B.P. Saraf, J.
1. By this reference under section 61(1) of the Bombay Sales Tax Act, 1959, made at the instance of the Revenue, the Maharashtra Sales Tax Tribunal has referred the following question of law to this Court for opinion :
'Whether, on the facts and circumstances of the case and correct interpretation of the provisions of the Bombay Sales Tax Act, 1959, as amended by Maharashtra Act No. 9 of 1989, dispensing with 'profit-motive' from the concept of the 'business', was the Tribunal justified in holding that the respondent is not a 'dealer qua its activities' of publication and sale of books, booklets and allied publications including photos and stickers ?'
2. The controversy in this case is whether the trust, Sai Publication Fund, which has been set up by some devotees of Saibaba of Shirdi for spreading the message of Saibaba of Shirdi can be held to be a dealer in respect in respect of sale of books, booklets and other publications containing the message of Saibaba and the turnover of such publications can be assessed to sales tax under the Bombay Sales Tax Act, 1959 ('the Act'). The material facts giving rise to this controversy are as follows :
The assessee is a trust created by four devotees of Saibaba of Shirdi by a deed of trust dated August 6, 1984. The object of the trust is to spread the message of Saibaba of Shirdi. For the advancement of the above object, the trust publishes books, booklets and other literature containing the message of Saibaba and photos, stickers, etc. All these are published by the trust under the aegis of 'Sai Publications' and made available to the devotees of Saibaba on a nominal charge to meet the cost. The mount realised from the sale of such publications goes to the trust and forms part of the property of the trust and can be utilised only for furtherance of the objects of the trust. The trust deed contains a specific provision to the effect that in the even of failure of the trust to carry on its aims and objects, the fund remaining in its hands would be handed over to the Sansthan of Shirdi.
To avoid any controversy in regard to leviability of sales tax on the amount received on sale of such publications, the trust made an application under section 52(1)(a) of the Act for determination of the questions whether the trust could be said to be carrying on the business as defined in section 2(5A) of the Act and whether it was a dealer within the meaning of section 2(11) of the Act and liable to registration. The Deputy Commissioner of Sales Tax, who took up the determination, by his order dated September 28, 1989, held that the activity of publication and sale of books, etc., by the trust amounted to business within the meaning of section 2(5A) of the Act and hence it was a dealer within the meaning of section 2(11) of the Act and liable to sales tax on the value of the publications sold by it. This conclusion was arrived at by the Deputy Commissioner in view of the amendment of the definition of 'business' in section 2(5A) of the Act by the Maharashtra Tax Laws (Levy, Amendment and Repeal) Act, 1989 (Maharashtra Act No. 9 of 1989) with retrospective effect from August 16, 1985 to provide that profit-motive is not necessary in business.
Against the above determination of the Deputy Commissioner, the trust appealed to the Maharashtra Sales Tax Tribunal ('the Tribunal'). Before the Tribunal, it was contended on behalf of the trust that it was not a dealer within the meaning of section 2(11) of the Act, as it was not engaged in any activity which could fall within the expression trade, commerce, manufacture or an adventure or concern in the nature of trade, commerce or manufacture. Reliance was placed on the trust deed as well as the definition of 'business' in support of the contention that even the basic ingredients of business were absent in case of the activities of the trust. The contention of the assessee, in other words, was that the question of profit-motive or no profit-motive would be relevant only where a person carries on trade, commerce, manufacture or adventure in the nature of trade, commerce, etc. If the activity does not meet the basic description of business, the person carrying on the same cannot be held to be a dealer. The Revenue relied on the amendment of the definition of 'business' as a result of which profit-motive is no more a relevant consideration in deciding whether a particular activity amounted to business or not. The Tribunal, on consideration of the rival submissions, came to a conclusion that keeping in view the object of the trust and the nature of its activities, the assessee could not be held to be a dealer and hence no tax can be levied on the amount received by it from the sale of its publications. Hence this reference at the instance of the Revenue.
3. Mr. R. V. Desai, learned counsel for the Revenue, submits that the trust in question is a dealer within the meaning of section 2(11) of the Act read with section 2(5A) thereof, as it sells the books published by it for a price. According to him, after the amendment of the definition of 'business' with effect from August 16, 1985, it is immaterial whether the above activity was carried on by the trust with a profit-motive or without any profit-motive. The submission of Mr. Desai in other words is that the object for which the books, etc., are published and sold by the trust is not relevant for deciding whether the trust carried on the business of sale or supply of books. the fact that it publishes the same for sale by itself is sufficient to make it a dealer in those publications. Reliance is placed in support of the above contention on the decisions of the Supreme Court in State of Gujarat v. Raipur . [1967] 19 STC 1 and Government Medical Store Deport v. Superintendent of Taxes [1985] 60 STC 269 and a decision of the Allahabad High Court in Food Corporation of India v. Commissioner of Sales Tax [1988] 69 STC 374.
