University cannot be said to be a ‘dealer’ under Section 2(11) of RVAT if the predominant and main activity is that of imparting education

Rajasthan High Court: Deciding on a revision petition filed by Revenue officials wherein the issue was whether
a University/Institution, whose dominant activity is imparting education to the
students merely, by providing cement, iron and steel to its contractors for
execution of civil work and by providing prospectus to the prospective
students, can be said to be carrying on a business activity and could the
institution be a dealer under Section 2(11) of Rajasthan Value Added Tax Act,
2003, a bench of R.K. Janka J held that imparting of education cannot be said
to be in the nature of business activity, trade, commerce or manufacture, hence
the assessee is not carrying on business or a trade or commerce or manufacture.
As the dominant activity is that of imparting education in the present case, it
cannot be said to be a dealer.

In the instant
case, the respondent is an institution imparting education primarily to female
students. It is registered under Section 12AA of the Income Tax Act and is
treated as a “university” as per notification issued by the Education
Department. After conducting a survey, Revenue officials claimed that providing
cement, iron and steel to the contractors for civil work and also selling of
the prospectus to the students is sale liable to RVAT under Entry 104. The
contention of the Revenue is that the respondent being a dealer is liable to
get registered under the RVAT.

The Court also
referred to a number of cases such as, State
of Tamil Nadu v. Board of Trustees of the Port of Madras (1999) 4 SCC 630
in which it was observed that “if the main activity was not “business”, then
the connected, incidental or ancillary activities of sales would not normally
amount to “business” unless an independent intention to conduct
“business” in these connected, incidental or ancillary activities is
established by the Revenue”. Considering the relevant facts and law, the Court
held that the respondent is not required to be granted “Obligatory
Registration” under Section 11 of the RVAT Act. [Commercial Taxes Officer vs. M/s. Banasthali
Vidyapith, decided on on 6.02.2015]

Source: Legal news India

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