Madras High Court
Arulmighu Mariamman Thirukovil vs / on 23 July, 2018
Author: M.Govindaraj
Bench: M.Govindaraj
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED: 23.07.2018
CORAM
THE HONOURABLE MR.JUSTICE M.GOVINDARAJ
W.P.(MD)No.21074 of 2014 and W.P.(MD)No.352 of 2015
and M.P.(MD)No.1,1 of 2014 & 2015
Arulmighu Mariamman Thirukovil,
Represented by Executive Officer / Joint Commissioner,
G.Thennarasu,
Samayapuram,
Trichy District. ... Petitioner (in both W.Ps)
/Vs./
1.The Commercial Tax Officer,
Lalgudi Assessment Circle,
Lalgudi,
Trichy District. ... 1st Respondent (in both
W.Ps)
2.The Deputy Commissioner of Commercial Taxes,
Commercial Tax Department,
Trichy. ... 2nd Respondent (in
W.P.(MD)No.21074
of 2014)
PRAYER in W.P.(MD)No.21074 of 2014: Writ petition filed under Article 226 of
the Constitution of India to issue a Writ of Mandamus, directing the first
respondent not to initiate any coercive steps against the petitioner for
recovery of Tax based on the proceedings dated 17.10.2014.
PRAYER in W.P.(MD)No.352 of 2015: Writ petition filed under Article 226 of
the Constitution of India to issue a Writ of Certiorari, calling for the
records relating to the proceedings made in RC.45/2010/B1 dated 17.10.2014
and quash the same.
!For Petitioner : Mr.K.Govindarajan
For Respondents : Mrs.J.Padmavathi Devi
Special Government Pleader
(in both W.Ps)
:COMMON ORDER
The writ petitions are directed against the final assessment order passed by the first respondent in R.C.45/2010/B1 dated 17.10.2014. By way of the said order, the first respondent has held that the petitioner temple involved in manufacturing activities of converting gold jewels and ornaments into gold biscuits for the purpose of sale and involved in trade activities of gold biscuit and therefore, the petitioner is liable to pay tax. This order is under challenge on the ground that this temple is not a dealer and not doing any business as defined in Sections 2 (10), 2 (12), 2 (15) of the Tamil Nadu Value Added Tax Act, 2006 [hereinafter referred to as ?the TNVAT Act?], by way of filing the writ petitions.
2. The petitioner is a Temple under the control of Government through Hindu Religious and Charitable Endowments Department (HR & CE). The income and expenditure of the Temple is controlled by the Head of the Department, namely, the Commissioner of HR& CE Department. The income of the Temple is derived through the offerings of the devotees through Hundials. The offerings are in the form of cash, gold, silver, and cattles etc. Depending on the decision made by the Government, the Head of the Department, as per rules, the gold and silver received through Hundials are also utilized for the requirements of other needy Temples. In one such transaction, as per the directions of the Head of the Department, gold received by the petitioner - Temple was sent to five other Temples for making golden chariot and gold plating on the surface of Vimanam. This was considered as a sale by the respondents and a pre-assessment notice dated 18.09.2013 demanding Rs.6,22,200/- as tax, was issued to the petitioner. The pre-assessment notice was issued on the basis of a newspaper report and the Temple gave its reply to the notice on 03.10.2013 and 20.03.2014. However, without appreciating the reply and the legal aspects set out therein, the final assessment order dated 17.10.2014 came to be passed by the respondents. Simultaneously, recovery proceedings under the Revenue Recovery Act was also initiated. Challenging the said orders, the present writ petitions are filed.
3. The learned counsel appearing for the petitioner would contend that the income of the temple is derived mainly from the offerings of the devotees through Hundials. The devotees offer by way of cash, silver, gold and other form of materials. Small gold articles gifted by the devotees are melted and utilized for various purposes in the temple. The usage of gold is under the control of the Government. As per the decision taken by the Government, the gold is used for making Car, Gopuram (Tower) and Kalasam at various temples under the control of Commissioner of Hindu Religious and Charitable Endowments Board. The main activities of the temple is only to propagate religion and the temple is doing charitable activities like Annadhanam, maintaining cleanliness, hygiene and other facilities like purifying water, etc. for the facility of the devotees. The temple has not involved in any business, more particularly, with an intent to conduct trade or business for making profit.
4. He would further contend that as per Section 36 of the HR&CE Act, a surplus income is transferred to other temples under the control of the Commissioner of Hindu Religious and Charitable Endowments Board. Therefore, there is no commercial activity in transferring the gold and cash from one temple to other temple for the purpose of making Gold Chariot, or Gopuram, etc. Therefore, the finding of the first respondent that the temples, a dealer involved in manufacturing of gold biscuits and trading the same is unsustainable and the impugned order is liable to be set aside.
