Statutory canteen sales can still be taxable business activity even when run on a non-profit welfare basis.

Sales in a statutory factory canteen maintained on a non-profit basis were treated as taxable business activity under the Madras General Sales Tax Act, 1959 as amended. The amended definition of business covered trade or commerce whether or not carried on for profit, and the validating provision protected past levies and collections. Although the canteen operated under section 46 of the Factories Act and factory rules for welfare purposes, its regular and systematic supply of food still constituted trade or commerce. The absence of bargaining did not prevent the transactions from being sales in law, and the assessment was sustained.

---

---

Issues: Whether sales in a statutory canteen maintained on a non-profit basis under the Factories Act constitute business and sales in the course of business so as to attract sales tax under the Madras General Sales Tax Act, 1959 as amended by Act 15 of 1964.

Analysis: The canteen was maintained under the statutory mandate of section 46 of the Factories Act and the relevant factory rules, and the supplies were required to be made on a non-profit basis. The earlier view under the pre-amendment sales tax law was that profit motive was relevant to the concept of business, but the amended definition of business in the Madras General Sales Tax Act, 1959 expressly included trade, commerce, manufacture, or concerns of that nature whether or not carried on with a motive to make gain or profit. The amendment also contained a validating provision protecting past levies and collections. The Court held that the constitutional power to tax sales is not confined to sales made with a profit motive, and that canteen sales, though incidental and welfare-oriented, remain regular and systematic trading activity and therefore fall within trade or commerce. The absence of bargaining did not exclude sale, since the transactions were voluntary contracts of sale in law.

Conclusion: The canteen sales were taxable, and the amended definition and validating provision sustained the assessment.

---