TaxTMI 
TaxTMI 
2013 (4) TMI 497
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..... VAT Act, 2008 (hereinafter referred to as the Act). The facts are not much in dispute. Only a legal proposition as to whether the petitioner is a 'dealer' within the meaning of section 2(h) and is carrying on the business within the meaning of section 2(e), of the Act. The case of the petitioner in brief is that it is a statutory body constituted under the provisions of U.P. State Universities Act and is imparting education in various courses run by the University. The seats are limited, therefore, with a view to select only meritorious students, it conducts tests. These tests are held for admission to Graduate, Postgraduate and various professional courses. To facilitate the holding of such tests, the University publishes brochure/admission form containing examination schedule and other conditions for admission in various such courses. Irrespective of the courses or as to whether the tests are held for admission in Undergraduate, Graduate, Postgraduate etc., the costs of these forms is Rs. 50/- uniformly to meet out the printing expenses etc. of the admission forms, except for professional courses, cost of which is Rs. 500/-. This non profit making activity the Uni....
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....y itself is continuous business being carried on by the petitioner and as such it is covered under the ambit of "dealer" and "business" as defined under the Act. This is the short plea which has been set out in the counter affidavit filed by the Assessing Authority herself, who has issued the impugned notices asking the petitioner to produce the account books and obtain the registration under the Act. Heard Sri Ravi Kant, learned senior counsel for the petitioner assisted by Ms. Harshita Raghuvanshi and Sri C.B. Tripathi, Special Counsel of State of U.P. for the respondents. The main crux of the matter is whether the activity in question of the petitioner brings it within the definition of "dealer" and/or it amounts to business as defined under the Act. The term "business" has been defined in Section 2(h) of the Act in the following manner:- "Dealer" means any person who carries on in Uttar Pradesh (whether regularly or otherwise) the business of buying, selling, supplying or distributing goods directly or indirectly, for cash or deferred payment or for commission, remuneration or other valuable consideration and includes, - i. a local authority, body corpo....
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....r otherwise) the business of buying, selling, supplying or distributing goods directly or indirectly, for cash or deferred payment or for commission, remuneration or other valuable consideration..................." To begin with, the learned senior counsel for the petitioner places reliance upon Swadeshi Cotton Mills Co. Limited Vs. Sales Tax Officer, AIR 1965 Alld. 86. In this case a division bench of this Court was called upon to decide a question relating to the petitioner company running a canteen in the Mill. The Court interpreted the words "sale", and "dealer" as then stood under the U.P. Sales Tax Act. The Court held that running of canteen by Mill for its employees may not be to make profit or gain but may only be to fulfil its statutory obligation or to provide for welfare of its workmen. The canteen is a step in the aid of petitioner's business. From this point of view, an ultimate profit motive is visible. It was held that the petitioner is exigible to tax under the U.P. Sales Tax Act. Along with the above case, the Court considered the nature of the charges paid by students for the food served to them in the dining hall by the University. A question arose whether....
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....tudent than a hotel has to one of its guests. If an institution of higher learning is interested in a complete education for its students, then it will accept the responsibility for the total living conditions that they experience during their stay on the campus." "The aim of education is the creation of a well-educated, healthy young generation imbued with a rational progressive outlook on life." (at page 1876) 56. The dining-hall service is an integral part of the University for imparting education to the students. It is indissolubly blended with, and is an inseparable component of education of this University. I find it difficult to appreciate the respondent's argument that the dining hall service of the University should be separately treated and qua this activity the University should be treated as carrying on the business of buying or selling. In my opinion, the University is not a "dealer" as defined by the Safes Tax Act. Sri Ravi Kant, learned senior counsel for the petitioner, on the strength of the above ruling, submitted that undoubtedly the petitioner University is imparting education in various disciplines at multiple levels. It is also engaged in providin....
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....ile interpreting the term "business" which includes any trade, commerce, or manufacture etc., the Court held that if the main activity is not business then any transaction incidental or ancillary would not normally amount to business unless an independent intention to carry on the business, incidental or ancillary, activity is established. The relevant portion of paragraph 11 is reproduced below:- 11. No doubt, the definition of "business" given in Section 2(5A) of the Act even without profit motive is wide enough to include any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture and any transaction in connection with or incidental or ancillary to the commencement or closure of such trade, commerce, manufacture, adventure or concern. If the main activity is not business, then any transaction incidental or ancillary would not normally amount to "business" unless an independent intention to carry on "business" in the incidental or ancillary activity is established. In such cases, the onus of proof of an independent intention to carry on "business" connected with or incidental or ancillary sales will rest on the Department. Thu....
