BASE REPAIR ORGANISATION NOW NAVAL DOCK YARD Vs. STATE OF ANDHRA PRADESH

JUDGEMENT

(1.) The petitioner "Base Repair Organisation", now called "Naval Dock Yard" Visakhapatnam, is maintained by the Defence Ministry for repairing and servicing the ships of the Indian Navy. As required by section 46 of the Factories Act, 1948, the petitioner runs a canteen, to cater to the needs of its employees. The petitioner says that it is running the canteen on "no-profit-no-loss" basis. For the assessment years 1969-70 to 1972-73, the Deputy Commercial Tax Officer-II, Visakhapatnam, treated the turnover of the canteen as taxable turnover under the A.P. General Sales Tax Act, and levied tax thereon. The petitioners contention was that its canteen activity carried on to comply with a statutory obligation is not "business", and that it is not a "dealer" as defined by the Act and therefore not liable to pay any tax. This contention was overruled by the Deputy Commercial Tax Officer, as well as the Appellate Assistant Commissioner in appeal. The matter was carried in second appeal to the Sales Tax Appellate Tribunal, which too held that the proceeds of the sales made in the canteen run by the petitioner constitute taxable turnover, and accordingly dismissed the appeal.

(2.) In these tax revision cases, the first contention urged by Mr. P. Venkatrama Reddy, the learned counsel for the assessee, is that running the canteen is only ancillary and incidental to the main activity carried on by the Naval Dock Yard; and inasmuch as the main activity of the petitioner does not amount to "business" as defined in the Act the petitioner cannot be treated as a dealer.

(3.) Under section 5(1) of the Act,