Case: Commr. Of S.T Vs. Sai Publication Fund

having agriculture for the purpose of earning income from the fields but there was nothing to show that he acquired the lands with the primary intention of doing business of selling or buying agricultural produce. This decision was approved by this Court in Dy. Commissioner of Agricultural Income Tax & Sales Tax. vs. Travancore Rubber & Tea Co. [(1967) 20 STC 520 (SC)] and it was held that where the only facts established were that the assessee converted latex tapped from rubber trees into sheets and effects a sale of those sheets to its customers, the conversion of latex into sheets being a process essential for transport and marketing of the produce, the Department had failed to prove that the assessee was formed with a commercial purpose. The Allahabad High in Swadeshi Cotton Mills Co. Ltd. vs. STO [(1964) 15 STC 505 (All) ] was dealing with a batch of cases where different bodies were running canteens. One of the cases concerned Aligarh Muslim University which was maintaining dining halls where it was serving food and refreshments to its resident-students. It was held, referring to observations of this Court in University of Delhi vs. Ram Nath [AIR 1963 SC 1873 ] that it was incongruous to call educational activities of the University as amounting to carrying on business. The activity of serving food in the dining hall was a minor part of the overall activity of the university. Education was more a mission and avocation rather than a profession or trade or business. The aim of education was the creation of a well-educated, healthy, young generation imbued with a rational and progressive outlook of life. On this reasoning, it was held that Aligarh University was not carrying on business and the sale of food at the dining halls was not liable to tax. Likewise after the amendment of the definition of business question arose in Indian Institute of Technology vs. State of U.P. [(1976) 38 STC 428 (All) ] with respect to the visitors hostel maintained by the Indian Institute of Technology where lodging and boarding facilities were provided to persons who would come to the Institute in connection with education and the academic activities of the Institute. It was observed that the statutory obligation of maintenance or the hostel which involved supply and sale of food was an integral part of the objects of the Institute. Nor could the running of the hostel be treated as the principal activity of the Institute. The Institute could not not be held to be doing business. Similarly, in the case of a research organization, in Dy. Commissioner (C.T.) vs. South India Textile Research Assn. [(1978) 41 STC 197) (Mad) ] which was purchasing cotton and selling the cotton yarn/cotton waste resulting from the research activities, it was held that the Institute was solely and exclusively constituted for the purposes of research and was not carrying on business and these sales and purchases above-mentioned could not be subjected to sales tax. Likewise, in State of T.N. vs. Cement Research Institute of India [(1992) 86 STC 124 (Mad) it was held that the Institute was an organisation the objects of which were to promote research and other scientific work that the laboratories and workshops were maintained by the organization for conducting experiments and that though the cement manufactured as a result of research was sold, it could not be considered to be a trading activity within Section 2(d) of the Tamil Nadu General Sales Tax Act, 1959. Again in Tirumala Tirupati Devasthanam vs. State of Madras [(1972) 29 STC 266 (Mad) ] the disputes arose with regard to the sales of silverware etc. which are customarily deposited in the hundis by devotees. It was held by the Madras High Court that the Devasthanams main activities were religious in nature and these sales were not liable to tax. (No doubt, the case related to a period where the profit motive was not excluded by statute). We are of the view that all these decisions involve the general principle that the main activity must be business and these rulings do support the case of the respondent-Port Trust. (Emphasis supplied) 17. This decision is directly on the point supporting the case of the respondent after noticing number of decisions on the point including the decisions cited by the learned counsel before us. It may be stated that the question of profit motive to nor profit move would be relevant only where person carries on trade, commerce, manufacture or adventure in the nature of trade, commerce etc. On the facts and in the circumstances of the present case irrespective of the profit motive, it could not be said that the Trust either was dealer or was carrying on trade, commerce etc. The Trust is not carrying on trade, commerce etc., in the sense of occupation to be a dealer as its main object is to spread message of Saibaba of Shridi as already noticed above. Having regard to all aspects of the matter, the High Court was right in answering the question referred by the Tribunal in the affirmative and in favour of the respondent-assessee. We must however add here that whether a particular person is a dealer and whether he carries on business, are the matters to be decided on facts and in the circumstances of each case. 18. For what is stated above, we answer the question set out in the beginning in the negative and in favour of the respondent-assessee and dismiss the appeal finding no merit in it but with no order as to costs. Civil Appeal No. 1716 of 1999 19. The impugned order was passed by the Tribunal relying on the judgment of the Bombay High Court in the case of Sai Publication Fund impugned in abovementioned C.A. No. 9445/96. The learned counsel also submitted that the result of this appeal depended on the decision in said C.A. No. 9445/96 as the facts and circumstances of both the cases are similar. 20.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]No doubt, the definition of business given in Section 2(5A) of the Act even without profit motive is wide enough to include any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture and any transaction in connection with or incidental or ancillary to the commencement or closure of such trade, commerce, manufacture, adventure or concern. If the main, activity is not business, when any transaction incidental or ancillary would not normally amount to business unless an independent intention to carry on business in the incidental or ancillary activity is established. In such cases, the onus of proof of an independent intention to carry on business connected with or incidental or ancillary sales will rest on the Department. Thus, if the main activity of a person is not trade, commerce etc., ordinarily incidental or ancillary activity may not come within the meaning of business. To put it differently, the inclusion of incidental or ancillary activity in the definition of business pre-supposes the existence of trade, commerce etc. The definition of dealer contained in Section 2(11) of the Act clearly indicates that in order to hold a person to be a dealer, he must carry on business and then only he may also be deemed to be carrying on business in respect of transaction incidental or ancillary thereto. We have stated above that the main and dominant activity of the Trust in furtherance of its object is to spread message. Hence, such activity does not amount to business. Publication for the purpose of spreading message is incidental to the main activity which the Trust does not carry as business. In this view, the activity of the Trust in bringing out publications and selling them at cost price to spread message of Saibaba does not make it a dealer under Section 2(11) of the ActIt may be stated that the question of profit motive to nor profit move would be relevant only where person carries on trade, commerce, manufacture or adventure in the nature of trade, commerce etc. On the facts and in the circumstances of the present case irrespective of the profit motive, it could not be said that the Trust either was dealer or was carrying on trade, commerce etc. The Trust is not carrying on trade, commerce etc., in the sense of occupation to be a dealer as its main object is to spread message of Saibaba of Shridi as already noticed above. Having regard to all aspects of the matter, the High Court was right in answering the question referred by the Tribunal in the affirmative and in favour of the respondent-assessee. We must however add here that whether a particular person is a dealer and whether he carries on business, are the matters to be decided on facts and in the circumstances of each case18. For what is stated above, we answer the question set out in the beginning in the negative and in favour of the respondent-assessee and dismiss the appeal finding no merit in it but with no order as to costs. Civil Appeal No. 1716 of 199919. The impugned order was passed by the Tribunal relying on the judgment of the Bombay High Court in the case of Sai Publication Fund impugned in abovementioned C.A. No. 9445/96. The learned counsel also submitted that the result of this appeal depended on the decision in said C.A. No. 9445/96 as the facts and circumstances of both the cases are similar.