1990 (6) TMI 210 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the activity of the club constitutes "business" within the meaning of section 2(1a) of the Bengal Finance (Sales Tax) Act, 1941.
2. Whether the club can be considered a "dealer" under section 2(c) of the Act.
3. Whether the supply of refreshments by the club to its members constitutes a "sale" under the Act.

Summary:

Issue 1: Whether the activity of the club constitutes "business" within the meaning of section 2(1a) of the Act.

The Tribunal examined whether the club's activities amounted to "business" as defined in section 2(1a) of the Act. The applicant argued that the club's primary objective was to provide benefits to its members without a profit motive, and the supply of refreshments was incidental to the club's main activities. The Tribunal referred to the definition of "business" in the Act, which includes any trade, commerce, or manufacture, regardless of profit motive. The Tribunal concluded that the club's activities, including the supply of refreshments, had considerable volume, frequency, continuity, and regularity, fulfilling the essential requirements of business.

Issue 2: Whether the club can be considered a "dealer" under section 2(c) of the Act.

The Tribunal analyzed the definition of "dealer" in section 2(c) of the Act, which includes any person carrying on the business of selling goods. The Tribunal noted that the definition was expanded to include clubs and associations selling goods to their members. The Tribunal found that the club's activities, including the supply of refreshments to members and non-members, constituted business, making the club a "dealer" under the Act.

Issue 3: Whether the supply of refreshments by the club to its members constitutes a "sale" under the Act.

The applicant argued that the supply of refreshments did not constitute a sale as it was merely a distribution of assets to its members. The Tribunal referred to the definition of "sale" in the Act, which includes the transfer of property for a price. The Tribunal found that the club's activities, including the supply of refreshments at a fixed tariff, amounted to a sale. The Tribunal also noted that the club's transactions were not between an agent and principal but were sales by the club as a distinct legal entity.

Conclusion:

The Tribunal held that the club's activities constituted "business" within the meaning of section 2(1a) of the Act, making it a "dealer" under section 2(c) of the Act. The supply of refreshments by the club to its members was deemed to be a "sale" under the Act. The notices issued by the Commercial Tax Officer for assessment of tax were valid, and the Commercial Tax Officer was competent to assess such tax. The application was dismissed, and interim orders were vacated.