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2017 DIGILAW 624 (UTT)

Manava Bharti International School v. State

2017-11-21

RAJIV SHARMA

body2017
JUDGMENT : Rajiv Sharma, J. Petitioner-society is running a co-educational day cum residential school. It was established in the year 1941 to impart education without discrimination on the basis of caste, creed or religion. The name of the petitioner-school was changed to Manava Bharti India International School in the year 1992. The main objects of the petitioner-school inter-alia are as under:- (a). To promote the advancement of the various aspects of India Culture, as an integral and dynamic force, in the renaissance of the nation. (b). To evolve and encourage an indigenous system of education, based on the latest scientific researches and in harmony with a glorious past and the living present and which should prepare the nation to play her role in moulding the destiny of mankind. (c). To establish cordial and intimate relations between India and the world, through mutual sympathetic understanding of their respective civilizations. (d). To make original investigations into the domain of Indian Culture, thought and literature. (e). To plan and promulgate socio-economic reconstruction of the country, based on artistic and cultural foundation. (f). To publish journals, magazines, pamphlets and books, either for sale or free distribution. (g). To reorganize and encourage cultural, economic youth common wealth in form of small model villages self-supporting and self-sufficient as far as possible. (h). To organize cultural expeditions, tours and excursions with a view to establish cordial and intimate relations between India and the world. 2. The primary objective/ prime activity of the petitioner-school, is to impart education. The curriculum of the school is based on CBSE pattern. There were about 180 students, who were pursuing their studies in the school. 80 students were boarders and about 100 students were day scholars. 3. Petitioner-school is operating a mess/catering activity for preparing and providing food to the residential scholars (boarders), without engaging any outside caterer, as part of school curriculum. Petitioner is providing free breakfast, lunch, supper, evening snacks, dinner etc. to its boarders, residing in the school. The school also provides refreshment, snacks and food during the parents teachers meet. 4. The petitioner, as per the averments made in the petition is not separately realizing any money against mess/catering activities. The case of the petitioner-school is also that it is not selling any food. to its boarders, residing in the school. The school also provides refreshment, snacks and food during the parents teachers meet. 4. The petitioner, as per the averments made in the petition is not separately realizing any money against mess/catering activities. The case of the petitioner-school is also that it is not selling any food. The school books and stationery items are provided by outside dealer, who visits the school campus and supplies the books and stationery as per requisition of the students. The students, being minor, signed the slip and the petitioner-school bills the cost of the said books and stationery to the parents and reimburse the amount to the dealer concerned. 5. The petitioner-school was issued notice on 20.03.2008 followed by letter dated 23.03.2008. Petitioner is aggrieved by the order dated 11.11.2010, whereby the petitioner-school has been called upon to deposit a sum of Rs.66,750/- within 60 days, failing which penalty would be levied. Petitioner-school has been issued notice vide Annexure Nos.10, 11, 12 and 13. 6. The principal ground taken by the petitioner-school is that the primary and predominant activity of the petitioner is to impart education to the students, which is not a business activity. The supply of food stuff to boarders is only an incidental and ancillary activity, which does not amount to a “sale”. Such activity does not amount to “business”, as contemplated under the Act. Petitioner-school further contention is that it is not a dealer carrying on business of selling food stuff, therefore, is not liable to tax. It is lastly contended that the Uttarakhand Value Added Tax Act, 2005 is not applicable to the petitioner-school. 7. The case of the respondents, as per the reply, is that the school is running a mess. The lumpsum fee is charged from the students. It is also contended in the reply, as per the Amendment carried out to the 46th Amendment to the Constitution, the food would fall within the definition of sale. 8. The petitioner-school is imparting education and is following CBSE stream. The school is providing food to the boarders including breakfast, lunch, supper, evening snacks, dinner etc. The school also provides refreshment, snacks and food during the parents teachers meet. No outside caterer is engaged for cooking food. 9. 