4. We have carefully considered the submissions of Mr. Desai and perused the decisions referred to by him. However, on a careful consideration of the above decisions, the scheme of the Bombay Sales Tax Act, and the provisions thereof, in particular the charging section 3, the definition of 'dealer' in section 2(11) and definition of 'business' in clause (5A) of section 2 of the Act, as amended from time to time, we are of the clear opinion that the trust cannot be held to be a dealer within the meaning of section 2(11) of the Act.
5. Though the Bombay Sales Tax Act, 1959, provides for levy of tax on the sale purchase of certain goods in the State of Maharashtra, the levy is restricted only to sales or purchases made by 'dealers'. This is evident from the charging section 3 which makes every 'dealer' whose turnover of sale or purchases during any year exceeds the limits specified therein, liable to payment of tax under the Act on his turnover of sales or purchases. It is manifest from section 3 that the liability to pay sales tax is only on dealers. 'Dealer' does not mean any and every person who sells or purchases any taxable goods. For the purposes of the Act, it has been defined in clause (11) of section 2 of the Act to mean any person 'who carries on the business of buying and selling of goods' in the State. It reads :
'2(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 or persons which buys goods from or sells goods to its members.'
On a careful reading of the above definition of 'dealer', it is clear that only persons 'who carry on the business' of buying or selling goods are regarded as dealers. Thus, a person would not be a dealer in respect of the goods sold or purchased by him, unless he carries on the business of buying and selling such goods.
6. 'Dealer' and 'person' are not inter-changeable expressions. 'Person' as defined in clause (19) of section 2 of the Act, means not only natural persons but includes any company or association or body of individuals whether incorporated or not and also a Hindu undivided family, a firm or a local authority. 'Dealer' on the other hand, means only such persons who carry on the business of buying and selling of goods in the State including those who are deemed to be dealer by virtue of the definition of 'dealer' contained in section 2(11) of the Act. It is thus clear from a conjoint reading of section 3 and clauses (11) and (5A) of section 2 of the Act that tax under this Act is leviable not on the sales or purchase of taxable goods by any and every 'person', but only 'by person who can be held to be dealer within the meaning of clause (11) of section 2 of the Act'.
7. The expression 'business' appearing in the definition of 'dealer' in section 2(11) of the Act is an extensively used expression. It connotes some real, substantive and systematic or organised course of activity or conduct with a set purpose. The true meaning of this expression in the context of the definition of 'dealer' in the sales tax statutes of different States has always been a subject-matter of serious debates in the courts.
In State of Andhra Pradesh v. Abdul Bakshi and Bros. [1964] 15 STC 644, the Supreme Court considered the meaning of this expression in the context of section 2(e) of the Hyderabad General Sales Tax Act, which defined 'dealer' to be a person engaged in the business of buying, selling or supplying goods and observed :
'..... A person to be a dealer must be engaged in the business of buying or selling or supplying goods. The expression 'business' though extensively used 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 a 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. But to be a dealer a person need not follow the activity of buying, selling and supplying the same commodity. Mere buying for personal consumption, i.e., without a profit-motive, will not make a person dealer within the meaning of the Act, but a person who consumes a commodity bought by him in the course of his trade, or use in manufacturing another commodity for sale, would be regarded as a dealer ......'
In State of Gujarat v. Raipur . : [1967]1SCR618 it was observed :
'....... 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 must in fact be earned. Nor does the expression cover a mere desire to make some monetary gain out of a transaction or even a series of transactions. It predicates a motive which pervades the whole series of transactions effected by the person in the course of his activity ......'
8. Despite these decisions, the meaning of the expression 'business' continued to remain a subject-matter of perpetual debate and disputes before the courts. To set this controversy at rest, the Legislatures of various States defined this expression. In the Bombay Sales Tax Act, 'business' was defined by insertion of clause (5A) in section 2 with effect from January 15, 1975. This clause, as originally inserted by Maharashtra Act No. 62 of 1974, reads as follows :
'(5A) 'business' includes 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 such trade, commerce, manufacture, adventure or concern.'
