Subsidised food for poor and needy persons qualifies as relief to the poor; cost-based receipts do not make it commercial.

An institution providing free or subsidised food to poor and needy persons was held to fall within relief to the poor, not the residual limb of general public utility. The proviso to section 2(15) did not apply merely because some receipts were recovered at or near cost, so the activity was not treated as trade, commerce or business. A collateral allegation regarding domestic LPG usage was also found insufficient on the facts. Registration under section 12AB was therefore directed to be granted, as rejection on these grounds was not sustainable.

---

---

Issues: Whether rejection of registration under section 12AB was justified on the ground that the society's activity of supplying food packets at concessional rates was a commercial activity hit by the proviso to section 2(15), and whether the alleged LPG-related violation furnished a valid basis to refuse approval.

Analysis: The application for registration had to be examined in the context of the objects and the genuineness of the proposed activities. A newly set up institution is not to be denied registration merely because its operational activity is at an stage, so long as the activity is in furtherance of its charitable objects. Supplying food to poor and needy persons at free or subsidised rates was found to fall within the charitable head of relief to the poor, not within the residual head of general public utility. The proviso to section 2(15) therefore had no application to such activity, and nominal or cost-based receipts did not convert the activity into trade, commerce or business. The alleged use of domestic LPG cylinders was also held to be an untenable ground for rejection on the facts found.

Conclusion: The rejection of registration was not sustainable and approval under section 12AB was directed to be granted.

Ratio Decidendi: Where an institution's dominant activity is providing subsidised or free food to poor and needy persons, the activity falls within relief to the poor and cannot be treated as trade, commerce or business merely because some consideration is recovered at or near cost; registration under section 12AB cannot be refused on that basis or on an unsupported collateral allegation.

---