Statutory canteen receipts were treated as business sales and included in taxable turnover under sales tax law.

Receipts from a canteen maintained under compulsory mining rules were treated as part of the assessee's integrated mining business, because the canteen activity was connected with the mine and worker amenities and was not a separate commercial venture. Food and drink supplied in that canteen were regarded as goods transferred for consideration, so the transactions constituted sales even though the canteen was run under statutory compulsion and on a non-profit or subsidised basis. On that reasoning, the canteen receipts were includible in taxable turnover and were assessable under the sales tax law.

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Issues: (i) Whether receipts from a canteen maintained under statutory mining rules formed part of the assessee's business as a dealer under the sales tax law. (ii) Whether supply of food and drink in such canteen amounted to sales includible in taxable turnover.

Issue (i): Whether receipts from a canteen maintained under statutory mining rules formed part of the assessee's business as a dealer under the sales tax law.

Analysis: The canteen was maintained under compulsory provisions of the mining rules and not as a separate commercial venture. Even so, the statutory obligation did not sever the canteen activity from the assessee's mining enterprise. The running of the canteen was treated as an integral component of the mining business because it was connected with the working of the mine and with the amenities required for the workers. The concept of business was applied broadly enough to include an activity forming part of the integrated commercial operation, even if that activity by itself was not independently profit-making.

Conclusion: The canteen receipts formed part of the assessee's business activity and the assessee was a dealer in respect of those receipts.

Issue (ii): Whether supply of food and drink in such canteen amounted to sales includible in taxable turnover.

Analysis: Food and drink were treated as goods, and transfer of those goods to employees for consideration constituted sale. The fact that the canteen was run on a non-profit or subsidised basis, and under statutory compulsion, did not prevent the transactions from being sales. Freedom of contract was not wholly excluded merely because the activity was regulated by law, and the statutory setting still left room for transactions of sale. Once the assessee was a dealer in relation to the canteen activity, the receipts from those sales were includible in turnover.

Conclusion: The canteen transactions were sales and the receipts were includible in the taxable turnover.

Final Conclusion: The reference was answered against the assessee and in favour of the revenue, with the canteen receipts held assessable under the sales tax law.

Ratio Decidendi: An activity carried on under statutory compulsion may still constitute business if it is an integral component of the assessee's commercial undertaking, and supplies of goods for consideration in such activity are sales includible in taxable turnover.

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