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TMI Blog1965 (8) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... d the condition of having been continuously in business during the basic years 1940 to 1944. No quota-holder could be a member of this syndicate unless he surrendered his 3% profits to the syndicate. The syndicate was allowed a margin of 3% profit in addition to the 3% margin of profit originally allowed to importers. The syndicate was debarred from handling the cloth physically. The cloth was to pass from the importing agency direct to the retailers, and the retailers, on depositing money with the importing agency were entitled to obtain the cloth from the specified godown or godowns. On 28th June, 1948, cloth was decontrolled. The syndicate could no longer function thereafter as an importing agency. The members then resolved (the actual r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... members was a sale even though in some cases the price of the cloth had been adjusted out of the money already invested by the purchasers in the syndicate particularly for the reason that the syndicate even in the sale invoice issued to its members had clearly charged a profit over and above the price of the cloth in the same manner as it would have charged to any other retailer. The Judge (Appeals) confirmed the assessment. On a reference being asked for, the following question has been referred to this Court: "Whether on the facts and in the circumstances of the case, cloth given by the syndicate to its members on payment was a sale within the meaning of the U.P. Sales Tax Act?" The short point which falls for consideration is as to wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods was transferred by the syndicate to its members for valuable consideration. The only contention urged by Mr. Kacker for the assessee was that the sale was a result of a resolution and not by the volition of the parties and therefore it cannot be said to amount to a contract of sale. There is no force in this contention. There was no element of compulsion and as found by the Sales Tax Officer, cloth was in short supply even though cloth had been decontrolled and if any member did not wish to take his quota it would have been readily disposed of. A resolution was admittedly passed by all the members of the syndicate agreeing to purchase the cloth at the same price as was hitherto being sold under the control order to the retailers. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale by the syndicate to its members. The syndicate and its members are two different entities and there is no prohibition in law in one entity making a transfer of its assets or stock-in-trade to another entity. Even in the case of a firm it can transfer or sell part of its assets or stock-in-trade to one of its partners. For the reasons given above we would answer the question referred in the affirmative and against the assessee. The reference is answered accordingly. We direct that copies of this judgment shall be sent under the seal of the Court and the signature of the Registrar to the Judge (Revisions) Sales Tax and the Commissioner, Sales Tax, as required by section 11(6) of the Act. The assessee will pay the costs of this reference w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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