Business activity test under sales tax law: charitable publication sales at cost price were not treated as taxable business.

A trust publishing and selling books, pamphlets, photos, stickers and similar literature at cost price to spread a religious message was not treated as carrying on business under the Bombay Sales Tax Act, 1959. Liability to sales tax arose only if the trust was a dealer, meaning it carried on the business of buying or selling goods. Although the statutory definition of business includes transactions incidental or ancillary to trade, commerce or manufacture without requiring profit motive, that extended meaning still depends on the main activity being business or on proof of a separate intention to conduct business in the incidental sales. As the trust's dominant object was religious dissemination and no independent business intention was proved, the publication turnover was not liable to sales tax.

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Issues: Whether a trust engaged in publishing and selling books, pamphlets, photos, stickers and other literature at cost price for spreading a religious message can be treated as carrying on business and therefore as a dealer liable to sales tax.

Analysis: Under the Bombay Sales Tax Act, 1959, liability to tax arises only when a person is a dealer, and a dealer is one who carries on the business of buying or selling goods. The definition of business is wide and includes transactions incidental or ancillary to trade, commerce or manufacture, even without a profit motive. But that extended meaning presupposes that the main activity itself is business, or that an independent intention to carry on business in the incidental activity is established. The trust's dominant object was to spread the message of Saibaba, and the publication activity was only a means to achieve that object. The publications were sold at cost price, and the Revenue did not prove any independent business intention in the sale activity. The fact that profit motive is excluded from the statutory definition did not by itself make the trust's activities business.

Conclusion: The trust was not carrying on business within the meaning of the Act and was not a dealer; the turnover from sale of its publications was not liable to sales tax.

Ratio Decidendi: Where the main activity of an or trust is not business, connected or incidental sales are not business unless the Revenue proves a separate intention to carry on business in those transactions.

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