1970 (7) TMI 75 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the petitioner-society is a 'dealer' under the Orissa Sales Tax Act, 1947.
2. Whether the society's activities constitute carrying on business for the purpose of sales tax assessment.

Analysis:

Issue 1:
The main issue in this case is whether the petitioner-society qualifies as a 'dealer' under the Orissa Sales Tax Act, 1947. The society, registered under the Orissa Co-operative Societies Act, deals in silk and tussore goods. The society's bye-laws outline its objectives, including purchasing raw materials and marketing finished products of weaver members. The society supplies raw materials to members for conversion into goods, pays wages for conversion, and acts as an agent for marketing. The society filed nil returns, claiming not to be a 'dealer.' However, tax authorities assessed the society as a 'dealer,' leading to the reference to the High Court.

Issue 2:
The second issue involves determining whether the society's activities constitute carrying on business for sales tax assessment. The definition of 'dealer' under the Act includes any person carrying on the business of purchasing, selling, or supplying goods. The court analyzed whether the goods sold by the society were its own and whether the business of selling belonged to the society. The court found that the society purchased raw materials, retained ownership throughout the process, controlled sales, and aimed to make a profit from transactions. Despite profits being distributed to members, the society's role as the seller was crucial in determining its status as a 'dealer.'

Precedents and Conclusion:
The court distinguished the present case from Commissioner of Sales Tax v. K.C. Mohapatra, emphasizing the society's control over sales compared to the agent-like role in Mohapatra. The court also drew parallels with The Indian Coffee Board v. The State of Madras, where a similar entity was deemed a dealer due to its control over sales and aim to make a profit. Ultimately, the court held that the society qualifies as a 'dealer' under the Orissa Sales Tax Act, 1947. The judgment was answered in the affirmative, with no order as to costs.