Statutory canteen sales are not taxable where the dominant object is welfare service, not sale-oriented business.

Statutory canteen supplies maintained under a legal obligation are not automatically exigible to sales tax; taxability depends on whether the canteen is run as a sale-oriented business or as a welfare service required by the Factories Act. The definitions of "business" and "sale" cannot be applied mechanically where the dominant object is service and the food supply is merely incidental. On the facts discussed, the tribunal had not found sale of food to be the primary object, so the canteen sales were not taxable and the contrary view was overruled.

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Issues: Whether canteen sales made by an occupier under a statutory obligation to maintain a canteen for workers were exigible to sales tax under the Madhya Pradesh General Sales Tax Act, 1958.

Analysis: The decisive inquiry was whether the canteen activity was carried on as a sale-oriented business or merely as a welfare service in compliance with the statutory mandate under the Factories Act. The Court held that the labels of dealer, business, and taxable turnover could not be applied mechanically where the dominant object of the canteen was to render service and the supply of food was only incidental. The widening of the statutory definition of business and the later expansion of the definition of sale did not, by themselves, make every statutory canteen sale taxable; the factual question of intention and dominant object remained controlling. On the facts found, the Tribunal had not held that sale of food was intended as the primary object.

Conclusion: Canteen sales in such circumstances were not exigible to sales tax, and the answer to the reference was in the affirmative, against the Revenue and in favour of the assessee.

Final Conclusion: The earlier contrary view was overruled, and taxability of statutory canteen supplies was held to depend on the factual determination whether the dominant object was sale or service.

Ratio Decidendi: Where a canteen is maintained under a legal obligation and the dominant object is to render a welfare service rather than to effect sales, the occupier is not carrying on business as a dealer in respect of those supplies, and the canteen sales are not exigible to tax.

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