1967 (4) TMI 181 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of provisional assessment made by the Deputy Commercial Tax Officer.
2. Determination of whether the petitioner-association qualifies as a "dealer" under the Madras General Sales Tax Act, 1959.

Analysis:
1. The petitioner, a bakery association, challenged the provisional assessment made by the Deputy Commercial Tax Officer for the month of August 1966. The petitioner had submitted a monthly turnover report but claimed exemption from sales tax on the distribution of maida to its members. Despite the petitioner's objection, the Deputy Commercial Tax Officer proceeded with the provisional assessment. The petitioner then appealed to the Deputy Commissioner of Commercial Taxes, who upheld the provisional assessment. The court considered whether the petitioner was liable to pay sales tax and if the assessment was valid.

2. The key issue revolved around whether the petitioner-association could be classified as a "dealer" under the Madras General Sales Tax Act, 1959. The Act defines a "dealer" as any person engaged in buying, selling, supplying, or distributing goods for valuable consideration. The court examined the activities of the association, which primarily involved obtaining maida and sugar for its bakery members. The association collected quotas from flour mills, paid on behalf of its members, and distributed the commodities. The court determined that these activities did not constitute a business transaction as defined in the Act. The court held that the association's role was limited to facilitating the procurement and distribution of goods among its members, rather than engaging in commercial trading activities. Therefore, the court concluded that the petitioner-association did not qualify as a "dealer" under the Act and was not liable to pay sales tax.

In conclusion, the court allowed the writ petition filed by the Madras Bakery Association, quashing the provisional assessment and ruling in favor of the petitioner. The court emphasized that the association's activities did not meet the criteria to be considered a "dealer" under the sales tax law, thereby exempting them from the tax liability.