8. The petitioner-school is imparting education and is following CBSE stream. The school is providing food to the boarders including breakfast, lunch, supper, evening snacks, dinner etc. The school also provides refreshment, snacks and food during the parents teachers meet. No outside caterer is engaged for cooking food. 9. Section 2(6) of the Uttarakhand VAT Act, 2005 (hereinafter referred to an the Act) defines “business” as under: - “2 (6) “Business” includes -- (a) any trade, commerce or manufacture, or (b) any adventure or concern in the nature of trade, commerce or manufacture, or (c) any transaction in connection with, or incidental or ancillary to such trade, commerce, manufacture, adventure or concern, or (d) any occasional transaction in the nature of such trade, commerce, manufacture, adventure or concern whether or not there is volume, frequency, continuity or regularity of such transaction, 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, or (e) the execution of any works contract or the transfer of the right to use any goods for any purpose (whether or not for a specified period), and (f) Any transaction of buying, selling or supplying plant, machinery, raw materials, processing material, packing material, empties, consumable stores, waste or byproducts, or any other goods of a similar nature or any unserviceable or obsolete or discarded machinery or any parts or accessories thereof or any waste or scrap or any of them or any other transaction whatsoever which is ancillary to or is connected with or is incidental to, or results from such trade, commerce, manufacture, adventure or concern or works contract or lease but does not include any activity in the nature of mere service or profession which does not involve the purchase or sale of goods;” 10. Section 2(11) of the Act defines the expression “Dealer” as under: - “2(11) “Dealer” means any person who, for the purposes of or in connection with or incidental to or in the course of his business, carries on in Uttarakhand the business of buying, selling, supplying or distributing goods with a motive of profit or not directly or indirectly, regularly or otherwise, whether for cash or deferred payment or for commission, remuneration or other valuable consideration, and includes:- (a) a department of the Central Government or any State Government or a local authority by name of any Panchayat, Municipality, Development Authority, Cantonment Board or any autonomous or statutory body; (b) an industrial, commercial, banking, insurance or trading undertaking whether or not of the Central Government or any of the State Governments or of a local authority; (c) a commission agent, factor, broker, arhti, del credere agent, or any other mercantile agent by whatever name called, and whether of the same description as hereinbefore mentioned or not, who carries on the business of buying, selling, supplying or distributing goods on behalf of any principal, whether disclosed or not; (d) any person who acts within the State as an agent of a non-resident dealer i.e. as an agent on behalf of a dealer residing out side the State, and buys, sells, supplies or distributes goods in the State or acts on behalf of such dealer, as (i) a mercantile agent as defined in the Sale of Goods Act, 1930, or (ii) an agent for handling of goods or documents of title relating to goods, or (iii) an agent for the collection or the payment of the sale price of goods or a guarantor for such collection or such payment. (e) an individual, a firm or a company or other body corporate, club, Hindu undivided family or any other system of joint family, association of persons, trust, and cooperative society or any other society, whether such society is incorporated or un-incorporated, and which carries on such business including buying goods for and selling to its members for a price, fee or subscription, whether in the course of business or not; (f) a non-resident dealer whether an individual, or a firm or a company or association or other body of persons, whether incorporated or not, the principal office or head quarter whereof is out side the State, whether or not having branch or office in the State, in respect of purchases or sales, supplies or distribution of goods in the State of Uttarakhand directly or through his agent or through such branch or office; (g) an auctioneer, who carries on the business of selling or auctioning goods belonging to any principal, whether disclosed or not, and whether the offer of the intending purchaser is accepted by him or by the principal or a nominee of the principal; (h) a casual dealer; (i) a person who supplies by way of or as a part of any service or any other manner whatsoever, goods, being foods or any other articles for human consumption or any drink (whether or not intoxicating), where such supply or service is for cash or deferred payment or other valuable consideration; (j) any person who, for the purposes of or in connection with or incidental to or in the course of his business disposes of any goods as unclaimed or confiscated, or unserviceable or scrap, surplus, old, obsolete or as discarded material or waste products by way of sale; (k) a person engaged in the business of transfer otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration; (l) any person who carries on the business of transfer of property in goods (whether as goods or in some other form) involved in the execution of works contract; (m) Any person who carries on the business of transfer of right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration; (n) any person engaged in business of delivery of goods on hire purchase or any other system of payment by instalment; Provided that a person who sells agricultural or horticultural produce grown by him or grown on any land in which he has an interest, whether as owner, usufructuary mortgagee, tenant, or otherwise, or who sells poultry or dairy products from fowls or animals kept by him shall not, in respect of such goods, be treated as a dealer; 11. Section 2(40) of the Act defines the expression “Sale” as under: - “2(40) “Sale” with its grammatical variation and cognate expressions means any transfer of property in goods (other than by way of mortgage, hypothecation, charge or pledge) by one person to another in the course of trade or business for cash or deferred payment or other valuable consideration, and includes- (a) a transfer otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment of other valuable consideration; (b) a transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract; (c) the delivery of goods in hire purchase or any system of payment by instalments; (d) a transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration; (e) a supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration; (f) any supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or drink (whether or not intoxicating) where such supply or service is for cash, deferred payment or other valuable consideration; (g) a transfer of property in goods by an auctioneer referred to in clauses (g) of subsection (11) or sale of goods by any dealer in the course of any other activity in the nature of banking or insurance, who in the course of his main activity also sells goods repossessed or reclaimed, And such delivery, transfer or supply of any goods under clause (a) to (g) above shall be deemed to be the sale of those goods by the person making the delivery, transfer or supply, and purchaser of those goods shall be the person to whom such delivery, transfer or supply is made; Explanation 1 : A sale or purchase shall not be deemed to have taken place inside the State if the goods are sold— (a) in the course of inter-state trade or commere; or (b) outside the State of Uttaranchal otherwise than by way of sale; or (c) in the course of import into or export out of the territory of India; Explanation 2 : A sale or purchase shall be deemed to have taken place in the State under sub-clause (b) if the goods are in the State at the time of transfer of property in such goods (whether as goods or in some other form) involved in the execution of works contract, notwithstanding that the agreement for works contract has been wholly or in part entered into outside the State; Explanation 3 : Notwithstanding anything contained in this Act, two independent sales or purchases shall, for the purpose of this Act, be deemed to have taken place— (a) when the goods are transferred from a principal to his selling agent and from the selling agent to his purchaser; (b) when the goods are transferred from the seller to a buying agent and from the buying agent to principal, and if the agent is found in either of the cases aforesaid— (i) to have sold the goods at one rate and passed on the sales proceeds of his principal at another rate, or (ii) to have purchased the goods at one rate and passed them to his principal at another rate, or (iii) not to have accounted to his principal for the entire collection or deductions made to him, from the sales or purchases effected by him on behalf of his principal, or (iv) to have acted for a fictitious or non-existent principal;” 12. Section 2(41) of the Act defines “Sale Invoice” as under: - "Sale Invoice" means a document listing goods sold, with price, quantity, tax charged, and such other particulars as may be prescribed in the Act or the Rules made thereunder; 13. Section 2(42) of the Act defines “Sale Price” as under: - "Sale Price" means the amount of valuable consideration received or receivable by a dealer for sale of any goods and shall include any sum charged for any thing done by the dealer in respect of goods at the time or before the delivery thereof, excise duty, special excise duty or any other duty or tax but shall not include- (a) any sum allowed by the seller of goods to the purchaser as cash discount, commission or trade discount according to normal trade practice, at the time of sale of goods; (b) the cost of outward freight or delivery or the cost of installation in cases where such cost is separately charged; (c) the amount of tax under this Act, if separately charged by the dealer; Explanation: For the purpose of this sub-section "Sale Price" includes (a) in relation to the delivery of goods on hire purchase or any other system of payment by installments, the