Co-operative canteen supplies held taxable where regular trading in goods existed and mutuality was not established.

A co-operative society running a canteen is a dealer carrying on business where the real nature of its activity is regular trading in goods, even if the canteen operates on a subsidised or no-profit-no-loss basis. Mutuality or agency may exclude sales tax liability, but no such protection was established here. The supply of eatables, drinks, refreshments and other articles to members and non-members was not a mere hospitality amenity; it constituted sales under the Bengal Finance (Sales Tax) Act, 1941 and was liable to tax.

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Issues: Whether the co-operative societies running canteens were dealers carrying on the business of selling goods so as to attract sales tax, and whether the supply of eatables, drinks, refreshments and other articles to members and non-members constituted sales liable to tax under the Bengal Finance (Sales Tax) Act, 1941.

Analysis: Liability under the charging provision arose only if the assessee was a dealer carrying on the business of selling goods. The society's incorporation, subsidised canteen arrangement, and no-profit-no-loss character were not decisive by themselves. The decisive inquiry was the real nature of the activity. If the transactions were protected by mutuality or agency, the society would not be carrying on business; but where the canteen supplied goods to members and non-members as a regular trading activity, the fact that the goods were sold at cheap rates or that the activity was socially desirable did not prevent it from being business. The supply of refreshments and articles was not a mere amenity in the sense of hospitality, and no mutuality or agency was established.

Conclusion: The societies were dealers carrying on business, and the supplies to members and non-members were sales liable to sales tax.

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