COMMISSIONER OF SALES TAX vs. SAI PUBLICATION FUND

CIVIL APPEAL No. 9445/1996Supreme Court[2002] 2 S.C.R. 74322 March 2002Bench: 2 JudgesAuthor: SHIVARAJ V. PATIL, B.P. SINGH12 pages
AI SummaryDismissed

What did the Supreme Court hold?

The Supreme Court held that the respondent-Trust cannot be considered a 'dealer' under Section 2(11) of the Bombay Sales Tax Act, 1959, and its publication sales turnover is not subject to sales tax. The Court reasoned that the Trust's sole object is to spread Saibaba's message, and the publication and sale of literature are incidental or ancillary to this main activity, not constituting 'business' in themselves. For such ancillary activities to be considered 'business', an independent intention to carry on business must be established, and the onus of proving this lies with the Revenue. The Revenue failed to prove such an independent intention. The Court affirmed that the High Court was correct in its decision, relying on the principle that the main activity must be 'business' for ancillary transactions to be taxed. The question is answered in the negative in favour of the assessee.

What were the facts?

The assessee, Sai Publication Fund, is a Trust established to spread the messages of Saibaba of Shridi. The Trust publishes and sells books, booklets, pamphlets, photos, and stickers containing these messages to devotees at nominal charges to cover costs. The sale proceeds are used for the Trust's objectives. The Deputy Commissioner of Sales Tax held the Trust to be a 'dealer' liable for sales tax, citing the amended definition of 'business' in Section 2(5A) of the Bombay Sales Tax Act, 1959, which removed the profit motive requirement. The Maharashtra Sales Tax Tribunal overturned this, finding the Trust not to be a 'dealer'. The Revenue appealed to the High Court, which upheld the Tribunal's decision. The Revenue then appealed to the Supreme Court.

What were the issues?

1. Whether the respondent-Trust, established to spread the message of Saibaba of Shridi, can be held to be a 'dealer' under Section 2(11) of the Bombay Sales Tax Act, 1959, in respect of the sale of publications containing Saibaba's messages, and whether the turnover of such publications is assessable to sales tax. Assessee's contentions: The Trust's primary object is to spread Saibaba's message, and the sale of publications is ancillary to this main object. Therefore, it does not constitute 'business' as defined in Section 2(5A) of the Act, and the Trust is not a 'dealer'. Revenue's contentions: The amendment to Section 2(5A) of the Act, which dispenses with the profit motive for an activity to be considered 'business', makes the Trust's sales activities liable for sales tax. The High Court erred in holding that the activity must still be one that is ordinarily regarded as business, contrary to legislative intent.

Which sections of the Income-tax Act were involved?

Section 2(5A),Section 2(11),Section 3,Section 61(1),Section 52(1)(a)

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"" ,.. ,,,. - ) ... ... COMMISSIONER OF SALES TAX A v. SAi PUBLICATION FUND MARCH 22, 2002 [SHIVARAJ V. PATIL AND BISHESHWAR PRASAD SINGH, JJ.) B Bombay Sales Tax Act, 1959-Sections 2(5A) as amended by Maharashtra Tax Laws (levy, Amendment and Repeal) Act, 1989, 2(I1) and 3-Sales Tax-Levy of-On publications sold by Trust with the object to spread C messages ofSaibaba-Held, Tax not leviable-Since the sale by the Trust was ancillary and incidental to the main object, the same would not amount to "business" and thus would not make the Trust a 'dealer'.

Evidence Act, 1872-0nus of Proof-For establishment of fact that incidental and ancillary activities of assessee was with independent intention to carry on "business "-Held, it is on the revenue-Bombay Sales Tax Act, D 1959-Section 2 (5A) as amended by Maharashtra Tax Laws (levy, Amendment and Repeal) Act, l 989. The issue for decision in the present appeals was whether the respondent-Trust set up by devotees of Saibaba of Shridi for spreading his E messages could be held to be a 'dealer' in respect of sale of books, booklets, pamphlets, photos, stickers and other publications containing messages of Saibaba an

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