The following was added in the above definition by the Maharashtra Tax Laws (Levy and Amendment) Act, 1988 (Maharashtra Act No. 9 of 1988) with retrospective effect from July 1, 1981 :
'and any transaction in connection with, or incidental or ancillary to, the commencement or closure of such trade, commerce, manufacture, adventure or concern;'
At the end of the above clause, the following Explanation was also added from July 1, 1981, by the same Amendment Act :
'Explanation. - For the purpose of this clause, the activities of raising of man-made forests or rearing of seedlings or plants shall be deemed to be business;'
In the present reference we are not concerned with the above Explanation.
This definition was further amended by the Maharashtra Tax Laws (Levy, Amendment and Repeal Act), 1989 (Maharashtra Act No. 9 of 1989) and the following words were added after the words 'in the nature of trade, commerce, or manufacture' with retrospective effect from August 16, 1985 :
'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.'
The above amendment was made to provide that profit-motive is not necessary in business.
As a result of the above amendments, the definition of 'business' in clause (5A) of section 2 of the Act, with effect from August 16, 1985, stood as under :
'(5A) 'business' includes any trade, commerce or manufacture of 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 or incidental or ancillary to, 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;
Explanation. - For the purpose of this clause, the activities of raising of man-made forests or rearing of seedlings or plants shall be deemed to be business.'
A careful study of the definition of 'business' contained in clause (5A), as originally enacted with effect from January 15, 1975 and the amendments made therein from time to time, clearly goes to show that the legislative intent was to include within the scope of business even activities which strictly speaking might not be regarded as business. This has been done by including the expression 'any adventure of concern in the nature of trade, commerce or manufacture'. It was also intended to include transactions in connection with or ancillary to such trade, commerce, manufacture, adventure or concern. This amendment was made in the light of the decision of the Supreme Court in State of Gujarat v. Raipur . [1967] 19 STC 1. The amendment made by Maharashtra Act No. 9 of 1988 with effect from July 1, 1981, was intended to get over the controversy whether the transactions in connection with commencement or closure of a trade would fall within the definition of business or not. The last amendment made by Maharashtra Act No. 9 of 1989 with effect from August 16, 1985, appears to be intended to get over the decisions of the Supreme Court where it was held that in the absence of profit-motive, transactions though satisfying the requirements of volume, frequency, continuity and regularity of transactions, would not constitute business so as to make the person carrying on such transactions a dealer.
9. Thought, as a result of the above definition, many of the activities which would not have been regarded as 'business' by reason of absence of some of the essential ingredients of business, like profit-motive, etc., would fall within the expression 'business', the activity must still be one which, in ordinary connotation, is regarded as business. The object of the definition of 'business' and the amendments made therein from time to time are merely to see that business activities are regarded as 'business' despite the absence of some of the elements which are normally associated with business, trade or commerce, such as profit-motive. It cannot, however, be construed to mean that a person would be a dealer merely because he sells or purchases any goods, even in the absence of anything to show that such sales or purchases were in the nature of trade, commerce, or manufacture or an adventure in the nature of trade, commerce, etc. The legislative intent of the Sales Tax Act and the charging section, as stated above, is not to levy tax on all sales or purchases of taxable goods by any and every person if the turnover of such sales or purchases exceeds the specified limits. It is only the sales or purchases by person who carry on he business within the meaning of clause (5A) of section 2 of the Act, of sale or purchase thereof, which are liable to tax under the Act. Had the legislative intent been otherwise, it was not necessary to provide in the charging section that tax would be payable only by 'a dealer' and to define the expression 'dealer' as a person who carries on the 'business' of buying or selling goods in the State and to further define the expression 'business' for the purpose of the Act and to amend the same from time to time with a view to widening the ambit thereof. All this would be rendered redundant, if 'all purchases or sales' of taxable goods by any person, per se, even in the absence of a finding that they were made by a dealer carrying on the business of selling or supplying the same, are held to be taxable under the Act. Had it been so, section 3 would have provided that every person, whose turnover of sales and purchases during the given period exceeded the specified limits, would be liable to pay tax on the turnover of sales or purchases made by him. Situated thus, it is difficult to construe the definition of 'dealer' in the manner suggested by the Revenue. The scheme of the Act and the charging section clearly indicate that in order to regard a person as a dealer, he must carry on the business in the sense the expression 'business' is understood in the commercial would subject only to the amplifications made by the Legislature by defining it in clause (5A) of section 2 of the Act.
