Judgement

GROVER, J.:- These appeals by special leave from a judgment of the Madras High Court involve a common question.

2. The facts in the first of these appeals may be stated. The assessee, who is the respondent herein, is a spinning mill manufacturing cotton yarn. It was assessed to sales tax under the Madras General Sales Tax Act, 1959, hereinafter called the Act . For the assessment year 1960-61 the assessing authority included in the taxable turnover certain amounts representing the sale value of foodgrains and groceries sold in the fair price shop run by the mills and the amount realised by sale of articles of food in the canteen which was run for its employees. The assessee filed an appeal questioning its liability to pay tax on these items. The appellate authority dismissed that appeal. The assessee thereupon filed a further appeal to the Sales Tax Appellate Tribunal which allowed the appeal and directed that the turnover in question be deleted. The Revenue went up in revision to the High Court of Madras. A division bench of that court dismissed the revision.

3. The Appellate Tribunal had found that the fair price shop and the canteen were run exclusively for the benefit of the employees and there was no profit motive in running the same. The High Court referred to the relevant statutory provisions and expressed the view that the primary requisite of business as defined by the Act should be a trade or commerce or advanture in the nature of trade or commerce. Presence or absence of profit was not material but the activity must be of a commercial character in the course of trade or commerce. It was found that the assessee had not been carrying on business in the fair price shop. The High Court looked into the Articles of Association of the assessee and found no article empowering it to carry on business in fair price shop. The assessee had opened that shop only to provide an amenity to its workmen so that commodities may be made available to them at fair prices. According to the High Court if as a matter of fact some profit accrued that would be wholly immaterial because the assessee never intended to run the fair price shop as a business having an element of commercial activity.

4. Section 2 of the Act gives the definitions. The definitions of "business" given in cl. (d), of "dealer" as given in cl. (g) and of "sale" as given in cl. (n) are reproduced below;

(d) "business" includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture whether or not any profit accrues from such trade, commerce, manufacture, adventure or concern".

(g) "dealer" means any person who carries on the business of buying, selling, supplying or distributing goods, directly or otherwise, whether for cash or for deferred payment or for commission, remuneration or other valuable consideration and includes-

(i)........

(ii).........

(iii) a commission agent, a broker or a del credere agent, or an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of buying, selling, supplying or distributing goods on behalf of any principal.

(iv) ....."

(n) "sale" with all its grammatical variations and cognate expressions means every transfer of the property in goods by one person to another in the course of business for cash or for deferred payment or other valuable consideration, and includes a transfer of property in goods involved in the execution of a works contract, but does not include a mortgage, hypothecation, charge or pledge".

By the Madras General Sales Tax (Second Amendment) Act, 1964, cl. (d) of S.2 was substituted by the following clause:

"business" includes-

(i) any trade, commerce or manufacture or 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 profit accrues from such trade, commerce, man