Carrying on business in a rural area requires local commercial activity, not mere purchase of raw material for an outside factory.

A company does not carry on business in a rural area merely by regularly purchasing sugarcane there for use as raw material in a sugar factory located elsewhere. For tax under section 121(a) of the U.P. Kshettra Samitis and Zila Parishads Adhiniyam, 1961, the relevant activity must amount to business being carried on within the rural area itself. Mere procurement of inputs, even on a continuous basis, is not enough where no separate profit-making or commercial operation is conducted locally. On the admitted facts, the tax was not leviable.

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Issues: Whether the company's regular purchase of sugarcane within the rural area, for use as raw material in its sugar factory situated outside that area, amounted to "carrying on business" in the rural area so as to attract tax under section 121(a) of the U.P. Kshettra Samitis and Zila Parishads Adhiniyam, 1961.

Analysis: The relevant statutory expression required business activity to be carried on in the rural area. The company's only activity within that area was the purchase of sugarcane as raw material for its manufacturing business conducted elsewhere. Mere procurement of inputs, even if continuous and regular, did not amount to carrying on the manufacturing business at the place of purchase. The Court distinguished authorities dealing with different statutory language and with situations where a distinct profit-yielding process or commercial operation was carried on locally. On the admitted facts, no separate business operation or profit-making activity took place within the jurisdiction of the Parishad.

Conclusion: The company was not carrying on business in the rural area merely by purchasing sugarcane there, and the tax was not leviable.

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