Charitable hospital activity involving medicines is not dealer business when carried on only to advance charitable objects.

A charitable hospital trust that buys, sells and supplies medicines only to further its hospital activity and achieve its charitable objects is excluded from the definition of dealer under Exception (iii) to section 2(10) of the Gujarat Value Added Tax Act, 2003. The decisive factor is whether the activity is carried on as an independent business; where it is merely incidental to the charitable function of running the hospital and not in the nature of business, the institution is not treated as a dealer. On the facts stated, the medicinal activity fell within the exception and the trust was outside dealer status.

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Issues: Whether a charitable hospital trust carrying on buying, selling and supplying medicines to patients for achieving its avowed charitable objects falls within the definition of dealer under section 2(10) of the Gujarat Value Added Tax Act, 2003, or is excluded by Exception (iii).

Analysis: The trust was engaged in purchasing, selling and supplying medicines only in furtherance of its charitable hospital activity and not as an independent business. The exception in section 2(10) excludes a charitable institution carrying on such activity in performance of its functions for achieving its avowed objects, where the activity is not in the nature of business. On the facts found, the medicinal activity was only incidental to the charitable object of running the hospital and did not amount to business.

Conclusion: The trust was not a dealer within Exception (iii) to section 2(10), and the question was answered in favour of the assessee.

Ratio Decidendi: A charitable institution is not a dealer where the buying, selling or supplying of goods is undertaken only in performance of its charitable functions to achieve its avowed objects and the activity is not in the nature of business.

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