Member procurement and distribution by an association is not business activity for dealer status under sales tax law.

An association that merely procures maida and other requirements for its members, pays the allotment value on their behalf, obtains delivery orders, and distributes the goods to members does not carry on the business of buying or selling goods. On those facts, its collecting-and-distributing function was held insufficient to satisfy the definition of "dealer" under the Madras General Sales Tax Act, 1959, so it was not liable to sales tax. The department's reliance on the absence of objections to the provisional assessment was also rejected because the association had already made clear that it denied tax liability.

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Issues: Whether the petitioner-association, which collected maida quotas for its members and distributed them to the members, carried on "business" so as to be a "dealer" liable to sales tax under the Madras General Sales Tax Act, 1959.

Analysis: The definition of "dealer" under section 2(g) of the Madras General Sales Tax Act, 1959 turns on carrying on the business of buying, selling, supplying or distributing goods. On the facts found, the association was only making arrangements to obtain maida and other requirements for its members, paying the value of the allotment on their behalf, obtaining delivery orders, and distributing the commodities to the members. This activity was held to be merely a collecting and distributing function for members and not an activity of buying or selling goods in the course of business. The department's reliance on the absence of objections to the provisional assessment was also rejected because the association had already made its stand clear that it was not liable to tax.

Conclusion: The petitioner-association was not a dealer and its activity did not amount to business; it was not liable to sales tax.

Ratio Decidendi: An association that merely procures commodities for its members, pays for them on their behalf, and distributes them to members without carrying on buying or selling as a business is not a dealer liable to sales tax.

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