The court held that a university's ancillary activities, such as providing food to students, do not constitute business for tax purposes, emphasizing the need for proof of intent to conduct business.

JUDGMENT :

Tarlok Singh Chauhan, J.

Since common question of law and facts arise for consideration in these revision petitions, therefore, they were taken up together for hearing and are being disposed of by way of a common judgment.

2. The instant is a classical example where Dr. Sunil Kumar AETC, Shimla took law into his own hands and played as a Prosecutor, Judge and Executor at the same time as would be evident from the further narration of facts.

3. The revisions petitions were admitted on 23.10.2024 on the following substantial questions of law:-

“i) Whether on the facts and in the circumstances of the case, the Ld. H.P. Tax Tribunal was justified in holding that the petitioner is liable for payment of tax on the supply of foodstuff and other items to the students within its premises even though it has been held that petitioner is predominately existing for education?

ii) Whether the Ld. Tribunal was justified in artificially bifurcating the turnover into exempted and non-exempted goods even though it has been categorically found that the petitioner is not a dealer in view of the law laid down by various courts?

(iii) Whether on the facts and circumstances of the case, the Ld. Tribunal was justified in remanding the case back even though the entire proceedings were void ab-initio and the order should have been set aside in toto?

(iv) Whether on the facts and circumstances of the case, the Ld. VAT Tribunal is justified in holding that petitioner would be liable to pay the tax on supply of goods to the students in the course of academic activities even though the same is not in the course of business?

v.) Whether on the facts and in the circumstances of the case the petitioner is entitled to Input Tax Credit for the tax paid on the purchase of goods which have been allegedly sold and held to be taxable by the tribunal?”

4. The facts are not in dispute.

5. The petitioner(s) - University was established in the year 2002 as a State Government University by virtue of passing of the Jaypee University of Information Technology Act No. 14 of 2002 by the Government of Himachal Pradesh. The University was setup under Jaiprakash Sewa Sansthan (JSS) a registered Public Trust (not for profit basis) and thus falls under the category of "Private University" within Regulation 2.1 of the University Grants Commission (Establishment and Maintenance of Standards in Private Universities) Regulations, 2003 framed under Clauses (f) 81 (g) of Section 26(1) of the University Grants Commission Act, 1956.

6. The object of the University, as defined in section 4 of the aforesaid Act, is as under:

"The object of the University shall be to disseminate, create and advance knowledge, wisdom and understanding and to offer technical education of high standards by Teaching, Research, Training and extension activities."

7. Thus, the only object of the University is to impart technical education to the students. The University is to run on "Not for Profit basis” resulting in reinvestment of the surplus in the development of educational facilities for the University.

8. In view of above objectives, the Petitioner university is also exempted from the payment of Income Tax under section 10(23C) (vi) of Income Tax Act, 1961 as ordered by the Chief Commissioner of Income Tax, Shimla vide order No. DEE GCIT/HP/10(23C)03/2008-09 dated 18.09.2009.

9. The University is at Waknaghat, District Solan, Himachal Pradesh. It is located in the hilly terrain of underdeveloped village Rachhiana, P.O. Dumehar in District Solan, where basic infrastructural facilities for the population are still in the process of development. The nearest little developed local market is Shoghi which is about 15 Kilometres from the campus of the University. Even, this local market is un-approachable by the students owing to lack of public transport.

10. Due to non-availability of market for the regular consumers in the vicinity of the University, it was considered essential to establish facility in the Universit