Incidental supply of food by an educational institution is not business absent independent commercial intention under VAT law.

An educational institution's supply of food to residential students was held not to be business under the Uttarakhand Value Added Tax Act, 2005, because tax liability arises only where sales are made in the course of business by a dealer. The court noted that the institution's primary activity was imparting education, not trade, and that hostel food provision was merely incidental and integral to that educational object. In the absence of any independent intention to carry on a food-selling business, the institution could not be treated as a dealer. Tax notices issued on that basis were therefore without jurisdiction and were quashed.

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Issues: Whether supply of foodstuff by an educational institution to its residential students amounted to business so as to make the institution a dealer liable to tax under the Uttarakhand Value Added Tax Act, 2005.

Analysis: The charging provision applies only to a sale made by a dealer or a person carrying on the business of taxable goods. The definitions of sale, dealer and business show that tax liability arises only where the activity is undertaken in the course of business. The institution's primary and predominant activity was imparting education, which is not trade or business. Supplying food to hostel students was only incidental and integral to the educational object, and no independent intention to carry on a business of selling foodstuff was shown. The principle applied is that incidental or ancillary transactions do not amount to business when the main activity is not a business.

Conclusion: The supply of foodstuff to residential students did not amount to business, the institution was not a dealer, and the proposed assessment on that basis was without jurisdiction.

Final Conclusion: The notices demanding tax on the hostel food supply were quashed and the writ petitions were allowed.

Ratio Decidendi: Where the principal activity of an institution is non-commercial and educational, incidental supply of food to its students does not constitute business or render the institution a dealer for sales tax purposes unless an independent business intention is established.

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