1. These petitions under Article 226 of the Constitution turn upon a common point as to whether sales of food and drink effected by the Integral Coach Factory Canteen to the workmen of the factory are liable to sales tax under the provisions of the Madras General Sales Tax Act, 1959- For the year 1959-60 on the view that the sales are so liable, the Deputy Commercial Tax Officer, Perambur Division, who is the respondent, by his order dated 31st March, 1960, assessed the canteen provisionally on a turnover of Rs. 2,00,000, the tax levied being payable in 12 monthly instalments of Rs. 333 each. On the basis of the provisional assessment a demand in Form B was made upon the canteen for payment of the monthly tax. One of the petitions is to quash the provisional assessment and the other is for a mandamus forbidding the respondent from enforcing the demand. The petitioner, who is the Chairman of the Committee of Management, Integral Coach Factory Canteen, Madras, seeks the reliefs on the main ground that the canteen by supplying food and drink to the workers of the Integral Coach Factory is only discharging a statutory obligation and it is not a dealer carrying on the business of selling goods.
2. Section 46 of the Factories Act, 1948, empowers the State Government to make rules requiring a factory, wherein more than 250 workers are ordinarily employed, to provide and maintain a canteen or canteens for the workers. The rules may make provision, among other things, for the food-stuffs to be served in the canteen and the charges which may be made thereof. In exercise of its powers, the State Government framed Rules 65 to 71 of the Factories Rules, 1950, of which Sub-rule (2) of Rule 65 says that the occupier of every factory notified by the State Government shall provide in or near the factory a canteen according to the standards prescribed in the rules. The other sub-rules of Rules 65 and 67 deal with matters relating to canteen buildings, dining halls, their size and equipment. Rule 68 regulates the price to be charged for the food and drink and other items served in the canteen and provides that, subject to any special or general directions issued by the State Government under the provisions of Rule 71, food, drinks and other items served in the canteen shall be served on a non-profit basis and the prices charged shall be subject to the approval of the managing committee. The same rule also says that the list of charges for various articles of food or beverages should be conspicuously displayed in the canteen. Somewhat detailed provisions are made by Rule 70 for the composition and powers of the managing committee of the canteen. Rule 71 says that the State Government may, by special or general directions, prescribe the proportion of the cost of running a canteen which shall be borne by the occupier. Pursuant to these rules, the Integral Coach Factory at Madras was obliged statutorily to open a canteen.
3. The main features of these rules are that the service of food and beverage to workers at the canteen should be on a non-profit basis and the prices charged shall be subject to the approval of the canteen managing committee and that part of the cost of running a canteen fixed by the State Government should be paid by the occupier which is in this case the factory. In other words, there is, by virtue of the statutory rules, a complete absence of profit motive in the service by the canteen to its workers, of food and drink at controlled charges. And in fact, Rule 71 suggests that to a certain extent such a service is subsidised or is to be subsidised by the factory.
4. The question is whether in such circumstances the canteen is a 'dealer' within the statutory definition of the term and whether the sales effected by the canteen to the workers are sales chargeable to sales tax.
5. To determine the question, it is necessary to notice the relevant statutory provisions. Section 2(d) of the Madras General Sales Tax Act, 1959, does not define 'business' but it says that it includes any trade, commerce or manufacture, or any adventure or concern in the nature of trade, commerce, or manufacture, whether or not any profit accrues from such trade, commerce, manufacture, adventure or concern. A 'dealer' is defined in Section 2(g) to mean any person who carries on the business of buying, selling and supplying or distributing goods, directly or otherwise, whether for cash or for deferred payment, or for commission, remuneration, or other valuable consideration. Section 2(n) defines 'sale' as a transfer of property in goods by one person to another in the course of business for cash or for deferred payment, or other valuable consideration.
6. It is clear from these provisions that in order to constitute a person a dealer, he must carry on the business of buying and selling goods and the sales to be sales for purposes of tax must be such as one effected in the .course of business. The word 'business' is of course of a wide import and almost everything perhaps may be brought within its scope, in some sense or other. But that, as it seems to me, is not the intention of the Madras General Sales Tax Act, 1959. 'Business' for the purpose of Section 2(g) and Section 2(n) should be understood in a commercial sense with a view to make profit. If those elements are absent, I think the definition of 'dealer' and 'sales' in the Act will not be satisfied. In my opinion, where a person is statutorily obliged to run a canteen on an entirely non-profit basis he is obviously not a dealer and the sales effected by him to his workmen pursuant to his statutory obligation are not sales under Section 2(n).
7. Sree Meenakshi Mills Ltd. v. State of Madras  5 S.T.C. 291 was a case of a canteen run by Sree Meenakshi Mills Ltd., under a similar statutory obligation. Satyanarayana Rao and Rajagopalan, JJ., held that the word 'business' in the definition of 'dealer' in the Madras General Sales Tax Act, 1939, was used in a commercial sense an integral part of which was the motive to make profits by sales or purchases and that if this was wanting a person merely buying or selling would not be a 'dealer'. The learned Judges on that view held that the canteen in that case was not a dealer and its turnover relating to sales of food and drink was not liable to tax. The Trustees of the Port of Madras v. State of Madras (1960) 2 M.L.J. 86 was not a case of canteen ; but there, the Trustees of the, Madras Port Trust were under a similar statutory obligation to supply drinking water to ships which call at the port of Madras. It was held that sales of drinking water by the Port Trust which was under a statutory obligation and which was not on the basis of a profit motive were not liable to tax and the Port Trust in relation to the sales was not a dealer. The principle of these two cases directly applies to the facts of this case.
8. Learned Additional Government Pleader, however, contends that the modified definition of business in the Madras General Sales Tax Act, 1959, in contrast with the 1939 Act, makes a difference and that the fact that the canteen makes no profit is no longer of significance. Counsel is right that far, but the argument does not help him the entire way to succeed. Though under the present Section 2(d) actual accrual of profit from trade or commerce is not essential it does not eliminate the requisite of a profit motive to call an activity a 'business' for the purpose of the Madras General Sales Tax Act, 1959. Even in the earlier Act, in order to constitute a person a dealer it was not necessary that he should run a business making profit and it would be sufficient if the business was run with a profit motive. That still continues to be the position even now. My attention has been invited to Madras Electricity Department Canteen v. State of Madras 75 L.W. 189, but it does not appear that the Electricity Board there was under a statutory obligation to conduct a canteen on a non-profit basis. On the facts of that case, Jagadisan and Srinivasan, JJ., were of the opinion that inasmuch as it was not impossible for the canteen to effect sales to persons other than workmen the canteen should be held to be a dealer. This case, in my opinion, is of no assistance to the respondent. As I said, in the present case, the provision requiring running of a canteen and the relevant rules make it beyond doubt that the canteen is run on an entirely non-profit motive for the benefit of only the workmen in the particular factory with the result neither the canteen can be said to be a dealer nor the sales to be sales within the meaning of the Madras General Sales Tax Act, 1959, so as to attract sales tax.
9. On this view the provisional assessment is quashed, the petitions are allowed and the rules nisi made absolute. There will be no order as to costs.