COMMISSIONER OF SALES TAX Vs. DEPARTMENTAL CATERING

JUDGEMENT

(1.) In this group of references, the following two questions have been referred to this Court by the Sales Tax Tribunal at the instance of the Revenue:-

(2.) So far as question No.1 is concerned, it does not arise out of the order made by the Tribunal. It was open to the Tribunal to reject the application if it was of the opinion that separate references are required, but for the same purpose, there cannot be a question of law arising out of the impugned judgment delivered by the Tribunal and hence the same is not required to be answered.

(3.) So far as question No.2 is concerned, the following facts are required to be kept in mind. The dealer/appellant [M/s Departmental Catering (Northern Railways)] which is operating at New Delhi Railway Station and Parliament House has been running some special canteens besides providing catering.in running trains. The Commissioner of Sales Tax vide its order dated 20.11.1963 held that the Catering Unit (Norther Railways) Baroda House, has been running business without profit motive and as such it was not a dealer. However, for subsequent assessment years, the view was changed and stand was taken that there is no profit motive in carrying on its activities and was providing facilities to its passengers and as was being run on no- profit-no-loss basis, there is no involvement of any commercial transaction and, therefore, is not liable to be taxed under the provisions contained in the Bengal Finance (Sales Tax) Act, 1941 as extended to the Union Territory of Delhi. The assessee applied for registration as a dealer under protest on or about 09.04.1970. The Assessing Authority, relying upon the decision of the Supreme Court in the case of Deputy Commercial Tax Officer, Saidapet, Madras, and Another Vs. Enfield India Ltd Co-operative Canteen Ltd: 21 STC 317 and in the case of Indian Employees' Co-operative Society Ltd Vs. State of Orissa & Two Others: 22 STC 460, held that profit motive was not essential for constituting business and held that the assessee was a dealer and accordingly taxed the assessee for a period of three years. The Appellate Authority held that the assessee was a dealer within the meaning of the term 'dealer.' Penalties were also levied for non- deposits of the amounts of tax and for non- filing of returns for certain periods. Ultimately, the Assistant Commissioner (Sales Tax) by an order dated 12.05.1975 held that in the case of the assessee for the year 1968-69, the ' profit motive was not necessary to constitute business and as such the assessee was a dealer. This question was not examined in detail for the assessment years 1969-70 to 1973-74 and it was observed while passing the orders for later years that the provision of raw material and finished goods and preparation of snacks and tea etc. and sale thereof is a commercial activity similar to that carried on by another person carrying on the business of sale of such, goods and held that the Northern Railways in this regard Would be covered by the term 'dealer'. The Tribunal, relying on the decision of the Supreme Court in the case of The Delhi Cloth & General Mills Company Ltd Vs. The Union of India and Another:., held that for the purpose of sales tax, it should be understood that in a commercial sense, an organised activity is carried on with a view to earn profit or gain, unless there is any provision in the statute to the contrary. The Division Bench in the case of Income-Tax Co-operative Supply Society Ltd Vs. The Commissioner of Sales Tax, Delhi and Another: 46 STC 433 held that business can be conducted even if there is no primary or prime profit motive. The Tribunal relied on earlier decision and held that the assessee is not liable to pay the tax. It is also required to be noted at this juncture that the Tribunal failed to observe that, in that case, under the statute, there was a statutory obligation under Section 46 of the Factories Act, 1948 read with Rule 58 of the Delhi Factories Rule, 1950 to provide canteen facilities. The Court pointed out the provisions contained in Section 46 of the Factories Act, 1948 as also rule 65 (2) and 68 (1) of the Delhi Factories Act, 1950. Reading the provisions, it becomes clear that it was mandatory to provide a canteen and to serve food or drink and the other items on a non-profit basis. Not only that, the prices charged were subject to the approval of the Canteen Managing Committee. It is in view of these facts that the decision was rendered in the case of The Delhi Cloth & General Mills (supra).