2002 (3) TMI 45 - SC - VAT / Sales Tax

Trust's religious publications not subject to sales tax; profit motive relevant only if carrying on trade or business

Commissioner Of Sales Tax Versus Sai Publication Fund

SC held the trust was not a dealer for purposes of sales tax on publications promoting a religious message. The Court ruled profit motive is relevant only ... Whether the trust-Sai Publication Fund, which has been set up by some devotees of Saibaba of Shiridi for spreading his message, can be held to be a 'dealer' in respect of sale of books, booklets, pamphlets, photos, stickers and other publications containing message of Saibaba and the turnover of such publication can be assessed to sales tax under the Bombay Sales Tax Act, 1959 ? Held that:- The question of profit motive or no profit motive would be relevant only where person carries on trade, commerce, manufacture or adventure in the nature of trade, commerce, etc. On the facts and in the circumstances of the present case irrespective of the profit motive, it could not be said that the trust either was a 'dealer' or was carrying on trade, commerce, etc. The trust is not carrying on trade, commerce, etc., in the sense of occupation to be a 'dealer' as its main object is to spread the message of Saibaba of Shiridi as already noticed above. Having regard to all aspects of the matter, the High Court was right in answering the question referred by the Tribunal in the affirmative and in favour of the respondent-assessee. We must however add here that whether a particular person is a 'dealer' and whether he carries on 'business' are matters to be decided on the facts and in the circumstances of each case. The question set out in the beginning in the negative and in favour of the respondent-assessee. Issues Involved:1. Whether the trust, Sai Publication Fund, can be considered a 'dealer' under the Bombay Sales Tax Act, 1959.2. Whether the trust's activities of selling publications constitute 'business' under the Act.Issue-wise Detailed Analysis:1. Whether the trust, Sai Publication Fund, can be considered a 'dealer' under the Bombay Sales Tax Act, 1959.The primary issue for consideration was whether the Sai Publication Fund, a trust set up by devotees of Saibaba of Shirdi for spreading his message, qualifies as a 'dealer' under the Bombay Sales Tax Act, 1959. The trust publishes books, pamphlets, and other literature containing Saibaba's message and sells them at nominal charges to cover costs. The proceeds from these sales are used solely for the trust's objectives.The Deputy Commissioner of Sales Tax had initially determined that the trust's activities amounted to 'business' under section 2(5A) of the Act and that the trust was a 'dealer' under section 2(11). This decision was based on an amendment to the definition of 'business' which included activities carried out without a profit motive.However, the Maharashtra Sales Tax Tribunal overturned this decision, concluding that the trust was not a 'dealer' as its primary objective was to spread Saibaba's message, not to engage in business. The High Court upheld this view, and the Supreme Court was tasked with reviewing this decision.2. Whether the trust's activities of selling publications constitute 'business' under the Act.The Supreme Court examined the definitions of 'business' and 'dealer' under the Act. Section 2(5A) defines 'business' broadly, including any trade, commerce, or manufacture, regardless of profit motive. Section 2(11) defines a 'dealer' as a person engaged in the business of buying or selling goods.The Court noted that not every person selling goods is a 'dealer'; the person must be engaged in the business of buying and selling goods. The trust's main activity was spreading Saibaba's message, and the sale of publications was incidental to this primary objective. The publications were sold at cost price, and the trust was not established with the intention of carrying on a business of selling goods.The Court referenced several precedents, including the case of State of Tamil Nadu v. Board of Trustees of the Port of Madras, which emphasized that if the main activity is not business, incidental or ancillary activities do not constitute business unless there is an independent intention to carry on business.The Court concluded that the trust's activities did not amount to 'business' as defined under the Act. The primary and dominant activity of the trust was to spread Saibaba's message, and the sale of publications was merely incidental to this objective. Therefore, the trust could not be considered a 'dealer' under section 2(11) of the Act.Separate Judgments:Civil Appeal No. 9445 of 1996:The Supreme Court dismissed the appeal, affirming the High Court's decision that the trust was not a 'dealer' and its activities did not constitute 'business' under the Act.Civil Appeal No. 1716 of 1999:This appeal was also dismissed as it relied on the judgment in Civil Appeal No. 9445 of 1996. The facts and circumstances of both cases were similar, and the dismissal of the earlier appeal necessitated the dismissal of this one as well.Conclusion:The Supreme Court upheld the High Court's decision that the Sai Publication Fund is not a 'dealer' under the Bombay Sales Tax Act, 1959, and its activities of selling publications do not constitute 'business.' The appeals were dismissed with no order as to costs.