Profit motive required for dealer status under the unamended Central Sales Tax Act; no tax liability without business activity.

Under the unamended section 2(b) of the Central Sales Tax Act, 1956, a person was a dealer only if it carried on business, and business for that period included a profit motive. On the findings that the Food Corporation of India was distributing fertilizers under allotment to States or their nominees and lacked profit motive, the statutory requirement of carrying on business was not met. The earlier view that it acted as an agent of the Central Government did not by itself establish dealer status. The Food Corporation of India was therefore not a dealer for the relevant period and was not liable to tax.

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Issues: Whether the Food Corporation of India was a "dealer" within the meaning of section 2(b) of the Central Sales Tax Act, 1956 for the relevant assessment year, and consequently liable to tax.

Analysis: For the period prior to the amendment of section 2(b) by Act 103 of 1976, the definition of "dealer" required carrying on business, and the concept of business under the Act included the element of profit motive. The findings recorded were that the Food Corporation of India was distributing fertilizers under allotment made by the Agriculture Department to States or their nominees and that there was no profit motive. On those findings, the statutory requirement of carrying on business was not satisfied. The earlier Division Bench view that the Food Corporation of India acted as an agent of the Central Government did not conclude the question, because the element of business still had to be established.

Conclusion: The Food Corporation of India was not a "dealer" for the relevant period and was not liable to tax under the Act.

Ratio Decidendi: Under the unamended section 2(b) of the Central Sales Tax Act, 1956, a person is a dealer only if it carries on business with the necessary profit motive; absence of profit motive negatives liability.

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