1997 (9) TMI 583 - HC - VAT and Sales Tax

Devasthanam exempt from sales tax on jaggery purchase under TN GST Act

Arulmigu Dhandayuthapani Swami Thirukkoil Versus Commercial Tax Officer-II, Palani

Arulmigu Dhandayuthapani Swami Thirukkoil Versus Commercial Tax Officer-II, Palani - [1998] 108 STC 114 (Mad) Issues Involved:1. Whether the appellant is a 'dealer' under the Tamil Nadu General Sales Tax Act, 1959.2. Whether the appellant's activities constitute 'business' under the Act.3. Validity of the levy of tax on the purchase of jaggery by the appellant.4. Availability of alternative remedy to the appellant.Summary:Issue 1: Whether the appellant is a 'dealer' under the Tamil Nadu General Sales Tax Act, 1959.The appellant, a Devasthanam, argued that it is not a dealer as it does not carry on any business. The Government had previously clarified that the sale of prasadams by temples is not liable to tax, as the activities of the temple cannot be held as business, and the temple cannot be held as a 'dealer.' This position was supported by various High Court decisions, including the Tirumala Tirupati Devasthanam case, which held that a temple's activities in selling prasadams do not constitute business.Issue 2: Whether the appellant's activities constitute 'business' under the Act.The appellant contended that its activities of preparing and selling prasadams, including panchamirtham, are not business activities. The preparation and sale of panchamirtham are incidental to the religious activities of the temple. The court referenced multiple decisions, including the Managing Committee, Temple Sri Bankey Behari Ji case, which held that the sale of prasadams by a temple does not constitute business, as the primary activity is religious and not commercial.Issue 3: Validity of the levy of tax on the purchase of jaggery by the appellant.The respondent sought to levy tax on the purchase of jaggery by the appellant, arguing that the ingredients used in the preparation of panchamirtham are taxable. However, the court found that the appellant is not engaged in any commercial activity and does not fall under the definition of 'business' or 'dealer' as per the Act. The court concluded that the appellant's dominant activity is religious and charitable, and the sale of panchamirtham is incidental, not a business activity. Therefore, the levy of tax on the purchase of jaggery is invalid.Issue 4: Availability of alternative remedy to the appellant.The learned single Judge dismissed the writ petition on the ground that the appellant had an alternative remedy to challenge the impugned order. However, the court held that the dismissal of the writ petition on this ground was against the principles of natural justice, given the peculiar facts and circumstances of the case. The court emphasized that the issue should have been decided on its merits.Conclusion:The court allowed the writ appeal and the writ petition, stating that the appellant is neither a dealer nor engaged in business under the Act. The tax levied on the purchase of jaggery by the appellant was deemed invalid. The interim stay granted during the appeal was upheld, and any bank guarantee furnished by the appellant was ordered to be canceled, with any recovered sales tax to be refunded to the appellant immediately.