Statutory port services and incidental receipts do not constitute business for sales tax liability without real trading activity.

A port trust was held not to be a dealer for sales tax purposes where the disputed receipts arose from statutory port functions rather than trading activity. Supply of water to visiting vessels, bunkering, tender-document charges, and supply of water or stores to contractors and staff were treated as incidental services connected with port operations, not independent business ventures. Disposal of surplus or unserviceable material also did not amount to business because there was no intention to carry on trade in those materials. On that basis, the sales tax authorities lacked jurisdiction to assess those transactions to tax.

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Issues: Whether the Board of Trustees of a major port was a dealer under the Andhra Pradesh General Sales Tax Act, 1957, and whether the disputed activities, including supply of water to visiting vessels, bunkering, tender-document charges, supply of water and stores to contractors and staff, and disposal of surplus or unserviceable material, constituted business liable to sales tax.

Analysis: Liability under the charging provision arose only if the assessee was a dealer carrying on the business of buying, selling, supplying or distributing goods. The Court treated the existence of dealer status as a jurisdictional fact and held that writ jurisdiction could be invoked to test whether the sales tax authorities had authority to proceed. Examining the Board's statutory constitution and functions under the Major Port Trusts Act, 1963 and the Indian Ports Act, 1908, the Court found that supply of water to vessels and bunkering were statutory port services rendered to facilitate navigation and port operations, not trading activities. The charging of rates for such services under statutory control did not convert them into commerce or business. Disposal of surplus or scrap material was also held not to amount to business, as there was no intention to carry on trade in those materials. The same was true of tender-document charges and supply of water and stores to contractors or staff, which were merely incidental to the Board's statutory work and not independent business ventures.

Conclusion: The Board of Trustees was not a dealer and was not carrying on business in any of the disputed transactions; the sales tax authorities had no jurisdiction to assess those transactions to tax.

Ratio Decidendi: An entity is liable to sales tax only if it is shown to be a dealer carrying on business in the relevant goods or services, and statutory or incidental activities undertaken in the course of public functions do not constitute such business absent a real trading activity.

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