Intermediary auction sales by a co-operative society do not make it a dealer when it lacks authority to transfer title.

A co-operative marketing society acting only as an intermediary in auction sales of agricultural produce is not a dealer under Section 2(g) of the Tamil Nadu General Sales Tax Act, 1959 if it has no authority to sell the goods independently or transfer title in them. The governing test is whether the society actually carried on the business of buying, selling, supplying or distributing goods, or itself effected a sale. Where the society merely brought agriculturist-principals and buyers together and did not sell the produce without the members' consent, the auction turnover was not taxable in its hands and the consequential penalty did not survive.

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Issues: Whether a co-operative marketing society acting as an intermediary in auction sales of agricultural produce, without authority to sell the goods independently or transfer property in the goods, is a dealer under Section 2(g) of the Tamil Nadu General Sales Tax Act, 1959 and liable to sales tax, including consequential penalty.

Analysis: The controlling test is whether the society carried on the business of buying, selling, supplying or distributing goods, or otherwise effected a sale so as to attract the statutory definition of dealer. The earlier binding view applied in the case law relied on by the Court was that a society which merely facilitates auction between agriculturist-principals and buyers, without authority to sell the produce without the member's consent and without authority to transfer title in the goods, does not itself effect a sale. On the facts before it, the Court found that the respondent society functioned only as an intermediary bringing together the agriculturists and the purchasers, and not as an independent seller.

Conclusion: The respondent society is not a dealer under Section 2(g) of the Tamil Nadu General Sales Tax Act, 1959, the auction turnover is not taxable in its hands, and the consequential penalty does not survive.

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