K.N. Shukla, J.
1. This order shall also govern the disposal of M. C. C. No. 78 of 1980 as facts stated and questions referred are common.
2. These are references under Section 44(1) of the M. P. General Sales Tax Act, 1958, made by the Board of Revenue, M. P., seeking this Court's decision on the following question of law :
Whether, under the facts and circumstances of the case, the Tribunal was justified in setting aside the purchase tax imposed on the purchases of building materials by M/s. Synthetics Ltd., Ujjain ?
3. Facts as stated by the Tribunal/Board of Revenue and admitted before us are as follows: The assessment periods involved in these references are 25th October, 1970, to 31st March, 1971, and 1st April, 1971, to 30th June, 1972. The assessee, M/s. Synthetics Ltd., Ujjain, is a registered dealer engaged in the business of manufacture of synthetic yarn. The assessee started construction of the factory for manufacture of synthetic yarn during the assessment periods in question. Production of synthetic yarn actually commenced on 1st October, 1972, i. e., after the assessment period ending on 30th June, 1972. There was no manufacturing activity during the periods of assessment under reference. The assessee had purchased building materials and furniture from unregistered dealers during this period for construction and furnishing of the factory. The Sales Tax Officer assessed these purchases to purchase tax under Section 7 of the M. P. General Sales Tax Act.
4. The assessee appealed against the orders of assessment before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner partly accepted the appeal and set aside the levy of purchase tax on furniture. The levy of purchase tax on the building materials was, however, sustained.
5. The assessee preferred second appeals before the Tribunal/Board of Revenue, M. P. Its contention was that the business of manufacture of yarn had not commenced during the period of assessment and the building materials purchased for construction of a factory were not liable to levy of purchase tax. The Tribunal accepted the argument and set aside the order levying purchase tax on building materials during the two assessment periods.
6. At the instance of the Commissioner of Sales Tax the aforementioned question has been referred for decision to the High Court.
7. Section 7 is the charging section for levy of purchase tax. The crucial words in Section 7(1) are as follows :
Every dealer who in the course of his business purchases any goods as specified in Schedule II...shall be liable to pay tax, etc. (sic)
The question for consideration before us is whether the assessee in the present case had purchased the building materials for construction of its factory 'in the course of its business'.
8. Section 2(bb) defines 'business' as follows:
(i) Any trade, commerce, manufacture or any adventure or concern in the nature of trade, commerce or manufacture, whether or not such trade, commerce, manufacture, adventure or concern is carried on with a motive to make gain or profit and whether or not any gain or profit accrues from such trade, commerce, manufacture, adventure or concern and irrespective of volume, frequency, continuity or regularity of such trade, commerce, manufacture, adventure or concern; and
(ii) Any transaction in connection with, or incidental or ancillary to, such trade, commerce, manufacture, adventure or concern.(sic)
9. It was contended by the learned counsel for the revenue that the purchase of building materials for construction of the factory fell within the extended definition of 'business' inasmuch as it was a transaction of purchase 'in connection with or incidental or ancillary to the trade, commerce, manufacture, adventure, etc.' The learned counsel referred to a decision of this Court in Commissioner of Sales Tax v. Project Automobiles  42 STC 279 in support of his proposition that the enlarged definition of the word 'business' included any transaction connected or incidental to the main business. We have perused the decision and we are clear that it is not in point. In the cited case the assessee was a registered dealer in automobiles and other accessories. It had sold an Ambassador car which was purchased for office use. Keeping in view the nature of the assessee's business, the court held that the sale of the car was incidental and ancillary to the business that the assessee carried on and, therefore, the transaction was liable for levy of sales tax.
10. For levy of purchase tax, the prerequisites must be :
(i) The purchase must be made in the course of business;
(ii) The transaction of purchase should be in connection with or incidental or ancillary to the business.
In the present case, admittedly the assessee had not commenced its business of manufacture of synthetic yarn. Therefore, purchases of bricks and other building materials before commencement of the business could not be considered as purchases 'in the course of business'.
11. The learned standing counsel laid great emphasis on the definition of business as amended vide Act No. 16 of 1965 with effect from 15th April, 1965. His contention was that under Clause (ii) of Section 2(bb) of the Act any transaction in connection with or incidental or ancillary to such trade, commerce, manufacture, etc., partook the character of business and invited levy of purchase tax under Section 7 of the Act. The business of the assessee was manufacture of synthetic yarn. Any transaction in connection with or incidental or ancillary to the manufacture of synthetic yarn would certainly be a transaction covered by Clause (ii) of Section 2(bb). But, purchasing of building materials for erection of a factory before commencement of the business cannot be a transaction in connection with or incidental or ancillary to such manufacture. The transaction contemplated by Clause (ii) of Section 2(bb) of the Act must have a direct nexus with the business in question which in the instant case was manufacture of synthetic yarn. Construction of a building for installing a manufacturing unit does not have any such direct connection with the business of manufacture of yarn. In fact, construction of a factory building may not be necessary for starting a manufacturing unit. A building can be obtained on rent also for the same purpose. Thus, construction of the building and the manufacturing activity have no direct connection. Therefore, purchasing of building materials for constructing a factory could not be considered as a transaction in connection with, or incidental or ancillary to, the business of the assessee of manufacture of synthetic yarn.
12. The learned counsel for the department referred to the decisions of the Supreme Court in State of Tamil Nadu v. Sri Thirumagal Mills Ltd. AIR 1972 SC 1148, State of Tamil Nadu v. Burmah Shell Co. Ltd.  31 STC 426 (SC) and Hyderabad Asbestos Cement Products Limited v. State of A. P.  30 STC 26 to support his contention with respect to the enlarged scope of the word 'business' after the amendment of the Act. We have perused these decisions. The facts in the cited cases were totally different. The ratio of the decisions in the above cases is that profit-making is no more a prerequisite for defining an activity as business. In that context it was held that running a welfare scheme like providing canteen facilities to workers, etc., would partake the character of business because such an activity was incidental to the principal business.
13. In the instant case, as the business had not yet commenced, the building materials were not purchased in the course of the business. Secondly, these purchases could not constitute transactions connected with or ancillary to the business of the assessee.
14. We, therefore, answer the question referred to us in the affirmative. Our answer is that:
Under the facts and circumstances of the case, the Tribunal was justified in setting aside the purchase tax imposed on the purchases of building materials of M/s. Synthetics Limited, Ujjain.
15. There shall be no order as to costs.