Judicial Analysis Court Copy Headnote Facts Arguments Court observation

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IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
P. Sam Koshy, Narsing Rao Nandikonda, JJ
State of Andhra Pradesh – Appellant
Versus
Hyderabad Race Club – Respondent
TAX REVISION CASE No.60 of 2010|TAX REVISION CASE No.72 of 2010|TAX REVISION CASE No.105 of 2010|TAX REVISION CASE No.106 of 2010|TAX REVISION CASE No.116 of 2010|TAX REVISION CASE No.139 of 2010

Advocates:
For the Appellants/Petitioners: Swaroop Oorilla
For the Respondents: S. Ravi, CH. Pushyam Kiran

An entity is not a ‘dealer’ if its activities are primarily non-commercial and lack a profit motive. Incidental supplies in such contexts do not constitute ‘carrying on business’. Taxing entries regarding ‘cattle feed’ should be interpreted broadly to include animal feed based on legislative context.

Headnote:(A) Andhra Pradesh General Sales Tax Act, 1957 - Section 2(e) - Sales Tax Appellate Tribunal - Classification of goods - Dealer status - Liability for tax on items supplied in the course of non-commercial activities - Whether an organization engaged in sporting and recreational activities qualifies as a ‘dealer’ when its supply of goods is incidental to its primary objective. (Paras 5, 8, 9, 12, 39)

(B) Statutory Interpretation - Taxing Statutes - Strict interpretation of fiscal statutes - Principles of construction where ‘that is to say’ is used in legislative entries - Burden of proof in claiming exemptions - Entries in schedules must be interpreted broadly to include ancillary or subsidiary matters unless clearly restricted by law. (Paras 20, 21, 22, 23, 26, 41)

(C) Classification of Goods - Entry 80 of First Schedule vs. Entry 20 of Third Schedule - Interpretation of ‘Cattle Feed’ - Legal fiction of including horses within the definition of ‘cattle’ for the purpose of taxation - Legislative intent behind segregating entries into specific categories via amendments. (Paras 6, 17, 31, 40, 43)

Facts of the case:
A tax-exempt organization involved in sporting activities challenged the assessment of various items, specifically the supply of feed for animals and tender forms, as taxable transactions. The assessing authority classified these turnovers as business activities, while the organization argued that its primary objective was non-commercial and the transactions were merely incidental, thus not qualifying it as a ‘dealer’ under the act. The organization further contended that the animal feed should be classified under a concessional tax entry rather than as general goods.

Findings of Court:
The Court held that for an entity to qualify as a ‘dealer’, the activities must constitute ‘carrying on business’ with a commercial or profit-seeking intent. Where an organization is primarily engaged in non-commercial objectives, incidental supplies do not automatically classify it as a dealer. Furthermore, by legal definition and historical statutory context, feed for animals used in performance activities falls under the category of ‘cattle feed’.

Issues: The main issues were whether an organization performing non-commercial activities qualifies as a ‘dealer’ under the act, and whether feed supplied for horses should be classified as ‘cattle feed’ under the relevant schedule.

Ratio Decidendi: The Court reasoned that the definition of a ‘dealer’ requires the carrying on of business for gain. In the absence of a profit motive, incidental sales do not trigger dealer status. Furthermore, interpreting tax entries strictly yet logically, the Court found that the statutory inclusion of diverse animals under the definition of ‘cattle’ for specific legislative purposes justifies classifying the animal feed as ‘cattle feed’ within the taxing schedule.

Result: Tax Revision Cases dismissed.

