1975 (10) TMI 91 - HC - VAT and Sales Tax

Summary

Issues:
Whether the co-operative society qualifies as a 'dealer' under section 2(c) of the U.P. Sales Tax Act.

Analysis:
The judgment of the High Court dealt with the question of whether a co-operative society, acting as an intermediary for the sale of foodgrains by its agriculturist members, falls within the definition of a 'dealer' under the U.P. Sales Tax Act. The Sales Tax Officer had assessed the society as a dealer based on its activities of selling goods, charging commission, and issuing sale receipts in its own name. The Appellate Assistant Commissioner upheld this assessment, emphasizing the society's control over the goods and its business-like operations. However, the Judge (Revisions) overturned the assessment, considering factors such as the society's role in finding customers for members and the requirement of member consent for sales. The Judge (Revisions) relied on the society's internal regulations and previous court decisions to support the conclusion that the society did not meet the definition of a 'dealer' under the Act.

The High Court analyzed the relevant provisions of the U.P. Sales Tax Act, particularly section 2(c) which defines a 'dealer' as any person or association carrying on the business of buying or selling goods. The Court noted that the wide definition of 'dealer' encompassed those selling goods for commission, including intermediaries like brokers or agents. The Court emphasized that the society's activities, although involving the sale of goods and charging commission, did not amount to being a dealer under the Act due to the specific nature of its operations and the necessity of member consent for sales. The Court highlighted the distinction between acting as a commission agent and being classified as a dealer, ultimately ruling in favor of the society and rejecting the department's claim that the society fell within the definition of a 'dealer.'

In conclusion, the High Court answered the reference question in the affirmative, supporting the Judge (Revisions)'s decision that the co-operative society did not qualify as a 'dealer' under the U.P. Sales Tax Act. The Court's analysis focused on the specific activities and characteristics of the society, considering factors such as member consent for sales, control over goods, and the nature of the society's operations in determining its classification under the Act. The judgment provided a detailed interpretation of the statutory definition of a 'dealer' and applied it to the factual circumstances of the case to reach a definitive conclusion in favor of the society.