1976 (10) TMI 63 - AT - Income Tax

Summary

Issues:
- Dispute over liability under s. 36(1) of the Tamil Nadu General Sales Tax Act 1959 for assessment years 1972-73 and 1973-74.
- Whether the appellant, a Co-operative Canteen, is considered a dealer and liable for sales tax.
- Interpretation of the by-laws and objects of the Co-operative Society to determine the nature of its activities.
- Application of relevant case law to establish whether the Co-operative Society can be considered a dealer.

Analysis:
The judgment involves two appeals filed by a Co-operative Canteen challenging its liability under the Tamil Nadu General Sales Tax Act for the assessment years 1972-73 and 1973-74. The appellant argued that it is not a dealer and no sale is involved in serving refreshments to its members. The assessing authority relied on a Supreme Court decision to consider the appellant a dealer. The Appellate Assistant Commissioner also found the appellant to be a dealer based on the by-laws. The appellant contended that the Supreme Court's decision in a different case had rendered the previous decision obsolete, emphasizing that the Co-operative Society's objective is to benefit its members. The appellant's membership is limited to employees of a specific office, and any profit is treated as surplus. The State Representative argued that the assessments should be confirmed based on the existing case law.

The Tribunal carefully reviewed the records and arguments presented. It noted that the Co-operative Society's activities were limited to its members, and there was no evidence of sales to outsiders. The Tribunal found that the Co-operative Society was not established for business purposes, with any references to profit being related to surplus treatment. The Tribunal also considered the subsidized nature of the Society's operations. After analyzing the case law cited by both parties, the Tribunal concluded that the appellant was not a dealer. It determined that no sale was involved when providing refreshments to members, as the members owned the foodstuff even during preparation, with the registered society acting as an agent. Consequently, the Tribunal allowed the appeals, granting the appellant exemption from liability under the sales tax act for the assessment years in question.