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....ng of admission forms, on the own showing the petitioner, is annual feature. Even if it is not a regular feature, the said annual activity is covered within the meaning of words "regular or otherwise". Argument is that a solitary incidence of sale and purchase by a person who does not carry on the business of buying and selling, will make him fall within the definition of word "dealer". It is difficult to agree with him. The intention of legislature does not appear to be so wide while defining the word "dealer". The business as defined under section 2(e) means any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce .......................... . The words "trade, commerce or manufacture" denote a course of action. It will not cover a solitary or isolatory instances. Sections 3, 6, 7 and 28 of the U.P. State Universities Act, 1973 are reproduced below:- 3. Incorporation of Universities.--(1) The Chancellor, the Vice-Chancellor and the members of the Executive Council, the Court and the Academic Council for the time being holding office as such in any University shall constitute a body corporate by the name of that University. (2) Each U....
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....ic Medicine Act, 1951 3[Doctor Bhimrao Ambedkar University, Agra or 4[Chhatrapati] Shahu Ji Maharaj University, Kanpur], as the case may be, shall-- (a) hold examinations for and grant diplomas in Homeopathy; (b) take over the functions of holding of examinations for courses prescribed by the Board of Homoeopathic Medicine constituted under the said Act and granting diplomas and shall exercise and perform all the powers and functions of such Board under the said Act with respect to holding of such examination and granting of diplomas. "28. Admission Committee.-- (1) There shall be an Admission Committee of the University, the constitution of which shall be such as may be provided for in the Ordinances, (2) The Admission Committee shall have the power to appoint such number of sub-Committee as it thinks fit. (3) Subject to the superintendence of the Academic Council and to the provisions of sub section (5), the Admission Committee shall lay down the principles or norms governing the policy of admission to various courses of studies in the University and may also nominate a person or a sub-Committee as the admitting authority in respect of any course of study in an ....
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.... rupees, or with both, as may be specified in the order. (5-A) Every order made under Clause (a) of Sub-section (5) shall be laid, as soon as may be, before both. Houses of the State Legislature and the provisions of Sub-section (1) of Section 23-A of the Uttar Pradesh General Clauses Act, 1904 shall apply as they apply in respect of rules made by the State Government under any Uttar Pradesh Act. (6) No student admitted to any College in contravention of the provisions of this section shall be permitted to take up any examination conducted by the University and the Vice-Chancellor shall have the power to cancel any admission made in such contravention." Having noticed the scheme of the U.P. State Universities Act, the main activity of the petitioner is to impart education undoubtedly. In discharge of its duties and obligations, printing and sale of admission forms to the students does not make the activity of the petitioner as business activity or making him dealer within the meaning of Act. We find that in M/S Scholors Home Senior Secondary School Vs State Of Uttarakhand And Another, 2011 NTN (46)-229 the Uttaranchal High Court has considered the question of exigibility o....
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....ts obtained during the course of manufacturing. The Apex Court has held while interpreting the expression "business" -- to record an activity as business there must be a course of dealings either actually continued or contemplated to be continued with a profit motive, and not for sport or pleasure. Whether a person carries on business in a particular commodity must depend upon the volume, frequency, continuity and regularity of transactions of purchase and sale in a class of goods and the transactions must ordinarily be entered into with a profit motive. By the use of the expression "profit motive" it is not intended that profit must in fact be earned. The relevant portion is reproduced below:- The expression "business" though extensively used in taxing statutes, is a word of indefinite import. In taxing statutes, it is used in the sense of an occupation, or profession which occupies the time, attention and labour of a person, normally with the object of making profit. To regard an activity as business there must be a course of dealings, either actually continued or contemplated to be continued with a profit motive, and not for sport or pleasure. Whether a person carries on busi....
