Club supplies to members are not taxable unless carried on as business with a profit-making object.

An unincorporated club is within the Bombay Sales Tax Act definition of "dealer" only where buying or selling to members is carried on as a business with commercial character. The HC treated the inclusive reference to clubs and associations as part of that same business concept, not as a separate basis for taxation, and held that intra-member transactions are not taxable merely because they involve members. It also found that the club's supplies were not made with a profit-earning object: the activities were recreational, catering was run at a loss, and any margin was incidental to overheads and wastage. On those facts, the club was not liable to be treated as a dealer.

---

---

Issues: (i) Whether an unincorporated club buying or selling goods to its members falls within the definition of "dealer" under the Bombay Sales Tax Act, 1959 only if such activity is carried on as a business; (ii) Whether the club's supply of articles to its members was undertaken with the object of earning profit.

Issue (i): Whether an unincorporated club buying or selling goods to its members falls within the definition of "dealer" under the Bombay Sales Tax Act, 1959 only if such activity is carried on as a business.

Analysis: The definition of "dealer" contained a substantive part referring to a person carrying on the business of buying or selling goods, and an inclusive part referring to societies, clubs, or other associations of persons dealing with their members. The inclusive part was held to be read as part of the same commercial concept, not as an independent expansion divorced from business activity. The statutory scheme, including the registration and charging provisions, showed that taxability under the Act was directed to transactions of a commercial character, and the special reference to clubs and associations was treated as inserted by way of abundant caution. The Court therefore rejected the view that intra-member transactions of an unincorporated club were taxable merely because they involved members.

Conclusion: The club was not a dealer unless its dealings with members were carried on as a business; on the facts, that requirement was not satisfied, and the issue was decided in favour of the assessee.

Issue (ii): Whether the club's supply of articles to its members was undertaken with the object of earning profit.

Analysis: The club's activities showed that its object was recreation for members, not the conduct of a profit-making trading venture. Its catering activities had consistently been carried on at a loss, and the existence of any margin in club supplies was regarded as only incidental to overheads and wastage rather than proof of a business motive. The facts did not support an inference that the supplies were made with a profit-earning object.

Conclusion: The club's object in effecting supplies to its members was not to earn profits, and this issue was also decided in favour of the assessee.

Final Conclusion: The reference was answered for the club, holding that its member-supplies were not taxable business transactions and that it was not liable to be treated as a dealer on the facts found.

Ratio Decidendi: For an unincorporated club or association, inclusion within a dealer definition does not dispense with the requirement that the relevant buying or selling to members must be carried on as a business and with a commercial character.

---