Charitable sales activity without profit-motive is not business for sales tax when incidental to the trust's object.

An activity carried on directly in furtherance of a charitable object does not amount to a taxable business merely because it yields surplus, where the sales are incidental and lack a profit-motive. The trust's institution prepared and sold eatables as part of its charitable purpose of providing employment and maintenance to poor and destitute women, and the surplus was applied to the same object. On those facts, the Bombay HC held that the respondent was not a dealer within section 2(11) of the Bombay Sales Tax Act, 1959, because the activity retained its charitable character and did not become a business for sales tax purposes.

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Issues: Whether the respondent was a dealer within the meaning of section 2(11) of the Bombay Sales Tax Act, 1959, so as to render the preparation and sale of eatables by the trust's institution a taxable business activity.

Analysis: The relevant definition required carrying on the business of buying or selling goods, which imports a business character and a profit-motive. The activity in question was undertaken in direct implementation of the trust's main charitable object, namely, giving employment and maintenance to poor and destitute women of the community. The eatables were prepared and sold as part of that charitable activity, and the surplus was again utilised to extend the same charitable purpose. On these facts, the sales were incidental to the charitable object and did not convert the activity into a business merely because surplus arose. The Court distinguished cases where the activity itself was carried on with the intention of making profit, even if the profits were later applied to charitable ends.

Conclusion: The respondent was not a dealer within the meaning of section 2(11) of the Bombay Sales Tax Act, 1959.

Ratio Decidendi: An activity undertaken directly in furtherance of a charitable object does not become a business for sales tax purposes merely because it yields surplus, if the sales are incidental and are not carried on with a profit-motive.

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