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....ee was carrying on business in some commodity and he disposes of for a price articles discarded, surplus or unserviceable. It was urged, however, on behalf of the State that where a dealer with a -view to reduce the cost of production disposed of unserviceable articles used in the manufacture of goods and credits the price received in his accounts, he must be deemed to have a profit motive, for it would be uneconomical for the business to store unserviceable articles and to survive as an economic unit. But the question is of intention to carry on business of selling any particular class of goods. Undoubtedly from the frequency, volume, continuity and regularity of transactions carried on with a profit motive, an inference that it was intended to carry on business in the commodity may arise. But it does not arise merely because the price received by sale of discarded goods enters the accounts of the trader and may on an overall view enhance Ms total profit, or indirectly reduce the cost of production of goods in the business of selling of which he is engaged. An attempt to realize price by sale of surplus unserviceable or discarded goods does not necessarily lead to an inference tha....
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....d meaning, the context being levy of tax by one unit of federal upon the income of the other unit, the manifold activities carried on by governments under out constitutional scheme, the necessity to maintain a balance between the Centre and the States and so on." The controversy involved therein was entirely different. The decision was rendered in the context of Article 289 of the Constitution of India. The question was -- "Whether the properties of the States situated in Union Territory of Delhi are exempt from property taxes levied under the municipal enactments enforced in the Union Territory of Delhi. In that connection while giving meaning to Article 289 clause (2) and section 155 of the relevant Statute defining the words "land" and "buildings" the following observations were made:- "Now what does clause (2) of Article 289 say? It may be noticed that the language of the first proviso to Section 155 and of clause (2) of Article 289 is practically identical [except for the two distinguishing features mentioned hereinbefore]. It would, therefore, suffice if we discuss the proviso. It says - omitting reference t Princely States - that where a trade or business of any kind i....
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....ny trade or business carried on by it - that is a trade or a business carried on with profit motive. In the light of the language of the proviso to Section 155 and clause (2) of Article 289, it is not possible to say that every activity carried on by the government is governmental activity. A distinction has to be made between governmental activity and trade and business carried on by the government, at least for the purpose of this clause. It is for this reason, we say, that unless an activity in the nature of trade and business is carried on with a profit motive, it would not be a trade or business contemplated by clause (2). For example, mere sale of government properties, immovable or movable, or granting of leases and licences in respect of its properties does not amount to carrying on trade or business. Only where a trade or business is carried on with a profit motive - or any property is used or occupied for the purpose of carrying on such trade of business - that the proviso [or for that matter clause (2) of Article 289] would be attracted. Where there is no profit motive involved in any activity carried on by the State government, it cannot be said to be carrying on a trad....
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.... it proceeded on the footing that the Railway is engaged in transportation which is not so in the case of educational institution. It appears to be that there was no dispute that Railway is not a dealer within the meaning of a relevant statutory provision. The dispute was whether incidental or ancillary activities of such dealer which amounts to business are exigible to sales tax law or not. In that connection, it was held that in the definition of dealer and business, such a dealer will also be liable to pay the sales tax on the sale of unserviceable material and scrap. This case is, therefore, distinguishable. For the same reason, the other relied upon cases Karnatka Pawn Brokkers Assn. & Ors., Etc. Versus State of Karnataka & Ors., Etc., AIR 1999 SC 201; State of Tamil Nadur Vs. Binny Ltd., Madras, AIR 1980 SC 2038; Federal Bank Ltd. and Ords. Versus State of Kerala and Ors., JT 2007 (5) SC 91; Member Board of Revenue, West Bengal Versus Controller of Stores Eastern Railway, AIR 1999 SC 1468 and State of Orissa Versus M/s. Orissa Road Transport Co. Ltd. and Ords., AIR 1997 SC 3409 are distinguishable. Noticeably, in all these cases, the main activity of dealer was business activ....
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....ld in view of the wide definition of business contained in the relevant Statute. In this very case, the judgment of the Apex Court in the case of Sai Publication Fund (supra) has been referred. With regard to it the Court has observed as follows:- "In (2002) 4 SCC 57 the question that arises for consideration before the Apex Court was as to whether the trust of Sai Publication Fund which was set up by some devotees of Saibaba can be held to the a "dealer". In respect of sale of books, booklets, pamphlets and other literature containing the message of Saibaba and the turnover can be assessed to tax under the Bombay Sales Tax Act, 1959. From the above decisions it is clear that if the main activities of the assessee concerned were not business. In which case any business activity incidental or ancillary thereto which is infinitesimal or small part of the main activities cannot bring it within the scope of the term 'dealer'. In other words, the presumption will be that these connected incidental or ancillary activities of sales are not business in these connected incidental and ancillary sales will rest on the Department. It was also held that if the main activity is "no....