TaxTMI 
TaxTMI 
2015 (4) TMI 458
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....pellant's activity of manufacture and sale of sweetmeats and farsan is integral and incidental to his main charitable activity, and that therefore the appellant is not a 'dealer' and does not carry on 'business' qua its activity of manufacture and sale of sweetmeats and farsan ?" 2. Few facts necessary for consideration of the Reference are as under :- The petitioner in the writ petition referred above (hereinafter referred to as "the trust", for the sake of brevity) is a charitable trust, registered in the year 1960, which claims to have area of operation over the entire country. The said trust claims to be engaged in charitable activities, such as installation of water supply units, organizing the medical camps, free education to needy students, subsidized food packets or free meals on special occasions, etc. It is also claimed that the petitioner is operating an orphanage at Lonavala and is instrumental in providing aid in case of natural calamities. 3. The trust is also running a shop called "Ganesh Bhandar" wherein sweetmeats, farsan, etc. are manufactured and sold. It is claimed by the trust that the said shop activity of preparation and selling of swee....
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....e Tribunal, dated 25th January, 2001. This is how the Reference is placed before us. 9. The relevant provisions of the statute, which deal with the issue required to be answered, are as under :- The terms "business", "dealer" and "person" are defined in sections 2 (5-A), 11 and 19 of the Bombay Act, which read thus:- "S.2(5A)- "business" includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture whether or not such trade, commerce, manufacture, adventure or concern is carried on with a motive to make gain or profit and whether or not any gain or profit accrues from such trade, commerce, manufacture, adventure or concern and any transaction in connection with, or incidental or ancillary to, the commencement or closure of such trade, commerce, manufacture, adventure or concern; (11) "dealer" means any person who whether for commission, remuneration or otherwise carries on the business of buying or selling goods in the State, and includes the Central Government, or any state Government which carries on such business, and also any society, club or other association of persons which buys goods from or sells goods to its me....
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....and thus the trust is amenable to pay sales tax. 14. According to Revenue, the judgment of the Apex Court in the matter of Commissioner of Sales Tax vs. Sai Publication Fund, reported in (2002) 4 SCC 57, has hardly any application to the issue under reference as the facts and circumstances in which the Apex Court has answered the same against the Revenue, were altogether different. He would further urge that the Revenue has discharged its burden by demonstrating that the activity of the trust in question is within the ambit of 'business' and as such the trust must register itself as a 'dealer'. 15. It is further claimed by the Revenue that the issue can be very much answered in its favour, in view of the judgment of the Karnataka High Court, in the matter of M/s Manipal University, Represented by its Registrar vs. The State of Karnataka, Department of Finance, By its Secretary, reported in ILR 2014 Karnataka 5582. In addition to above, he would urge that irrespective of profit motive of the trust, the activity of manufacture of sweetmeats and farsan was found to be on large scale, the sale of the same to the public at large, the volume, frequency, continuity and r....
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....ions made by the Revenue and the assessee, it is required to be noted that the charitable activity as could be gathered from the provisions of the Bombay Public Trusts Act, 1950, under which the assessee is registered, could be termed as activity of general public utility. The charitable purpose as is provided under section 9 of the Maharashtra Public Trusts Act speaks of poverty or distress, education, medical relief, provision for facilitation for recreation or other leisure time occupation........... and the advancement of other objects of general public utility, however, excludes exclusive religious teaching or worship. The facilities which are provided in the interest of social welfare are not taken to be charitable activities, unless the qualification required under the Act is satisfied. 18. In the present case, if we look into the object of the assessee trust, it is required to be noted that the trust was formed with an object of providing pure drinking water to the needy, to provide food; either free of charge or at concessional rate to the needy and deserving and as such according to the assessee, the activity of manufacturing of farsan and sweetmeats is taken up. Though ....
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....the trust was formed with an object to spread the message of Saibaba, however, the activity of publication and sales of books, pamphlets, photos, stickers, etc. was sought to be covered under the activity of 'business'. While dealing with the said issue, the Apex Court held that the said activity was not carried out with a profit motive and there was no independent intention of the said trust to conduct business. It was also observed by the Apex Court in the said judgment that it is not a repeated activity. While answering the issue of 'business' and 'dealer' in favour of the said assessee, the Apex Court has observed that the sole object of assessee trust in the said case was to spread message of Saibaba. The sale of literature and books containing message of Saibaba to its devotees, at cost price, could be termed as 'non business activity' which is ancillary to the main activity of spreading of message, which is not a business activity. The Apex Court held that the activity of publishing and selling literature, books and other literature is obviously incidental or ancillary to the main activity of spreading message of Saibaba and as such not a busi....
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....tivity of the Trust is to spread the message of Saibaba. This main activity does not amount to "business". The activity of publishing and selling literature, books and other literature is obviously incidental or ancillary to the main activity of spreading message of Saibaba and not to any business as such even without profit motive and it is in a way a means to achieve the object of the Trust through which message of Saibaba is spread. It is clear from the Trust Deed and objects contained therein that it was not established with an intention of carrying on the business/occupation of selling or supplying goods. This being the position, it cannot be said that the Trust carries on the business of selling and supplying goods so as to fall within the meaning of "dealer" under Section 2(11) of the Act. 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 co....
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....sage of somebody as revered as Saibaba. It is a proper commercial activity and aimed at garnering revenue. It is now established and is in place under the distinctive name and style. The sale of sweetmeats, farsan to general public cannot be equalled with a activity noticed by the Hon'ble Supreme Court and associated with Saibaba and his followers. 25. In that view of the matter, it is required to be held that the activity of manufacture of farsan and sweetmeats is a 'business' activity within the meaning of section 2 (5-A) of the Bombay Act and the assessee is required to be registered as dealer and as such is liable for the tax. We are fortified in our view, in view of the law laid down by the Division Bench of the Karnataka High Court, in the matter of M/s Manipal University vs. State of Karnataka (cited supra), wherein the Division Bench was dealing with the issue, whether sale of prospectus amounts to a 'business' by charitable trust and observed in paragraph 15 of the said judgment thus:- "It has come on record, and it is not in dispute that in 2005-06, total collection of the University from the sale of prospectus and application forms was Rs. 2.55 cror....
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....ation Fund (cited supra) and has noted that there was a profit motive on the part of the University and the activity of the University is that of business. 26. It is also required to be noted that even if the main object of the trust in the present case is not a business, the connected incidental or ancillary activity of manufacture of farsan and sweetmeats, could not normally be termed as 'business', unless the very conduct of the assessee if analyzed independently, the intention that could be gathered is to conduct the business in carrying out the incidental or ancillary activity. In our opinion, the Revenue has rightly discharged its burden by bringing on record from the observations made herein above, that the activity of the assessee trust is not incidental or ancillary to the main object of the trust, hence termed as 'business' having regard to its nature, viz. continuity, voluminous, etc. 27. Even this Court is alive to the fact that the profit motive will have hardly any bearing over declaring the said activity as 'business' activity, however, it is required to be noted that the regularity of the transaction of manufacture and sale in the said clas....