( 1. ) BY this reference made by the Tribunal under Section 44 of the M. P. General Sales Tax Act, 1958 (hereinafter referred to as "the Act") at the instance of the Commissioner of Sales Tax, the following question of law has been referred to this Court for decision:

Whether, in the facts and circumstances of the case, the Board of Revenue was justified in holding that canteen sales are not exigible to tax as the dominant object in running the canteen is welfare of the employees and not carrying on business in sale of food articles?

( 2. ) THE aforesaid question arises out of the order of the Appellate Tribunal in second appeal in the following circumstances:

The non-applicant-assessee being a registered dealer, was assessed to sales tax for the calendar year 1977. The canteen sales in the factory premises of the assessee amounting to Rs. 6,02,277 were assessed to sales tax at 2 per cent by the Assistant Commissioner, Sales Tax, Indore. In first appeal, the order of assessment was maintained by the Additional Appellate Deputy Commissioner, Sales Tax, Indore. In second appeal, the Board of Revenue functioning as "tribunal", held that the canteens were established under Section 46 of the Factories Act, 1948 and the dominant object for the establishment of a canteen is to provide for welfare of the workmen engaged in the factory and not to sell food articles and as such, the canteen sales are not exigible to tax. Aggrieved by the order passed by the Appellate Tribunal, the Commissioner of Sales Tax moved the Tribunal under Section 44 of the Act and the Tribunal has accordingly referred the question of law as stated at the outset.

( 3. ) HAVING heard Learned Counsel we have come to the conclusion that the question referred to us must be answered in the affirmative and in favour of the assessee. The Learned Counsel for the non-applicant-assessee has referred to Section 46 of the Factories Act, 1948 and Rules 77 and 82 of the M. P. Factories Rules, 1962 in support of his contention that the activity of running the canteen is a welfare activity which is a legal obligation on the factory owner and the dominant object of running the canteen is welfare of the employees and not carrying on the business in sale of food articles. The transactions of the canteen, therefore, do not partake the character of business-sales as what is intended a welfare measure or service to mill workers and not sale of food supplied to them. Learned counsel has also cited a decision of the Supreme Court in Northern India Caterers v. Lt. Governor of Delhi AIR 1980 SC 674 in support of his contention wherein the following observations have been made:

Indeed, we have no hesitation in saying that where the food is supplied in an eating-house or restaurant, and it is established upon the facts that the substance of the transaction, evidenced by its dominant object, is a sale of food and the rendering of service is merely incidental, the transaction would undoubtedly be exigible to sales tax. In every case, it will be for the taxing authority to ascertain the facts when making an assessment under the relevant sales tax law and to determine upon those facts whether a sale of the food supplied is intended.

( 4. ) IN the instant case, the canteen in question is maintained for the use of the workmen under Section 46 of the Factories Act, 1948, which provides for making rules by the State Government requiring that in any specified factory wherein more than 250 workers are ordinarily employed, canteen or canteens shall be provided and maintained by the occupier for the use of the workers.

Section 46 occurs in Chapter V of the Factories Act which is entitled as "welfare" indicating that maintenance of canteen is provided as a welfare measure. The M. P. Factories Rules, 1962 in its Rule 77 makes detailed provisions about the specifications of the structure required to be constructed for a canteen and its maintenance; Rule 77-A provides for medical examination for fitnes