10. Before we turn to the facts of the case to decide whether the assessee-trust can be held to be a dealer, it may be expedient to deal with the decisions referred to by the learned counsel for the Revenue. The first decision referred to is the decision of the Supreme Court in State of Andhra Pradesh v. Abdul Bakshi and Bros. [1964] 15 STC 644. In the above case, the assessees carried on the business of tanning hides and skins and selling the tanned hides and skins. They were also registered as dealer under the Hyderabad General Sales Tax Act, 1950, in respect of the above business. The controversy arose only in regard to levy of tax on the price paid for buying tanning bark which was required in their tannery. The assessees was disputed the levy of tax on the same. The case of the assessee was that tanning bark was bought for consumption in the tannery and not for sale, and they were accordingly not dealers in tanning bark and therefore the price paid for buying tanning bark was not liable to duty. This contention was rejected by the taxing authorities. But the High Court of Andhra Pradesh accepted the contention of the assessee and modified the order of the taxing authorities. On appeal, the Supreme Court reversed the decision of the High Court and held that it could not be said that tanning bark was brought by the assessed-dealer for any purpose unconnected with the business carried on them, viz., manufacture and sale of the dressed hides and skins. It was further held that the consumption in the business therefore did not exclude the assessees from the definition of the dealer qua the tanning bark. That decision, in our opinion, is of no assistance in deciding the controversy in the present case, because in that case the admitted position was that the assessee was a dealer. What was contended was that the purchases made by him for use in the manufacture could not be regarded as purchases as a dealer. It is this contention which was repelled by the Supreme Court and it was held that a person who consumes commodity bought by him in the course of trade or use in manufacturing another commodity for sale, would be regarded as a dealer.
So far as the decision of the Supreme Court in State of Gujarat v. Raipur . [1967] 19 STC 1 is concerned, we fail to appreciate how to the said decision helps the Revenue. In our opinion, this decision does counter to the submissions of the Revenue. In this case, the Supreme Court held that mere sale of a commodity which the assessee requires for the purpose of its business and which has been purchased for use in that business will not justify an inference that the business of selling that commodity was intended, unless contrary circumstances existing at the time when the commodity was purchased or which have come into existence later show such an intention. It was accordingly held that where the assessee-company, which carried on the business of manufacturing and selling cotton textiles, sold a part of the coal which was necessary for the purpose of lighting its furnaces and heating its boilers, the burden of proving that the company was carrying on the business of selling coal was upon the sales tax authorities and if they made no investigation and had come to such a conclusion merely because of the frequency and volume of the sales of coal, the inference could not be sustained. This decision is a clear authority for the proposition that carrying on business 'in the commodities' is an essential ingredient of definition of 'dealer', which cannot be inferred merely because of frequency and volume of sale in the particular commodity. Something more than that is necessary and the onus to establish the same is on the Revenue. It is in fact in an attempt to get over the above decision of the Supreme Court that the definition of 'business' was incorporated with a specific inclusion therein of activities ancillary or incidental to the business carried on by the assessee.
In Government Medical Store Depot v. Superintendent of Taxes [1985] 60 STC 296, the controversy before the Supreme Court was whether profit-motive was relevant in deciding whether a person was carrying on business and the Supreme Court answered in the affirmative. There was no dispute in that case in regard to the other ingredients of business. The above decision, therefore, is not of any assistance in deciding the issue before us. Moreover, in the above case, considering from the point of view of volume, frequency, continuity and regularity, it was not a case of the assessee that the activity did not amount to business. The Government Medical Depot, in the above case, had been set up for the purpose of procuring and supplying medical stores to the Government institutions, both Central and State, as also the railway establishments located in Assam, North-Eastern Frontier are as, Nagaland, Manipur, Tripura and other neighbouring places on payment. The depot had been set up with a view to facilitating supply of medical store to the Government institutions and the motive in locating the same was to function as a distributing centre for the purpose of supply of medical stores. This decision, therefore, is not relevant in deciding the controversy in the case before us.
