Purchase tax liability on co-operative sugar society turns on bye-laws showing real purchase, not mere agency.

Supply of sugarcane by members to a co-operative sugar factory was treated as a purchase by the society for purchase-tax purposes because the statutory definition of "dealer" covered a society buying goods from its members. The bye-laws required members to sell sugarcane to the factory, empowered the board to fix the purchase price, and authorised the society to buy from members and non-members alike. Those features were inconsistent with a mere agency arrangement for sale on behalf of members. The society was therefore liable to purchase tax and could not be regarded as only a selling agent.

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Issues: Whether the supply of sugarcane by the members to the co-operative society amounted to purchases by the society so as to attract purchase tax under the Bombay Sales Tax Act, and whether the society could be treated as a mere selling agent of its members.

Analysis: The liability to tax depended on the statutory definition of "dealer" and on the true effect of the society's bye-laws. The relevant provisions included the definition of dealer under the Bombay Sales Tax Act and the corresponding definition under the Gujarat Sales Tax Act, both of which brought within the tax net a society that buys goods from its members. The bye-laws showed that the members were bound to sell sugarcane to the factory, the board of directors fixed the purchase price, and the society was authorised to purchase sugarcane from both members and non-members. These features were inconsistent with a mere agency for sale on behalf of members and materially distinguished the case from the earlier decision relied upon by the appellant.

Conclusion: The supply of sugarcane was a purchase by the society and the society was liable to purchase tax; the society was not merely an agent of its members.

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