total amount of valuable consideration including deposit or other initial payment in order to complete the purchase or the acquisition of the property in goods. It includes hire charges, interest and other charges incidental to such transaction, but does not include any sum payable as penalty or as compensation or damages for breach of agreement; (b) in relation to transfer of the right to use any goods for any purpose (whether or not for a specified period) the valuable consideration or hire charges received or receivable for such transfer of right to use goods but does not include any sum payable as a penalty or as compensation or damages for breach of agreement; (c) in relation to the transfer of property in goods (whether as goods or in some other form) involved in the execution of works contract, the valuable consideration paid or payable to a person for the execution of such works contract, less the actual amount representing labour and such other charges as may be prescribed, but does not include any sum payable as a penalty or as compensation or damages for breach of agreement; (d) the amount of duties paid or payable under Central Excise Act, 1944, or Customs Act, 1962, or U.P. Excise Act, 1910, as applicable in Uttarnachal, in respect of such goods at the time of clearance of the goods from bonded warehouse, whether such duties are paid or payable by or on behalf of the seller or by any other person; (e) the price of packing material in which goods sold are packed; 14. Section 2(48) of the Act defines “Taxable Turnover” as under: - "Taxable Turnover" means the turnover on which a dealer shall be liable to pay tax as determined after making such deductions from his total turnover and in such manner as may be prescribed; 15. Section 3 of the Act is the charging section. The relevant extract of Section 3 of the Act is reproduced hereunder: - (1) Tax shall be levied and charged in accordance with the provisions of this Act on every sale made within the State by a dealer or a person; (2) Every person who is registered or is liable to be registered under the provisions of this Act shall be a taxable person and liable to pay tax in the manner provided in the Act. (3) Subject to provisions of sub-section (4) or subsection (5) as may be applicable, every dealer or a person shall pay from the date he becomes so liable, a tax for each assessment year on his turnover, to be determined in the prescribed manner, of all sales inside the State, made on or after the date he becomes liable to pay tax at such rates as provided by or under section 4 of the Act; (4) Where a dealer carries on the business of- (a) sale of any taxable goods in the course of inter-state trade or commerce; or (b) sale of any taxable goods in the course of export out of the territory of India; or (c) consigns any taxable goods for delivery at a place outside the State; or (d) sale of any taxable goods purchased or received from outside the State; or 2 (e) purchases of any taxable goods after furnishing any form of declaration or certificate prescribed either under Uttaranchal (the Uttar Pradesh Trade Tax Act,1948) Adaptation and Modification Order, 2002 or the Central Sales Tax Act,1956; or under this Act; or (f) sales or purchases of taxable goods if such dealer is already registered under the Uttaranchal (the Uttar Pradesh Trade Tax Act, 1948) Adaptation and Modification Order, 2002 or the Central Sales Tax Act, 1956; and desires to retain such registration after the ‘commencement of this Act or applies for grant of registration voluntarily under the provisions of this Act; and (i) if such dealer has been carrying on the business in the immediately preceding assessment year and continues it on the date of commencement of this Act, he shall be liable to pay tax from the date of commencement of this Act; and (ii) if such dealer commences business on or after the date of commencement of this Act, he shall be liable to pay tax from the date on which any of events from (a) to (f) above takes place for the first time in any assessment year; 16. It is clear from the plain language of the Act that the tax shall be levied and charged in accordance with the provisions of this Act on every sale made within the State by a dealer or a person. A person must carry on the business of taxable goods. 17. It is clear from the plain language of the Act that the tax shall be levied and charged in accordance with the provisions of this Act on every sale made within the State by a dealer or a person. A person must carry on the business of taxable goods. 17. It is also clear from the plain language employed in Section 2(40) of the Act that there must be a transfer of property in goods by one person to another in the course of trade or business. 18. The “dealer” would mean a person who carries on the business of buying, selling, supplying or distributing goods with a motive of profit. 19. The “business” includes, as per the definition, any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture, or any transaction in connection with, or incidental or ancillary to such trade, commerce, manufacture, adventure or concern. 