5. Per contra, the learned Special Government Pleader would contend that in Hindu Newspaper on 31.12.2009 and Dinakaran Newspaper on 05.01.2010, it is clearly mentioned that the petitioner temple was selling gold weighing around 4 to 6 kgs to other temples. The sale value of the gold was around Rs.6,22,20,000/-. Since it is a taxable commodity, tax should be levied 1% on the turnover. The temple melted the gold and converted into gold biscuits and sold it on market value to other temples. Therefore, the activity of the temple in selling the gold would amount to trade. As per Section 2 (10) of the TNVAT Act, it should be construed as a business and as per Section 2 (15) of the TNVAT Act, temple will fall within the definition of ?dealer?. Further, Explanation II of Section 2(15) of the TNVAT Act defines the establishment under the control of Central and State Government is also liable to be treated as dealers for the purpose of the Act. Therefore, the order passed by the first respondent is very much valid in law. For the sale transactions made by the petitioner, the petitioner is liable to pay tax as specified in the TNVAT Act. Hence, the writ petitions are not maintainable. Even otherwise, there is a provision of appeal under Section 51 of the TNVAT Act to the petitioner. Without availing the alternative remedy, the petitioner cannot maintain the writ petitions and the writ petitions are liable to be dismissed.
6. Heard both sides.
7. From the factual background set out by the parties, it should be analyzed as to whether the temple will fall under Sections 2 (10) and 2 (15) of the TNVAT Act.
8. Section 2 (10) Act, defines ?business?. It reads as under:
"(10) ?business? includes -- (i) any trade or commerce or 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 profit accrues from 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; "
9. From the above definition, it can be stated that the establishment should involve itself in a trade or commerce or concern in the nature of trade. In the instant case, the main purpose of establishment of the temple is not for the purpose of carrying out any trade or commerce. From time immemorial the temples are built for the purpose of inculcating self discipline, promote dharma and thereby social integrity. It unites the people under one faith, promotes hope and charity and provide peace and harmony for the welfare of the society. The offerings made by the devotees are utilized in doing charitable activities.
10. As contended by the learned counsel appearing for the petitioner, whatever money received by the temple is utilized for feeding poor; distributing prasadham, providing water and shelter and other facilities; conducting temple festivals; making idols, etc. The gold received is also utilized for making idols, Gopuram (Tower), Kalasam, Roof, Car, Kalasam and / or for gold plating the same. The money and materials received through offerings, donations, thus, is being utilized for the said purpose and it is not marketed or sold. Much less, there is any profit motive in dealing with the offerings made by way of cash by the temple. The transfer of gold or silver or money from temple to another as per the policy decision taken by the Government, under the directions of the Commissioner of HR & CE is only an implementation of the above policy decision to nurture the temples, without financial resources and thereby an administrative action and the transaction is not in the nature of trade or commerce. In such circumstances, it cannot be held that the temple is running any business or trade or commerce.
11. Coming to Section 2 (15) of the TNVAT Act defines ?dealer?. It means any person who carries on the business of buying, selling, supplying or distributing goods, directly or otherwise, whether for cash, or for deferred payment, or for commission, remuneration or other valuable consideration. Section 2(15) of the TNVAT Act reads as under:
" (15) ?dealer? means any person who carries on the business of buying, selling, supplying or distributing goods, directly or otherwise, whether for cash, or for deferred payment, or for commission, remuneration or other valuable consideration, and includes-- (i) a local authority, company, Hindu undivided family, firm or other association of persons which carries on such business; (ii) a casual trader; (iii) a factor, a broker, a commission agent or arhati, a del credere agent or an auctioneer, or any other mercantile agent by whatever name called, and whether of the same description as hereinbefore or not, who carries on the business of buying, selling, supplying or distributing goods on behalf of any principal, or through whom the goods are bought, sold, supplied or distributed; (iv) every local branch of a firm or company situated outside the State; (v) a person engaged in the business of transfer otherwise than in pursuance of a contract of property in any goods for cash, deferred payment or other valuable consideration; (vi) a person engaged in the business of transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract;
(vii) a person engaged in the business of delivery of goods on hire-purchase or any system of payment by instalments; (viii) a person engaged in the business of transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration; (ix) a person engaged in the business of supplying by way of, or as part of, any service or in any other manner whatsoever of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service is for cash, deferred payment or other valuable consideration; "
12. From a reading of the above Section, it can be easily inferred that any person who carries on the business of buying, selling, supplying and distributing goods for cash or for deferred payment or for other valuable consideration is considered as a dealer. As discussed in the preceding paragraphs, it is clear that the temple is not involved in any business or commerce or trade. The core activity of the temple is not buying and selling and supplying goods, but promoting the noble objects of dharma, faith, hope and peace in the society. When it is found that the temple is not involved in any business nor carrying on any business or trade or commerce or any activity in the nature of trade or commerce, it cannot be brought under the definition of "dealer". Depending on the population of the area where the temple is situated, belief of the devotees on the deities, age and ancient nature of structure, architectural splendour, beauty of the sculptures and designs, familiarity of the temple and so many other factors, the temple fetches income. In some places, the offerings, donations through Hundials and collection of charges by administration may be more, whereas in many temples, it is meagre or nothing. In such circumstances, the temples getting lesser income and put under the maintenance of major temples as subsidiary temples. When the administration of all these temples are under the control of the Government, diverting funds from one temple to other temple is quite normal. It all depends on the policy decision taken by the Government as to the maintenance of temples and its funds. In that view of the matter, where one temple gets offerings only in cash and another temple receives offerings mostly in kind and not in cash, the same can be exchanged under the monitoring and supervision of the Head of the Department, namely, the Commissioner of Hindu Religious and Charitable Endowments Board. The intra-temple exchanges, diversions and utilisation of funds and bullion is made for the purpose augmenting the religious activities of the temple, for providing better service and facilities to the devotees, worshipers, tourists, Indian and international visitors. The conversion of gold into cash and cash into gold and its diversion from one temple to another shall not be considered as trade, or commerce of buying, selling, supplying or distribution of goods with a profit motive, for, temple which gives or receives is under the control of one person which means transactions are made by one person between the two establishments under his control and no third person is involved to buy or sell. It is only an internal arrangement on book adjustment and there cannot be any profit or loss in the indoor management. Since no outsider is involved and even assuming that there was exchange of gold for cash, it is to be construed as an administrative function and not as a business.
