Profit-motive in book resale determines sales tax liability, and charitable use of profits does not exempt the dealer.

The Madras HC held that a society buying books at a discount and reselling them at a profit was carrying on business in the commercial sense and therefore fell within the statutory definition of a dealer under the Madras General Sales Tax Act, 1939. The fact that the profits were applied to religious or charitable objects did not change the character of the transactions or exempt the sales from tax. The Court stressed that liability depends on the profit-motive in the buying and selling activity, and any exemption must be expressly provided by statute.

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Issues: Whether the respondent-society, which bought books at a discount and sold them at a profit but applied the profits to its religious objects, was carrying on "business" so as to be a "dealer" liable to sales tax under the Madras General Sales Tax Act, 1939, and whether the destination of the profits affected taxability.

Analysis: The statutory definition of "dealer" turned on carrying on the business of buying or selling goods, and the word "business" was construed in a commercial sense as involving transactions undertaken with a view to earn profit. The respondent admittedly purchased books and sold them at a marked price, earning profit up to 25 per cent. The fact that the society used the profits for propagation of Christian literature did not alter the commercial character of the sales. The Court held that the ultimate object for which profits are used is irrelevant for assessing liability to sales tax, and that exemption, if any, had to be expressly provided by the Legislature or granted under the Act.

Conclusion: The respondent was carrying on business within the meaning of the Act and was liable to sales tax; the use of the profits for charitable or religious purposes did not exempt it from assessment.

Ratio Decidendi: For the purposes of sales tax, the decisive test is whether the activity of buying and selling is undertaken with a profit motive in a commercial sense; once that test is satisfied, the subsequent application of the profits is immaterial unless the statute grants a specific exemption.

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