20. In the instant case, the principal activity of the petitioner-school is academic and providing food etc. to the students as ancillary activity. The profit is an integral part of predominant academic purpose. 21. The Assistant Commissioner, Commercial Tax has misdirected himself by referring to guidelines issued by the Central Board of Secondary Education to impose commercial tax upon the petitioner-school. To provide food etc. to the boarders will not amount to sale or trading activity and the petitioner-school cannot be treated as a dealer. The petitioner-school is not engaged in a business activity, as per Section 2(6) of the Act. It is neither doing any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. The petitioner-school is only imparting education, as per the curriculum. 22. 48th Amendment carried out in the Constitution in Article 366 is not applicable in the present case. The Value Added Tax Act has come into force w.e.f. 01.10.2005. 23. In 2006 (126) S.T.C. 288 SC, in the case of “Commissioner of Sales Tax vs. Sai Publication Fund”, their Lordships of the Hon’ble Supreme Court have held that the question of profit motive arises only if the person is carrying on activity in the nature of trade etc. Their Lordships have held as under: - “10. The contention that the Trust in question is "dealer" within the meaning of Section 2(11) read with Section 2(5A) requires careful scrutiny. Their Lordships have held as under: - “10. The contention that the Trust in question is "dealer" within the meaning of Section 2(11) read with Section 2(5A) requires careful scrutiny. As is evident from Section 2(11), every person is not "dealer" but only those persons "who carry on the business" by buying or selling goods are regarded as "dealers". From the very definition of dealer, it follows that 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. "Dealer" and "person" are separately defined in Section 2(11) and Section 2(19) of the Act respectively. "Person" means not only natural person 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; whereas "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 dealers by virtue of definition of "dealer" contained in Section 2(11) of the Act. As rightly noticed by the High Court, it is clear from charging Section 3 that every dealer, whose turnover of sale or purchase during any year exceeds the limits specified therein, is liable to payment of tax under the Act on his turnover of sales or purchases. Although the Act provides for levy of tax on the sales or purchases of certain goods in the State of Maharashtra, the levy is restricted only to sales or purchases made by dealers. As is manifest from Section 3 itself, the liability to pay sales tax is only on the dealers. From the combined reading of Section 3, 2(5A) and 2(11) of the Act, it follows that the tax under the Act is leviable on the sales or purchases of taxable goods by a dealer and not by every person. From the facts of the present case, the sole object of the assessee Trust is to spread the message of Siababa of Shridi. It is also not disputed that the books and literature etc. containing the message of Saibaba were distributed by the Trust to the devotees of Saibaba at cost price. There is no dispute that the primary and dominant activity of the Trust is to spread the message of Saibaba. It is also not disputed that the books and literature etc. containing the message of Saibaba were distributed by the Trust to the devotees of Saibaba at cost price. There is no dispute that the primary and dominant activity 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 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. Thus, if the main activity of a person is not trade, commerce etc., ordinarily incidental or ancillary activity may not come within the meaning of "business". To put it differently, the inclusion of incidental or ancillary activity in the definition of "business" presupposes the existence of trade, commerce etc. Thus, if the main activity of a person is not trade, commerce etc., ordinarily incidental or ancillary activity may not come within the meaning of "business". To put it differently, the inclusion of incidental or ancillary activity in the definition of "business" presupposes the existence of trade, commerce etc. The definition of "dealer" contained in Section 2(11) of the Act clearly indicates that in order to hold a person to be a "dealer", he must ‘carry on business' and then only he may also be deemed to be carrying on business in respect of transaction incidental or ancillary thereto. We have stated above that the main and dominant activity of the Trust in furtherance of its object is to spread message. Hence, such activity does not amount to "business". Publication for the purpose of spreading message is incidental to the main activity which the Trust does not carry as business. In this view, the activity of the Trust in bringing out publications and selling them at cost price to spread message of Saibaba does not make it a dealer under Section 2(11) of the Act.” 12. This Court in State of T.N. v. Board of Trustees of the Port of Madras after referring to various decisions in regard to “business” and “carrying on business” in paras 15 and 16 has stated thus: (SCC p. 640) “15. Now the definition of ‘business’ in Section 2(d) and in most of the sales tax statutes is an inclusive definition and includes ‘trade or business or manufacture etc.’ This itself shows that the legislature has recognized that the word ‘business’ is wider than the words ‘trade, commerce or manufacture etc.’ The word business though extensively used is a word of indefinite import. In taxing statutes, it is normally used in the sense of an occupation, a profession — which occupies time, attention and labour of a person, normally with a profit motive and 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 (State of A.P. v. H. Abdul Bakhi & Bros.). Even if such profit motive is statutorily excluded from the definition of ‘business’, yet the person could be doing ‘business’. 16. The words ‘carrying on business’ require something more than merely selling or buying etc. Even if such profit motive is statutorily excluded from the definition of ‘business’, yet the person could be doing ‘business’. 16. The words ‘carrying on business’ require something more than merely selling or buying etc. 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 (Board of Revenue v. A.M. Ansari. Such profit motive may, however, be statutorily excluded from the definition of ‘business’ but still the person may be ‘carrying on business’.” 16. In para 33 of the same judgment, this Court has referred to various decisions to consider whether one is a “dealer” or carries on “business” and the nature and object of activity. The said para reads thus: (SCC pp. 648-50) “33. In Girdharilal Jiwanlal v. CST, relied on for the respondent-Port Trust, the Bombay High Court held that an agriculturist did not necessarily fall within the definition of a ‘dealer’ under Section 2(c) of the C.P. & Berar Sales Tax Act (21 of 1967), merely because he sold or supplied commodities. It must be shown that he was carrying on a business. It was held that it must be established that his primary intention in engaging himself in such activities must be to carry on the business of sale or supply of agricultural produce. This High Court held that there was ‘nothing to show that the petitioner acquired these lands with a view to doing “the business of selling or supplying” agricultural produce. According to (the assessee), he (was) principally an agriculturist who also deals in cotton, coal, oilseeds and groundnuts’. (emphasis supplied) He was having agriculture for the purpose of earning income from the fields but there was nothing to show that he acquired the lands with the primary intention of doing business of selling or buying agricultural produce. This decision was approved by this Court in Dy. Commr. of Agricultural Income Tax & Sales Tax v. Travancore Rubber & Tea Co. This decision was approved by this Court in Dy. Commr. of Agricultural Income Tax & Sales Tax v. Travancore Rubber & Tea Co. and it was held that where the only facts established were that the assessee converted latex tapped from rubber trees into sheets and effected a sale of those sheets to its customers, the conversion of latex into sheets being a process essential for transport and marketing of the produce, the Department had failed to prove that ‘the assessee was formed’ with a commercial purpose. The Allahabad High Court in Swadeshi Cotton Mills Co. Ltd. v. STO was dealing with a batch of cases where different bodies were running canteens. One of the cases concerned Aligarh Muslim University which was maintaining dining halls where it was serving food and refreshments to its resident-students. It was held, referring to observations of this Court in University of Delhi v. Ram Nath that it was incongruous to call educational activities of the University as amounting to ‘carrying on business’. The activity of serving food in the dining hall was a minor part of the overall activity of the University. Education was more a mission and avocation rather than a profession or trade or business. The aim of education was the creation of a well-educated, healthy, young generation imbued with a rational and progressive outlook of life. On this reasoning, it was held that Aligarh University was not ‘carrying on business’ and the sale of food at the dining halls was not liable to tax. Likewise after the amendment of the definition of ‘business’ question arose in Indian Institute of Technology v. State of U.P. with respect to the visitors’ hostel maintained by the Indian Institute of Technology where lodging and boarding facilities were provided to persons who would come to the Institute in connection with education and the academic activities of the Institute. It was observed that the statutory obligation of maintenance of the hostel which involved supply and sale of food was an integral part of the objects of the Institute. Nor could the running of the hostel be