13. In that context, it cannot be stated that the temple is a dealer, only because, the temple got the gold jewels, converted into gold biscuits and deposited in bank lockers. It will not amount to impact as held by the first respondent in the assessment order. Therefore, the activities carried on by the temple cannot be termed as ?business? and temple cannot be defined as ?dealer? also.
14. This Court, by judgment reported in (1998) 1 MLJ 160 in the case of Arulmigu Dhandayuthapani Swami vs. Commercial Tax Officer has held as follows:
?22. The decision reported in [1989] 73 STC 321 (State of Andhra Pradesh v. Sri Bhramaramba Mallikarjuna Swamy Devasthanam), is a judgment rendered by a Division Bench of the Andhra Pradesh High Court holding tha if the dominant activity of an institution, such as a religious or charitable institution, is not a business activity, but if the secondary activity has the elements of commerce or trading activity, then in order to claim exemption from tax, it must be established that it forms an integral part of the main activity. The Bench has further held that the main activity of the respondent/Devasthanam was neither commercial nor trading in nature, and the incidental activity of running a canteen for the pilgrims, although of a business nature, was for the supply of foodstuffs to visiting pilgrims at reasonable prices, which was functionally integral to the main activity. The sales of food in the canteen were, therefore, not liable to tax. The Bench has also observed that the respondent ran motor vehicles for exxtending transport facilities to the pilgrims at reasonable rates. It was inevitable that unserviceable motor parts had to be disposed of as scrap, as retention would cause problems of storage and hygiene. Though is isolation this activity constituted a business activity, as far as the respondent was concerned, it partook of the character of functional integrality and the turnover relating to it had to be exempted. Likewise, the human hair, offered by pilgrims to the temple in fulfilment of vows, was sold by the respondent to avoid storage and health problems. The activity was not commercial and no tax was, therefore, exigible on it.?
and this Court, by judgment dated 12.11.2011 in the case of Sri Velur Devasthanam vs. The State of Tamil Nadu held as follows:
?No doubt, the definition of ? business? given in Section 2(5-A) of the Act even without profit motive is wide enough to include any trade, commerce or manufacture and any transaction in connection with or incidental or ancillary to the commencement or closure of such trade, commerce, manufacture, adventure or concern. If the main activity is not business, then any transaction incidental or ancillary would not normally amount to ? business? unless an independent intention to carry on ? business? in the incidental or ancillary activity is established. In such cases, the onus of proof of an independent intention to carry on ? business? connected with or incidental or ancillary sales will rest on the Department. Thus, if the main activity of a person is not trade, commerce etc, ordinarily incidental or ancillary activity may not come within the meaning of ? business?. To put it differently, the inclusion of incidental or ancillary activity in the definition of ? business? presupposes the existence of trade, commerce etc. The definition of ? dealer? contained in Section 2(11) of the Act clearly indicated that in order to hold a person to be a ? dealer?, he must carry on business and then only he may also be deemed to be carrying on business in respect of transaction incidental or ancillary thereto. We have stated above that the main and dominant activity of the Trust in furtherance of its object is to spread message. Hence, such activity does not amount to ? business?. Publication for the purpose of spreading message is incidental to the main activity which the Trust does not carry on as business. In this view, the activity of the Trust in bringing out publications and selling them at cost price to spread message of Saibaba does not make it a dealer under Section 2(11) of the Act.?
15. The above said judgments squarely apply to the instant case. Therefore, I am of the considered view that the order passed by the first respondent considering the temple as a dealer and it is running business of selling gold biscuits cannot be accepted.
16. In such circumstances, the impugned order passed by the first respondent lacks jurisdiction in assessing the petitioner temple. Therefore, the impugned order passed by the first respondent in RC.45/2010/B1 dated 17.10.2014 and the notice of assessment and demand and notice of penalty dated 17.10.2014 are set aside. Accordingly, the Writ Petitions are allowed. No costs. Consequently, the connected Miscellaneous Petitions are closed.
To:
1.The Commercial Tax Officer, Lalgudi Assessment Circle, Lalgudi, Trichy District.
2.The Deputy Commissioner of Commercial Taxes, Commercial Tax Department, Trichy.
.