Factory canteen sales outside the course of business were not liable to sales tax under statutory obligation.

Sales tax under the Act applies only to transactions effected in the course of business, not to every sale. Sales made in a factory canteen operated under a statutory obligation under section 46 of the Factories Act and on a no profit, no loss basis were treated as outside the commercial sphere, because they were not carried on with an intention to earn profit. The canteen sales were therefore not liable to sales tax, and the assessment orders were quashed in favour of the assessee.

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Issues: Whether sales effected in a factory canteen run under a statutory obligation and on a no profit, no loss basis constitute sales effected in the course of business so as to attract sales tax.

Analysis: The levy of sales tax under the Act extends only to transactions effected in the course of business and does not cover every sale transaction. Sales made in the canteen were not carried on with any intention to earn profit and were required to be run under a statutory obligation imposed by section 46 of the Factories Act. Transactions of this nature were treated as outside the commercial sphere and not as sales in the course of business.

Conclusion: The canteen sales were not liable to sales tax and the assessment orders were liable to be quashed in favour of the assessee.

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