Heavy reliance was placed by the learned counsel for the Revenue on the decision of the Allahabad High Court in Food Corporation of India v. Commissioner of Sales Tax [1988] 69 STC 374, where the controversy was whether the Food Corporation of India is a dealer or not. We have carefully gone through the above decision. The case of Food Corporation of India, in our opinion, cannot be equated with the case of a charitable trust like the one before us. In case of Food Corporation of India, it was not possible to contend that it was not carrying on business because the very object of setting up or establishing the same was to undertake trading in foodgrains in a commercial manner which is evident from the statement of objects and reasons for enacting the Food Corporation Act, 1964. The relevant portion of the Statement of Objects and Reasons, reads as follows :
'(1) It is considered desirable, in the interests of increased agricultural production as well as in the interests of the common consumer, to set up a State agency for the purpose of undertaking trading in foodgrains in a commercial manner but within the framework of an overall Government policy. Only by such a measure it will be possible to effectively implement any policy of ensuring that the primary producer obtains the minimum price that may be announced from time to time and to protect the consumer from the vagaries of speculative trade.
(4) the corporation will be encouraged to function generally as an autonomous organisation working on commercial lines. It is expected to secure for itself a strategic and commanding position in the foodgrains trade of the country. Bearing in mind the several large spheres in which the corporation will ultimately have to operate, have to operate, this Bill is being introduced to enable it to function as a statutory corporation wholly owned by the Government.'
On the face of the above object, it was not possible for the Food Corporation of India to contend that it was not engaged in business. The ratio of this decision, therefore, has no application to the present case.
11. We have also perused the decision of State of Andhra Pradesh v. Sri Bhramaramba Mallikarjuna Swamy Devasthanam . In this case it was held that if the dominant activity of an institution, such as religious or charitable institution, is not a business activity, any subsidiary activity which forms an integral part of the main activity cannot also be regarded as business activity; that the activity of sale of human hair offered by pilgrims to the temple in fulfilment of vows was not a commercial activity, as it was undertaken to avoid storage and health problems. It was also held that as the main activity of the devasthanam was neither commercial nor trading in nature, the incidental activity of running a canteen for the pilgrims, although of a business nature, was for the supply of foodstuffs to visiting pilgrims at reasonable prices, which was functionally integral to the main activity. The sales of food in the canteen were therefore held not liable to tax. We are in agreement with the conclusion arrived at in the above case. We, however, do not propose to discuss the reasoning of the court in that case because of the conclusion arrived at by us independently of the above decision that the basic activity of a person must be such which can be regarded as 'business' in the normal connotation of the term. The amplification of the definition by including incidental or ancillary activities does not in any way militate against the above conclusion of ours. The inclusion of incidental or ancillary activities in the definition of 'business' pre-supposes the existence of trade, commerce, manufacture, etc. Activities which are incidental or ancillary to the trade or commerce carried on by a person would fall within the definition of 'business' so far as such person is concerned and the turnover of sale or purchases attributable to such ancillary or incidental activity would also be included in the turnover of such person for the purpose of levy of sales tax. But that will be so if the primary or dominant activity of the assessee is trade, commerce, etc. Something which is incidental or ancillary cannot stand independently of the object to which they are incidental or ancillary. The definition of 'business' in section 25(5A) of the Act, therefore, makes it clear that in order to hold a person to be dealer, he must carry on the business and than only he may be deemed also to be carrying on business in respect of transactions incidental or ancillary thereto.
12. Turning to the facts of the present case, we find that the sole object of the assessee-trust is to spread the message of Saibaba of Shirdi. It was not established with the intention of carrying on the business of selling or supplying goods. The publication of books and booklets containing the message of Saibaba, photographs, stickers, etc., is to achieve the above object. It is in fact an activity incidental to the main activity of the trust, which is to spread the message of Saibaba of Shirdi. There is also no controversy in the case before us about the fact that the books and literatures containing the message of Saibaba were distributed by the trust to the devotees of Saibaba at cost price. Admittedly, the primary and dominant activity of the the trust is to spread the message of Saibaba which does not amount of 'business'. That being so, the ancillary activity of publishing and selling the literature containing the message of Saibaba, photographs, stickers, etc., undertaken by the assessee-trust to achieve the above object, which does not amount to trade, commerce, etc., also cannot be held to be business within the meaning of section 2(5A) of the Act. That being so, the assessee-trust cannot be held to be a 'dealer' within the meaning of section 2(11) of the Act in respect of the sales of books, booklets, stickers, photographs, etc., containing the message of Saibaba or image of Saibaba, at a nominal price with the object of spreading the message of Saibaba by it and hence no tax can be levied on the amounts received from the sales thereof.
13. In view of the above opinion of ours, the question referred by the Tribunal is answered in the affirmative and in favour of the assessee.
14. In the facts and circumstances of the case, there shall be no order as to costs.
Reference answered in the affirmative.