Statutory canteen sales may be sales in law, but absent profit-motive they do not make the operator a dealer.

Canteen supplies made under statutory compulsion may still constitute sales in law, so the compulsory character of the canteen did not exclude the element of sale. However, under the unamended Bihar Sales Tax Act, 1959, dealer status required business or sustained commercial activity with a profit-motive. Because the canteens were maintained under statutory obligation, operated on a no-profit-no-loss basis, depended on subsidy, and were not authorised as a business venture in the company's charter, the company was not treated as a dealer for those canteen sales and was not liable to sales tax on that footing.

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Issues: (i) Whether the services rendered at the assessee's canteen, maintained in compliance with the Factories Act and the Mines Act, involved any element of sale. (ii) Whether, on the facts and in the circumstances of the case, the assessee was a dealer in respect of the canteen sales and liable to sales tax.

Issue (i): Whether the services rendered at the assessee's canteen, maintained in compliance with the Factories Act and the Mines Act, involved any element of sale.

Analysis: The question of compulsory sale was already settled by the Supreme Court, which held that a transaction carried out in compliance with a statutory mandate may nevertheless amount to a sale in law. The compulsory character of the canteen operations therefore did not by itself exclude the element of sale.

Conclusion: The issue was answered in the affirmative and against the assessee.

Issue (ii): Whether, on the facts and in the circumstances of the case, the assessee was a dealer in respect of the canteen sales and liable to sales tax.

Analysis: Under section 2(f) of the Bihar Sales Tax Act, 1959, the concept of dealer was held to carry the notions of business and sustained commercial activity. The Court found that the canteens were maintained under a statutory compulsion, were run on a no-profit-no-loss basis, required subsidy, and were not authorised by the company's memorandum and articles as a business venture. In the absence of profit-motive and voluntary commercial activity, the company could not be treated as carrying on the business of running canteens so as to be a dealer in respect of those sales.

Conclusion: The issue was answered in the negative and in favour of the assessee.

Final Conclusion: The canteen transactions were sales in law, but the assessee was not a dealer in respect of those canteen sales under the unamended statutory definition and was therefore not liable to sales tax on that footing.

Ratio Decidendi: For the unamended sales tax definition, a person becomes a dealer only when engaged in a business or sustained commercial activity with a profit-motive, and a compulsory, non-profit statutory canteen does not amount to such business.

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