Table of Content
1. factual background involving tax assessment of race club operations. (Para 2 , 3 , 4 , 5 , 6)
2. petitioner argues club is a dealer and oats are general goods. (Para 7 , 8 , 9 , 10 , 11)
3. respondent contends it is not a dealer; oats constitute cattle feed. (Para 12 , 13 , 14 , 15 , 16 , 17 , 18)
4. principles of strict interpretation for tax and legislative statutes. (Para 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26)
5. legal classification of horses as cattle under statutory frameworks. (Para 27 , 28 , 29 , 30 , 31)
6. review of relevant apgst act definitions and schedule entries. (Para 32 , 33 , 34 , 35 , 36 , 37 , 38)
7. defining dealer status and expansive scope of cattle feed. (Para 39 , 40 , 41 , 42 , 43 , 44)
8. dismissal of tax revision cases regarding the respondent's status. (Para 45 , 46)

1. Whether Reporters of Local newspapers

may be allowed to see the Judgments? : Yes

2. Whether the copies of judgment may be

marked to Law Reporters/Journals? : Yes

3. Whether His Lordship wishes to

see the fair copy of the Judgment? : Yes

Counsel for petitioner : Mr. Swaroop Oorilla, learned Special Standing Counsel for Commercial Tax.

Counsel for respondent : Mr. S.Ravi, learned Senior Counsel appearing on behalf of Mr. CH. Pushyam Kiran.

GIST:

HEAD NOTE:

Cases referred

1) 37 STC 522

2) 1987 SCC OnLine AP 87

3) (1999) 3 SCC 346

4) (2023) 6 SCC 451

5) 1993 SCC OnLine SC 10

6) 2000 SCC Online AP 557

7) 1978 SCC OnLine Guj 102

8) 1987 SCC OnLine AP 558

COMMON ORDER: (per the Hon’ble Sri Justice P.Sam Koshy)

Heard Mr. Swaroop Oorilla, learned Special Standing Counsel for Commercial Tax appearing on behalf of the petitioner - State; and Mr. S.Ravi, learned Senior Counsel appearing on behalf of Mr. CH.Pushyam Kiran, learned counsel for the respondent.

2. These are six Tax Revision Cases filed by the State under Section 22(1) read with Rule 10 of the Andhra Pradesh Goods and Service Tax Rules (hereinafter referred to as ‘APGST Rules’) under the Andhra Pradesh Goods and Service Tax Act, 1957 (hereinafter referred to as ‘APGST Act’) challenging the orders passed by the Sales Tax Appellate Tribunal, Andhra Pradesh, Hyderabad (hereinafter referred to as the ‘STAT’). The details of each of the case; like the Tax Revision Case number, assessment year, and the Tax Appeal number before the STAT along with date on which it was decided is reproduced below:

Sl. No.	TREVC. No.	ASSESSMENT YEAR	IMPUGNED ORDER
1.	60 of 2010	1995-1996	T.A.No.393 of 2001, decided on 01.10.2008
2.	72 of 2010	1999-2000	T.A.No.1093 of 2001, decided on 01.10.2008
3.	105 of 2010	1994-1995	T.A.No.392 of 2001, decided on 01.10.2008
4.	106 of 2010	1998-1999	T.A.No.396 of 2001. decided on 01.10.2008
5.	116 of 2010	1993-1994	T.A.No.391 of 2001, decided on 01.10.2008
6.	139 of 2010	1996-1997	T.A.No.394 of 2001, decided on 01.10.2008

3. In all these since cases the point of contention is same, they have been taken up and heard together and are decided by this Common Order.

4. For convenience, the facts in Tax Revision Case No.105 of 2010 are discussed hereunder.

5. The facts of the case are that the respondent M/s. Hyderabad Race Club is an organization engaged in horse racing activities. During the assessment years in question, the Commercial Tax Officer examined various transactions undertaken by the club and determined that it qualified as a "dealer" under Section 2(e) of the APGST Act. The assessing authority found that the club was involved in multiple commercial activities including the sale of food items to outsiders (Rs.1,90,975/-), sale of oats to horse trainers (purchase value Rs.52,30,405/-), sale of gunnies (Rs.51,473/-), sale of tender forms (Rs.4,930/-), and sale of scrap materials (Rs.1,29,100/-). Additionally, tax was levied under Section 6A of the APGST Act amounting to Rs.2,66,302/- on works contract turnover. The respondent challenged the tax assessment arguing that as a club it should not be treated as a dealer and that several of these transacti

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Cases Referred (2)