Jeevan Reddy, J.:— The petitioner “Base Repair Organisation”, now called “Naval Dock Yard” Visakhapatnam, is maintained by the Defence Ministry for repairing and servicing the ships of the Indian Navy. As required by section 46 of the Factories Act, 1948, the petitioner runs a canteen, to cater to the needs of its employees. The petitioner says that it is running the canteen on “no-profit-no-loss” basis. For the assessment years 1969-70 to 1972-73, the Deputy Commercial Tax Officer-II, Visakhapatnam, treated the turnover of the canteen as taxable turnover under the A.P General Sales Tax Act, and levied tax thereon. The petitioner's contention was that it's canteen activity carried on to comply with a statutory obligation is not “business”, and that it is not a “dealer” as defined by the Act and therefore not liable to pay any tax. This contention was overruled by the Deputy Commercial Tax Officer, as well as the Appellate Assistant Commissioner in appeal. The matter was carried in second appeal to the Sales Tax Appellate Tribunal, which too held that the proceeds of the sales made in the canteen run by the petitioner constitute taxable turnover, and accordingly dismissed the appeal.

2. In these tax revision cases, the first contention urged by Mr. P. Venkatrama Reddy, the learned counsel for the assessee, is that running the canteen is only ancillary and incidental to the main activity carried on by the Naval Dock Yard; and inasmuch as the main activity of the petitioner does not amount to “business” as defined in the Act the petitioner cannot be treated as a dealer.

3. Under section 5(1) of the Act, “every dealer whose total turnover for a year is not less then Rs. 25,000. shall pay a tax for each year, at the rate of Section 5 is the charging section. The tax under the Act is, therefore, payable only by a dealer, besides of course, the agent of a non-resident dealer, with which category we are not concerned herein. The expression “dealer' is defined in clause (e) of section 2(1) in the following words:

“‘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) the Central Government, a State Government, local authority, a company, a Hindu undivided family or any society (including a co-operative society), club, firm or association, which carries on such business;

(ii) a society (including a co-operative society), club, firm or association, which buys goods from or sells, supplies or distributes goods to its members;

(iii) a casual trader, as hereinbefore defined;

(iv) a commission agent, a broker, a del credere agent, an auctioneer or any other mercantile agent, by whatever name called who carries on the business of buying, selling, supplying or distributing goods on behalf of any principal or principals”

4. The expression “business” is defined in clause (bbb) of section 2(1), and it reads thus:

“‘business’, includes—

(i) any trade, 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 or undertaken with a motive to make gain or profit and whether or not any gain or profit accrues therefrom; and

(ii) any transaction in connection with, or incidental or ancillary to, such trade, commerce, manufacture, adventure or concern.”

5. A reading of the definition of “dealer” makes it clear that a dealer means any person, be it the; Central Government, State Government, local authority, incorporated body, Hindu undivided family, society, club firm or association, who carries on the business of buying, selling, supplying or distributing goods, whether directly or otherwise; and whether for cash or for deferred payment or for commission, remuneration or other valuable consideration,

6. Now coming to the definition of “business”, it is in two sub-clauses. According to sub-clause (i) the expression. “business” includes any trade commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture; it does not matter whether such trade, commerce or manufacture is carried on with a motive to make gain or profit. It is equally immaterial whether gain or profit does arise or not. Sub-clause (ii) is in the nature of an explanation. It says that any transaction in connection with or incidental or ancillary to, the trade, commerce, manufacture, adventure or concern, referred to in sub-clause (i), shall equally be a business. The contention of Mr. Venkatarama Reddy is that, On the same parity of reasoning, inasmuch as the main activity of the petitioner does not amount to trade, commerce or manufacture, the ancillary or incidental activity of running a canteen cannot equally amount to business.

7. It is not possible to agree with this submission. According to the definition, if the main activity is in the nature of trade, commerce or manufacture, any ancillary or incidental transaction, be it per se in the nature of trade, commerce or manufacture or not, is also treated as “business”. But the converse is not true. In other Words, if the main activity is not business, but if an ancillary or incidental activity is per se business, the incidental or ancillary, activity does not cease to the business, merely because it is ancillary or incidental to the main activity, which itself is not business. The definition is not capable of being read in’ such a manner. We are, therefore, unable to agree with Mr. Venkatarama Reddy that, though the transactions relating to the canteen are per se business, they cease to be business because they are incidental to the main activity of the assessee, which is undoubtedly not a business.

