CST v. Sai Publication Fund

Issues

• Is the trust a dealer under Section 2(11) of the Bombay Sales Tax Act, 1959?
• Do its publication sales amount to business under Section 2(5A)?

Rules

• Where a trust sells literature at a nominal price only to spread its message and cover costs, the activity is not business.
• Without a profit motive or trade intent, the trust is not a dealer and sales tax does not apply.

Bombay Sales Tax Act, 1959 — Ss. 2(11) & 2(5A)

Arguments

Judgment

The Supreme Court held that the trust is not a dealer and its activity is not business under the Act. The literature sales were only a means to spread the message and recover costs. No commercial intent, no sales tax.

Ratio (Core Principle)

Where sales are incidental to a charitable or religious object and priced to cover costs, the activity is not “business” and the entity is not a “dealer” for sales tax.

Why It Matters

• Guides charities and trusts on when small-value sales are tax-neutral.
• Separates devotion-driven distribution from commercial trade.
• Useful for exam answers on dealer/business definitions.

Key Takeaways

• No profit motive → no “business”.
• Incidental sales for objects of trust ≠ dealer activity.
• Nominal pricing to recover costs supports non-commercial character.

Mnemonic + 3-Step Hook

Mnemonic: “FAITH, NOT TRADE”

1. FAITH purpose leads the activity.
2. NOT for profit—only cost recovery.
3. TRADE? No—hence no dealer status.

IRAC Outline

Issue: Are publication sales by the trust “business,” making it a “dealer” under the Act?

Rule: Incidental, cost-covering sales for religious/charitable objects are not business; entity not a dealer.

Application: Trust sold at nominal price to spread message; proceeds stayed within trust; no profit motive.

Conclusion: Not business; not a dealer; no sales tax liability.

Glossary

Dealer

A person or entity engaged in business of buying/selling goods under the Act.

Business

Trade/commerce activity, usually with a profit motive or commercial character.

Nominal Price

A small price aimed at recovering costs, not making profit.

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