Statutory factory canteen sales without profit motive are not business activity and are outside sales tax liability.

Sales of food and drink by a factory canteen maintained under statutory obligation on a non-profit basis do not constitute business activity under the Madras General Sales Tax Act. Because the canteen was required by factory rules, charges were subject to approval, the occupier bore part of the running cost, and no profit motive existed, the canteen did not answer the statutory meaning of "dealer" or "sale". Transfers to workmen in such a canteen were therefore not taxable sales, and earlier authorities on similarly mandated canteens and statutory supply arrangements were treated as directly applicable.

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Issues: Whether sales of food and drink by a factory canteen maintained under statutory obligation on a non-profit basis are sales in the course of business so as to render the canteen a dealer liable to sales tax.

Analysis: The canteen was required by statutory rules framed under the Factories Act to be maintained for workmen and to serve food and drink on a non-profit basis, with charges subject to approval and part of the running cost borne by the occupier. On the scheme of the Madras General Sales Tax Act, the expressions "business", "dealer" and "sale" contemplate activity carried on in a commercial sense with a profit motive. Where the canteen exists only to discharge a statutory obligation and the service is structured without profit motive, the activity does not answer the statutory conception of business and the transfers to workmen do not amount to taxable sales. Earlier decisions on similarly mandated canteens and statutory supply of drinking water were treated as directly applicable.

Conclusion: The canteen was not a dealer and the sales to its workmen were not sales within the Act liable to sales tax.

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