1960 (11) TMI 114 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of the term "dealer" under the U.P. Sales Tax Act in relation to transactions of a Co-operative Marketing Society Limited. Whether the sale of agricultural produce grown by the society's members should be included in the society's turnover.

Analysis:
The case involved two references under section 11(3) of the U.P. Sales Tax Act concerning the Co-operative Marketing Society Limited, Kalpi. The primary dispute revolved around whether the society could be considered a dealer in the sale of agricultural produce belonging to its members. The society contended it was a mere weigh-man, while the assessing authority deemed it a commission agent falling under the definition of a dealer as per the Sales Tax Act.

The assessing authority, appellate authority, and revising authority all found that the society acted as a selling commission agent on behalf of its agriculturist-members, thus qualifying as a dealer. The appellate authority specifically highlighted the society's involvement in rate settlements, weighing of goods, and payment processes, indicating its dealer status. The revising authority emphasized that the society's objective was to profitably dispose of members' produce, aligning with the definition of a dealer post-amendment in 1961.

Regarding the authority to conclude bargains on behalf of sellers, the revising authority's supplementary statement revealed that the society charged commissions and acted as a commission agent and weigh-man. The society's broker settled rates, indicating its authority to strike bargains on behalf of sellers. This clarified the society's position as falling within the explanation to section 2(c) of the Sales Tax Act.

On the issue of turnover exemption for agricultural produce sales, the court analyzed the definition of "turnover" and the proviso excluding proceeds from the sale of such produce grown by the dealer. The court interpreted the proviso's conditions, emphasizing the dealer's interest in the land where the produce was grown. The court concluded that the society did not qualify for the exemption as it did not have ownership or possessory interest in the land, as outlined in the proviso.

The court referenced legal precedents from other cases to support its interpretation, highlighting the liability of an agent being co-extensive with the principal and the distinction between an agent's turnover and the principal's turnover. The court's decision affirmed that the society's turnover from the sale of agricultural produce grown by its members should be included in its overall turnover for tax assessment purposes.

In conclusion, the court answered both referred questions in the affirmative, affirming the society's status as a dealer and the inclusion of agricultural produce sales in its turnover. The Commissioner of Sales Tax was awarded costs, and a single set of costs was determined for the case.