treated as the principal activity of the Institute. The Institute could not be held to be doing business. Similarly, in the case of a research organization, in Dy. Commr. (C.T.) v. South India Textile Research Assn. Nor could the running of the hostel be treated as the principal activity of the Institute. The Institute could not be held to be doing business. Similarly, in the case of a research organization, in Dy. Commr. (C.T.) v. South India Textile Research Assn. which was purchasing cotton and selling the cotton yarn/cotton waste resulting from the research activities, it was held that the Institute was solely and exclusively constituted for the purposes of research and was not carrying on ‘business’ and these sales and purchases abovementioned could not be subjected to sales tax. Likewise, in State of T.N. v. Cement Research Institute of India it was held that the Institute was an organisation, the objects of which were to promote research and other scientific work, that the laboratories and workshops were maintained by the organization for conducting experiments, and that though the cement manufactured as a result of research was sold, it could not be considered to be a trading activity within Section 2(d) of the Tamil Nadu General Sales Tax Act, 1959. Again in Tirumala This extract is taken from CST v. Sai Publication Fund, (2002) 4 SCC 57 , at page 65: Tirupati Devasthanam v. State of Madras the dispute arose with regard to the sales of silverware etc. which are customarily deposited in the hundis by devotees. It was held by the Madras High Court that the Devasthanam’s main activities were religious in nature and these sales were not liable to tax. (No doubt, the case related to a period where the profit motive was not excluded by statute.) We are of the view that all these decisions involve the general principle that the main activity must be ‘business’ and these rulings do support the case of the respondent-Port Trust.” (emphasis supplied) 24. In 1976 (38) STC 428 , in the case of “Indian Institute of Technology, Kalanpur, Kanpur vs. The State of Uttar Pradesh & another (Allahabad)”, the Allahabad High Court has held that the Indian Institute of Technology, Kalyanpur was maintaining a hostel for the scholars who would come for a brief period to the institute for the purpose of research. The food being supplied to these scholars was assessed to sales tax. The food being supplied to these scholars was assessed to sales tax. The Allahabad High Court held that the Institute’s principal activity was not doing business in a commercial way of buying food stuff and that the principal activity was predominantly academic and that the supply of food stuff was minor, subsidiary and incidental to the principal activity and was an integral part of the academic activity. The Allahabad High Court further held that the I.I.T. could not be dubbed as a dealer within the meaning of ‘dealer’ as defined under Section 2(c) of the U.P. Sales Tax Act and that the Sales Tax Officer had no jurisdiction to initiate proceedings for the levy of sales tax. 25. In AIR 1965 Allahabad 86, in the case of “Swadeshi Cotton Mills Co. Ltd. vs. Sales Tax Officer”, the Allahabad High Court has held that the Aligarh Muslim University was maintaining dining halls, wherein it served food and refreshments to its resident students. The Sales Tax Officer held the Aligarh Muslim University to be a dealer under the U.P. Sales Tax Act on the ground that it was selling food stuff to its students. The Allahabad High Court held that the University is an educational institution and its activities were predominantly academic and was not engaged in the business of supply of food to its students which was only incidental to its main activity of imparting education and, consequently, the University was not a dealer as defined under Section 2(c) of the U.P. Sales Tax Act. 26. In 2009 (19) V.S.T. 305 (A.P.), in the case of “Gowtham Residential Junior College vs. Commercial Tax Officer, Benz Circle, Vijaywada”, the Andhra Pradesh High Court held that the supply of food to the students residing in the hostel did not amount to a sale since the petitioner was not carrying on the business of sale and purchase of food stuff and that the petitioner’s primary object was to impart education to the students and, therefore, was not a dealer. 27. In 2008 NTN (Vol. 36) 149, in the case of “Tata Main Hospital Vs. the State of Jharkhand & others”, the Jharkhand High Court has held that the hospital was supplying medicines, surgical items etc. to its indoor patients during the course of treatment. 