1968 (1) TMI 43 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the Society is a dealer in respect of the purchase and supply of ice to its members.
2. Whether the activities of supply of ice by the Society to its members amount to sales.

Issue-Wise Detailed Analysis:

1. Whether the Society is a dealer in respect of the purchase and supply of ice to its members:

The applicant-Society, registered under the Bombay Co-operative Societies Act, 1925, is a body corporate whose object is to transport fish belonging to its members. The Society maintained a fleet of transport vehicles and purchased ice to preserve fish during transport, charging its members for the ice used. The Society had a surplus from these transactions in the year 1959-60. The Society contended that it was not liable for sales tax as it did not "sell" ice to its members and did not qualify as a "dealer" under section 2(11) of the Bombay Sales Tax Act, 1959.

The Deputy Commissioner of Sales Tax and the Sales Tax Tribunal held that the Society was a "dealer" and its supply of ice amounted to a sale. The Society appealed, and the High Court examined whether the Society fell within the definition of "dealer" under section 2(11) of the Act. The Court noted that the term "dealer" includes any society, club, or association that buys or sells goods to its members.

The Court analyzed the definition of "dealer" and concluded that the substantive opening part of the definition, which refers to any "person" carrying on the business of buying or selling goods, includes both natural persons and juristic persons like the applicant-Society. The Court referenced the Supreme Court's decision in The Deputy Commercial Tax Officer v. Enfield India Ltd. Co-operative Canteen Ltd., which held that a registered society is a body corporate and thus a "person" under the Act.

The Court determined that for a society to be considered a "dealer," it must carry on the activity in question as a business. The Court applied the test laid down by the Supreme Court in The State of Gujarat v. Raipur Manufacturing Co. Ltd., which requires establishing that the activity was carried on with the intention of conducting business. The Court concluded that the applicant-Society did not carry on the business of selling ice to its members, as its primary business was transporting fish, and the supply of ice was incidental to that business.

2. Whether the activities of supply of ice by the Society to its members amount to sales:

Given the Court's conclusion on the first issue, it was unnecessary to address whether the supply of ice constituted a "sale" under section 2(28) of the Act. The Court noted that the evidence on record was insufficient to determine this question.

Conclusion:

The High Court answered the first question in the negative, holding that the applicant-Society was not a "dealer" in respect of the supply of ice to its members. Consequently, it found the second question unnecessary to answer. The respondents were ordered to pay the applicant's costs of the reference, and the amount deposited by the applicant-Society was ordered to be refunded.

Reference Answered Accordingly:

- Question No. (1): In the negative.
- Question No. (2): Unnecessary.