Club purchases and purchase tax: liquor bought only for members was not in the course of business and escaped tax.

A members' club was not liable to purchase tax on liquor bought only for supply to its members under section 7 of the Madhya Pradesh General Sales Tax Act, 1958, because liability arose only where the assessee was a dealer making purchases in the course of business. Although the statutory definition of dealer covered a club, the decisive inquiry was whether the purchases were business purchases. In the absence of a statutory definition of business for the relevant period, the term was given its ordinary meaning, requiring an activity ordinarily pursued with a profit motive. As the club acted for its members, did not sell to outsiders, and operated for pleasure rather than profit, the purchases were outside the course of business and no purchase tax was payable.

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Issues: Whether a members' club could be assessed to purchase tax under section 7 of the Madhya Pradesh General Sales Tax Act, 1958 on liquor purchased for supply only to its members.

Analysis: Liability under section 7 arose only if the assessee was a dealer and the purchases were made in the course of its business. The statutory definition of dealer included a club, but the relevant inquiry remained whether the purchases were in the course of business. For the period in question there was no applicable statutory definition of business, so the term was to bear its ordinary meaning, involving an occupation or activity ordinarily pursued with a profit motive. The club purchased liquor only for distribution among its members, did not sell to outsiders, acted as an agent of its members, and the activity was for pleasure rather than profit. On those facts, the purchases were not made in the course of business.

Conclusion: The club was not liable to purchase tax under section 7.

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