27. In 2008 NTN (Vol. 36) 149, in the case of “Tata Main Hospital Vs. the State of Jharkhand & others”, the Jharkhand High Court has held that the hospital was supplying medicines, surgical items etc. to its indoor patients during the course of treatment. The taxing authorities treated the hospital as a dealer under the Bihar Finance Act on the ground that the hospital was doing business of supplying medicines, surgical items, etc. The Jharkhand High Court held that the supply of the medicines, surgical items, etc. to the patients was a part of the composite services and such composite services does not come under the definition of ‘business’ of selling goods and the hospital could not be treated to be a dealer as defined under Section 2(e) of the Bihar Finance Act. The High Court further held that the supply of medicines etc. to the indoor patients does not amount to a sale within the meaning of Section 2 (t) of the Bihar Finance Act. The special leave petition filed by the State against the judgment was dismissed by the Supreme Court by an order of 10th March, 2008. 28. The co-ordinate Bench of this Court vide its judgment dated 07.11.2011, rendered in WPMS No.1611 of 2009 and analogous matters, has also considered the issues raised in this petition and has held as under: - “32. In the light of the aforesaid decisions, it is clear that from a combined reading of Section 3, 2(6), 2(11), 2(27), 2(40) of the Act, that a tax is leviable on the sale made by a dealer or a person who is carrying on the business of taxable goods. There is no dispute that in the case of the petitioner, the primary and dominant activity is to impart education. This main activity of the petitioner does not amount to a commercial activity nor is a trade or business as held by the Andhra Pradesh High Court in Gowtham Residential Junior College (supra). In the opinion of the court, such education being imparted by the petitioner is neither a commercial activity nor a trade nor does it amount to ‘business’. It cannot be contended that the establishment of an educational institution is a business nor can it be called a trade since no trading activities are being carried out. In the opinion of the court, such education being imparted by the petitioner is neither a commercial activity nor a trade nor does it amount to ‘business’. It cannot be contended that the establishment of an educational institution is a business nor can it be called a trade since no trading activities are being carried out. In University of Delhi (supra), the Supreme Court held that imparting of education was a mission or a vocation rather than a trade or business. This court is of the opinion that imparting education cannot be treated as a trade or business and that education cannot be allowed to be converted into a commerce nor such activity could be a trade or business contemplated under Article 19(1)(g) of the Constitution. 33. In the light of the aforesaid, the main activity of the petitioner is imparting education and is not business. Any transaction, namely, supply of food stuff to its residential students which is incidental would not amount to ‘business’ since the main activity of the petitioner could not be treated as a commerce or a business. The incidental activity of supplying food stuff would not come within the meaning of the word ‘business’ as defined under Section 2(6) of the Act. Consequently, since no business is being carried out and there is no sale, the petitioner would not come within the meaning of the word ‘dealer’ as defined under the Act. 34. The contention of the respondents that the dominant intention is not required to be seen in view of the amended definition of the word ‘sale’ pursuant to the 46th Amendment in the Constitution and that the sale of food stuff would be a sale as contemplated under Section 2 (40) (f) of the Act is based upon a decision in Bharat Sanchar Nigam Ltd. & another Vs. Union of India & others 2006 (3) SCC 1, in which the Supreme Court in para 49 held that after the 46th Amendment, the sale element of those contracts which are covered by sub-clause (6) of Clause 29-A of Article 366 are separable and subjected to sales tax and that there was no question of the dominant nature test to be applied. There is no quarrel with the aforesaid proposition. The judgment is however not applicable to the case at hand. There is no quarrel with the aforesaid proposition. The judgment is however not applicable to the case at hand. Before imposing any tax, one has to see whether the Act is applicable or not. The question of a deemed sale under Section 2(40)(f) of the Act would only apply if the person on whom the tax is being imposed is a dealer who is doing the business of sale of taxable goods. If the person is not doing the business, the question of imposition of tax would not arise. Merely because there is a deemed sale or the fact that the deemed sale is incidental or casual, the tax could only be imposed if the person is a dealer and is engaged in a business activity of purchase and sale of taxable goods. The Supreme Court has clearly held that such business activity must be predominant i.e. the main activity. As held earlier, the petitioner’s main activity is to impart education which is not a business activity nor is a trade and, consequently, the petitioner is not a dealer and is not liable to be taxed under the Act.” 29. Accordingly, the writ petition is allowed. The issuance of notices dated 10.11.2009 and assessment orders dated 11.11.2010 are quashed and set-aside. The parties shall bear their own cost.