Co-operative society sales through auction can amount to business with profit-motive and attract sales tax liability.

A co-operative society that pooled members' groundnuts, financed growers, controlled auction sales, and earned commission was treated as carrying on a commercial venture rather than a mere incidental activity. The wide definition of "dealer" under the Bombay Sales Tax Act covered a person selling goods for commission or remuneration, and "business" was assessed by the integrated course of dealings, continuity, regularity, volume, and profit-motive. Actual profit in a particular year was not decisive; the society's overall selling arrangement showed a profit-motive, so the auction sales of members' groundnuts were liable to sales tax.

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Issues: Whether the society's auction sale of members' groundnuts was a sale liable to tax under the Bombay Sales Tax Act, 1959, and whether the society carried on the business of selling goods with a profit-motive so as to fall within the definition of dealer.

Analysis: The society was not the owner of the groundnuts, but it pooled the members' produce, financed the members, fixed the sale process through auction, and sold the goods as a commission agent. The statutory definition of dealer under section 2(11) of the Bombay Sales Tax Act, 1959 was wide enough to include a person who, for commission or remuneration, carried on the business of selling goods in the State. The decisive question, therefore, was whether the society's activity amounted to business. Business in the taxing sense requires a course of dealings having volume, frequency, continuity, regularity, and a profit-motive, though actual profit need not be shown in every transaction. The Tribunal's finding that no profit was earned in the particular year was not decisive, because the relevant inquiry was the commercial character of the integrated activity of the society as a whole. The society's constitution, financing arrangement, pooling of produce, auction sales, and commission structure showed a commercial venture aimed at selling the members' goods to advantage and securing the repayment of advances. The fact that the surplus may ultimately be returned to members did not negative the business character or the profit-motive of the arrangement. Accordingly, the society's selling activity could not be treated as merely incidental or as a separate money-lending function divorced from the sale business.

Conclusion: The society was a dealer carrying on the business of selling goods with a profit-motive, and the auction sales of members' groundnuts were liable to tax.

Final Conclusion: The reference was answered in the affirmative, confirming sales tax liability on the society's auction sales of members' groundnuts.

Ratio Decidendi: Where a co-operative society, under its bye-laws and financing arrangement, systematically pools and sells members' goods through auction as part of an integrated commercial venture, it carries on the business of selling goods with a profit-motive even if the immediate sale does not yield actual profit.

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