Railway canteen sales were not business activity, so sales tax assessments lacked jurisdiction and were quashed.

Sales by a railway canteen to railway staff were not sales in the course of trade or business under the Mysore Sales Tax Act, 1957, because the canteen was run as a labour welfare on a no-profit, no-loss basis. The railway administration supplied accommodation and facilities, and the evidence did not show any profit-making object or intention to acquire gain. The then-applicable definition of business required such an intention, while the expanded 1964 definition had no retrospective effect. The bye-laws merely regulated disposal of any surplus and did not establish a business activity. The assessments were therefore without jurisdiction and were quashed in favour of the assessee.

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Issues: Whether the canteen's sales of food and refreshments to railway staff were sales in the course of trade or business so as to make the canteen a dealer liable to sales tax under the Mysore Sales Tax Act, 1957.

Analysis: Under the Act, liability to tax arises only where there is a sale in the course of trade or business and the tax is recoverable from a dealer carrying on the business of buying, selling, supply or distribution of goods. The canteen was run as a labour welfare measure on a no-profit and no-loss basis, with accommodation and facilities supplied by the Railway Administration, and the evidence did not show a profit-making object. The then-existing definition of business required an intention to acquire gain, and the later expanded definition introduced in 1964 had no retrospective application to the periods in question. The bye-laws did not establish a profit motive; they only regulated the disposal of any surplus that might arise. On the facts, the canteen's activity was not a business within the meaning of the Act.

Conclusion: The assessments were without jurisdiction and were quashed; the petitions were allowed in favour of the assessee.

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