8. We are, however, inclined to agree with Mr. Venkatarama Reddy on the alternate contention, viz., that, inasmuch as the running of the canteen constitutes an integral and inseparable part of the activity carried on by the assessee, it is not possible to isolate or insulate it from the main activity, and treat it as business for the purpose of the Act. It should be noticed that the canteen is not only being run in discharge of a statutory obligation, but that it constitutes an infinitesimal and insignificant part of the entire activity of the assessee. Having regard to the nature of the functions and the purpose for which the Naval Dock Yard is established, and also because of the fact that the canteen subserves the main object and purpose of the assessee, and is an integral and inseparable part of it, it would be unrealistic to separate the said activity and treat it as a business. We must make it clear that there is a definite distinction between an activity which is ancillary or incidental to the main activity, and an activity which is an integral part of the main activity. In the first case, the incidental, or ancillary activity is a distinct activity, though it' is incidental or ancillary to the main activity; whereas, in the latter case, it is one single activity. In Swadeshi Cotton Mills Company Ltd. v. Sales Tax Officer, [1964] 15 STC 505 the Allahabad High Court was considering the case of dining halls maintained and run by the Aligarh Muslim University, wherein food and refreshments were served to its resident-students. The court examined the purposes for which the University was established, as well as its academic Ordinances, and concluded the dining-hall service is an integral part of the University for imparting education to the students. It is indissolubly blended with, and is an inseparable component of, education of this University”. It was further observed that, it was difficult to appreciate the respondent's argument that the dining-hall service of the University should be separately treated, and qua this activity the University should be treated as carrying on the business of buying or selling. Similar view was expressed by the same High Court in Indian Institute of Technology v. State of U.P, [1976] 38 STC 428, with respect to the visitors' hostel maintained by the Indian Institute of Technology, where lodging and boarding facilities were provided to persons who came to the Institute in connection with education and the academic activities of the petitioner. It was observed that, not only the maintenance of the hostel was a statutory obligation of the Institute, but that its activity in supplying food-stuffs to the occupiers of the hostel was an integral part of the objects of the petitioner. It was also observed that the running of the hostel cannot be said to be the principal activity of the petitioner or that it was doing business in a commercial way of buying or selling food-stuffs. The principal activity of the Institute was predominantly academic and the supply of food-stuffs was minor, subsidiary and incidental to the principal activity and was an integral part of its academic activity.

9. A somewhat similar question arose before this Court in A.P State Road Transport Corporation v. Commercial Tax Officer, [1971] 27 STC 42 The Andhra Pradesh State Road Transport Corporation sold the scrapped vehicles, old tyres, old containers and other unserviceable material left with the Corporation in the course of its activity, and which articles were being disposed of periodically by public auction or by inviting tenders. When the turnover on this account was sought to be taxed, this Court held that inasmuch as the Corporation was not a dealer having regard to the nature of its activity, the sale of old or scrapped vehicles or other scrapped or unserviceable material by it cannot equally be treated as business, nor can it be held to be a dealer in that behalf. While it is true that the main premise of this judgment that the A.P State Road Transport Corporation is not a “dealer” may be open to doubt in view of the subsequent decision of the Supreme Court in District Controller of Stores v. Assistant Commercial Taxation Officer, [1976] 37 STC 423 (SC), this decision is certainly relevant in so far as it says that the Corporation cannot be held to be a “dealer” while disposing of the discarded material which came into possession in the course of its activity. This decision was followed by another Bench of this Court in Board of Trustees of Visakhapatnam Port Trust v. Commercial Tax Officer, [1979] 43 STC 36. In the case of Visakhapatnam Port Trust, [1979] 43 STC 36, the main thrust of this judgment, of course, is that having regard to the statutory objects for achieving which the Visakhapatnam Port Trust was established it cannot be said to be a dealer.

10. For the above reasons, we hold that the transactions effected by the asseseee in its canteen being an inseparable and integral part of its main activity, which admittedly does not amount to business, as defined in sub-clause (i) of clause (bbb) of section 2(1), cannot be brought to tax under the A.P General Sales Tax Act. The main activity not being a business, the petitioner herein cannot be called a dealer.

11. Accordingly, these tax revision cases are allowed; but in the circumstances, there shall be no order as to costs. Advocate's fee Rs. 500 consolidated.