Incidental hostel food supply by educational institutions was not business activity and escaped sales tax treatment.

Purchase and supply of foodstuffs by private educational institutions running student hostels was held not to constitute a separate business activity for sales tax purposes. The court treated the institutions' dominant function as education, and the hostel food service as merely ancillary, incidental and integral to that educational purpose. Charging consideration for the meals did not convert the support activity into commerce. On that basis, the food supply in the hostels could not be taxed under section 6A of the Andhra Pradesh General Sales Tax Act, 1957, and the finding was in favour of the assessees.

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Issues: Whether the purchase and supply of foodstuffs by private educational institutions running hostels for students constituted a business activity so as to attract tax under section 6A of the Andhra Pradesh General Sales Tax Act, 1957.

Analysis: The institutions were primarily engaged in imparting education, and the hostel facilities with supply of food were only supportive of that principal educational function. The supply of food was not a separate commercial venture but an activity incidental and integral to the main educational activity. The principle applied was that an activity which is merely ancillary or incidental to a predominantly academic purpose does not become business merely because consideration is charged for it. Education itself was treated as a non-commercial activity, and the hostels existed only to facilitate that object.

Conclusion: The supply of foodstuffs in the hostels did not amount to business and could not be taxed under the Sales Tax Act; the finding was in favour of the assessees.

Ratio Decidendi: An activity incidental and integral to the predominant educational function of an institution does not constitute business for sales tax purposes merely because it involves purchase and supply of goods to students.

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