1979 (9) TMI 178 - HC - VAT and Sales Tax

Issues Involved:
1. Whether the society can be regarded as a "dealer" within the meaning of clause (c) of section 2 of the Bengal Finance (Sales Tax) Act, 1941.
2. Whether the supply of eatables/drinks by the society to its members constituted a "sale" within the meaning of clause (g) of section 2 of the Bengal Finance (Sales Tax) Act, 1941.
3. Whether the supply of eatables/drinks by the society to non-members constituted a "sale" within the meaning of clause (g) of section 2 of the Bengal Finance (Sales Tax) Act, 1941.
4. Whether the society was liable to pay sales tax in respect of its transactions of supply of eatables/drinks to its members and non-members.

Issue-wise Detailed Analysis:

1. Whether the society can be regarded as a "dealer" within the meaning of clause (c) of section 2 of the Bengal Finance (Sales Tax) Act, 1941:
The court examined whether the Income-Tax Co-operative Supply Society Ltd. and similar societies can be classified as "dealers" under the Bengal Finance (Sales Tax) Act, 1941. The term "dealer" includes any person who carries on the business of selling goods. The court noted that the society was registered as a co-operative society and provided refreshments and other articles to its members and non-members at subsidized rates. The court concluded that the society, by selling goods to its members and non-members, fits the definition of a "dealer" as it carried out the business of selling goods.

2. Whether the supply of eatables/drinks by the society to its members constituted a "sale" within the meaning of clause (g) of section 2 of the Bengal Finance (Sales Tax) Act, 1941:
The court considered whether the transactions between the society and its members could be classified as "sales." The term "sale" includes any transfer of property in goods by one person to another for cash or other valuable consideration. The court referred to the definition of "sale" and noted that the society's transactions involved a transfer of property in goods for cash. The court also examined previous judgments, including Deputy Commercial Tax Officer v. Enfield India Ltd., which established that transactions by a co-operative society supplying goods to its members could be considered sales. Consequently, the court held that the supply of eatables/drinks by the society to its members constituted a "sale."

3. Whether the supply of eatables/drinks by the society to non-members constituted a "sale" within the meaning of clause (g) of section 2 of the Bengal Finance (Sales Tax) Act, 1941:
The court addressed whether the transactions between the society and non-members could be classified as "sales." It was undisputed that the society provided refreshments and other articles to non-members for cash. The court concluded that these transactions also met the definition of "sale" under the Act, as they involved a transfer of property in goods for valuable consideration.

4. Whether the society was liable to pay sales tax in respect of its transactions of supply of eatables/drinks to its members and non-members:
The court examined the overall liability of the society to pay sales tax. It was argued on behalf of the society that the transactions were not in the nature of business and were merely a service or amenity provided to members and non-members. However, the court noted that the society's activities involved the sale of goods for money, which constituted carrying on the business of selling goods. The court also referred to previous decisions, including Delhi Cloth & General Mills Co. Ltd. v. Union of India, which emphasized that the concept of business is brought in by the use of the term "dealer," and the requirement of profit-motive is attracted. The court concluded that the society was liable to pay sales tax on its transactions of supply of eatables/drinks to both members and non-members.

Conclusion:
The court answered all four questions in the affirmative, holding that the society can be regarded as a "dealer," the supply of eatables/drinks to members and non-members constituted "sales," and the society was liable to pay sales tax on these transactions. The references were answered accordingly, with no order as to costs.

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