ORDER :

U. Durga Prasad Rao, J.

Petitioner seeks writ of mandamus declaring the action of respondents in directing the petitioner’s school to obtain dealer registration under Andhra Pradesh Value Added Tax (AP VAT) Act, 2005 and their action in assessing the petitioner’s school under the said Act for the period 01.04.2005 to 31.12.2005 vide order dated 08.03.2006 is arbitrary, illegal and violative of Articles 14, 19, 21A and 265 of the Constitution of India and to set aside the same and pass such other orders.

2. Petitioner’s case succinctly is thus :

(a) Petitioner is Bharatiya Vidya Bhavan’s Residential Public School located at Vidyashram, Pedatadepalli (PO), West Godavari District. The Bharatiya Vidya Bhavan is a public trust registered under Bombay Public Trust Act bearing Registration No.F-358 (Bom). The petitioner’s school was established in the year 1983 with an object to provide education on non-profit basis. It was established by the Philanthropists for development of society. The petitioner’s school is run on non-profit basis. The school offers courses from LKG to 10th standard as is recognized by Central Board of Secondary Education (CBSE), New Delhi. As on the date of writ petition, the petitioner’s school has 832 students and 70 staff members of both teaching and non-teaching category. A number of schools were sponsored by Bharatiya Vidya Bhavan in the State of Andhra Pradesh and petitioner’s school is one among them.

(b) The further case of the petitioner is that the Government of India having recognized services of Bharatiya Vidya Bhavan, notified the society as an educational institution of national eminence for the purpose of Section 80(g)(1) of the Income Tax Act, 1962 (for short ‘I.T. Act’). As a result, the funds and donations received by the society and the institutions sponsored by it are eligible for exemption U/s 80 (g)(1) of the I.T Act. The petitioner’s school is being run from out of the donations received by it. Apart from the donations, petitioner’s school collects nominal fees and mess charges from the students. During the financial year 2004-05, the petitioner’s institution had a surplus of Rs.2.87 lakhs which was remitted to Bharatiya Vidya Bhavan Society. The petitioner’s school does not retain any surplus amounts with it. Petitioner’s accounts are audited by the auditors appointed by the Bharatiya Vidya Bhavan Society. All these facts would manifest that petitioner’s school is a non-profit entity engaged in dissemination of knowledge in the spheres of culture, arts and science. It is further submitted that the maintenance of hostels by the petitioner’s school is incidental, ancillary and connected with the main object and activity of imparting education.

(c) While so, the 2nd respondent visited the petitioner’s school on 10.12.2005 and inspected the records. Thereafter he issued a notice dated 30.12.2005 and called for the sales turnover for the period up to 30.12.2005 along with the Form-100 and directed the petitioner to obtain registration under the provisions of AP VAT Act, 2005. Subsequently 2nd respondent issued notice of assessment under AP VAT Act, 2005 on 17.02.2006 proposing to levy VAT for the period 01.04.2005 to 01.01.2006 amounting to Rs.3,67,050/- on the ground that the petitioner’s school sells the food items and thus treated the activity of the petitioner in providing food as a business of running restaurant / hotel for the purpose of the AP VAT Act, 2005. The said act of 2nd respondent is arbitrary, illegal and unconstitutional.

(d) For the purpose of AP VAT Act a dealer is one who carries on the business of buying, selling, supplying or distributing goods for cash or deferred payments and includes any person who in the course of business of running a restaurant or eating house or hotel, sells or supplies by way of or as a part of any service, goods being food or any other article for human consumption. Therefore, for the purpose of bringing any person within the fold of Section 2(