12-03-2010 passed by the Assistant Commissioner of Commercial Taxes, (Enf-1), Mangalore (for short the Assessing Authority) under Section 39 of the Act by which the balance tax payable had been determined. By this order (12-03-2010), the Assessing Authority also levied interest under Section 36 and penalty under Section 72(2) of the Act. 2. Briefly stated the facts leading to these revision petitions are that, the Assessing Authority on 13.01.2010 visited the petitioner's premises and collected sales particulars of prospectus and application forms for the period between April 2005 to December 2009 (for short 'the relevant period') and also collected other particulars with which we are not concerned in the present petitions. After verification, the Assessing Authority found that the University had not declared the sales of application forms and prospectus and offered tax in the form VAT 100 filed by them. In view thereof, a pre-assessment notice under Section 39(1) of the Act was issued and after getting reply from the University, an order under Section 36(1) of the Act was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts. 6. Smt. Vani, learned counsel appearing for the University, at the outset submitted that the University is not carrying on any business in order to attract the levy of tax under the Act. The University is a deemed University engaged in imparting education and for this purpose they print and sell prospectus along with application forms for admission to various courses, so as to recover the expenditure incurred for printing the same. She submitted that though the University is a registered dealer, it got registered for sale of medicines and other equipments in the hospital and medical shops attached to their medical colleges and not for the sale of prospectus and application forms. She submitted that, in any case, the main activity of the University is to impart education and, therefore, the sale of prospectus and application forms cannot be treated as incidental or ancillary to the "business" but it is incidental and ancillary to educational activities. In other words, it was submitted that the sale of prospectus and application forms is incidental/ancillary to the main activity of education and not the business for which they got registered as a dealer under Section 22 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectus and application forms is incidental or ancillary to the activities of education, it is always open to the Revenue to find out whether it had intention to conduct business and whether it would fall under Entry 71 of the Third Schedule. The Revenue has accordingly considered all these aspects in proper perspective to hold that the receipts out of the sale of prospectus and application forms are exigible to tax. She placed reliance upon certain observations made by the Supreme Court in the judgments relied upon by learned counsel for the petitioner-University. In addition, she placed reliance upon the judgment of the Supreme Court in Board of Revenue v. A.M. Ansari [1976] 38 STC 577. 8. It is not in dispute that the University is a registered dealer under the Act. They run medical colleges and hospitals attached thereto. Admittedly, they pay and paid during the relevant period tax on the sale of medicines in the hospitals maintained by them and so also in the medical shops attached thereto. The registration Certificate issued in form VAT-7 by the authority clearly certify that the University whose principal place of business is at Manipal-E.D.U, Madhava Nagar, Manipal-576 104 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of additional place of business. Rule 8 provides for rejection of application and demand of surety. Rule 9 provides for issue of registration certificate which states that the registered authority shall assign a registration number or tax payers identification number (TIN) to the dealer and issue a certificate of registration in Form VAT-7 or Form VAT-8 as the case may be to him, and also certified copies of such certificate for any additional place of business. We are not concerned with other rules. 9.2 Form VAT-1 under Rule 4(i) provides for several particulars to be furnished by the applicant. Col.6 thereof provides for furnishing type of business: manufacturer/ wholesaler/retailer/contractor/hotelier/others (specified). Col.7 provides for commodities dealt, obliging the applicant to specify all commodities. From bare perusal of Columns 6 and 7, it appears to us that an applicant is supposed to specify a list of all commodities he/it dealt. In the present case, merely because the University did not specify all the goods/commodities in the Form VAT-1, in particular, the prospectus, cannot claim that the registration certificate in Form VAT 7 was issued for the sale of only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtensively used is a word of indefinite import, in taxing statutes, it is normally used in the sense of an occupation, a profession which occupies time, attention and labour of a person, normally with a profit-motive and there must be a course of dealings, either actually continued or contemplated to be continued with a profit motive and not for sport or pleasure, (State of Andhra Pradesh v. H. Abdul Bakshi and Bros. [1964] 15 STC 644 (SC); AIR 1965 SC 531). Even if such profit-motive is statutorily excluded from the definition of "business" yet the person could be doing "business". 14. The word "carrying on business" requires something more than merely selling or buying, etc. Whether a person "carries on business" in a particular commodity must depend upon the volume, frequency, continuity and regularity of transactions of purchase and sale in a class of goods and the transactions must ordinarily be entered into with a profit-motive. [Board of Revenue v. A.M. Ansari [1976] 38 STC 577 (SC); (1976) 3 SCC 512]. Such profit-motive may, however, be statutorily excluded from the definition of "business" but still the person may be "carrying on business".' (Emphasis supplied) 11. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d it was not in dispute that the books and the literature containing message of Sai Baba were distributed by the trust to the devotees of the trust "at cost price". In view of the facts before the Supreme Court, it was observed that it cannot be said that the trust carried on the business of selling and supplying goods so as to fall within the meaning of dealer under Section 2(11) of the Bombay Sales Tax Act. 12. The Supreme court in A.M.Ansari (supra) also had an occasion to deal with the very same words /phrases. The observations made by the Supreme Court in the said report are relevant for our purpose which read thus: "...whether a person carries on business in a particular commodity must depend upon the volume, frequency, continuity and regularity of transactions of purchase and sale in a class of goods and the transactions must ordinarily be entered into with a profit-motive. The court further went on to observe that when a subsidiary product is turned out in the factory of the assessee regularly and continuously and it is being sold from time to time, an intention to carry on business in such product m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, in 2007-08 Rs.4.46 crores, in 2008-09 Rs 4.27 crores and in 2009-2010 it was Rs.3.61 crores. Insofar as the year 2009-2010 is concerned for the period between April 2009 to December 2009 the sale, was Rs.1.37 crores. The figures of receipts from the sale of prospectus clearly demonstrate that the University collect huge amounts every year from the sale of prospectus. As observed by the Supreme court whether a person "carries on business" in a particular commodity depends upon volume, frequency, continuity and regularity of transactions of purchase and sale in a class of goods and the transaction must ordinarily be entered into with a profit motive. As a matter of fact, the profit motive, has now been excluded from the definition of 'business'. It is not in dispute that the University sell prospectus and application forms every month during every academic year. The volume, frequency, continuity and regularity of transaction of sale is not in dispute. They earn huge profits/surplus from the sale of prospectus/application forms. Therefore, looking at the price at which prospectus and application forms were sold and huge amounts were collected by the University during the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er stationery." 19. In view of the language used in Entry-11 in the First Schedule, learned counsel for the University vehemently submitted that the prospectus being a booklet is liable to be exempted from tax under sub-section (1) of Section 5 of the Act. On the other hand, learned counsel for the State submitted that under any circumstances, the prospectus cannot be treated as a 'book' so as to attract Entry 11 in the First Schedule. 20. To resolve this controversy, we have perused meaning of the word prospectus'. The word 'prospectus' is explained in Chambers 20th Century Dictionary as follows : "prospectus - the outline of any plan submitted for public approval, particularly of a literary work or of a joint-stock concern: an account of organization of school." 20.1 The word "Prospectus" is from the Latin verb specere, "to look," which is combined with the prefix pro-"forward" - giving us a verb meaning "to look forward" to something that is coming. In the Oxford English Dictionary, on historical principles, Vol.II, the word "Prospectus" is explained as follows: "a printed document giving advance notificati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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