TaxTMI 
TaxTMI 
1967 (11) TMI 96
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....6 of the Constitution for orders quashing the proceedings of the Deputy Commercial Tax Officer, Saidapet, assessing the Society to sales tax in respect of its transactions. Srinivasan, J., following a decision of the Madras High Court in Young Men's Indian Association (Regd.), Madras, and Another v. Joint Commercial Tax Officer, Harbour Division II, Madras and Another [1963] 14 S.T.C. 1030., quashed the orders of assessment. In appeal to the High Court, the orders passed by Srinivasan, J., were confirmed. With special leave, the Deputy Commercial Tax Officer has appealed to this Court. Section 3 of the Madras General Sales Tax Act (1 of 1959) makes every dealer whose total turnover for a year is not less than ten thousand rupees, and every casual trader or agent of a non-resident dealer, whatever be his turnover for the year, liable to pay a tax for each year at the rate of two per cent. of his taxable turnover. "Dealer" is defined in section 2(g) as meaning- "any person who carries on the business of buying, selling, supplying or distributing goods, directly or otherwise, whether for cash, or for deferred payment, or for commission, remuneration or other valuable consideration,....
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....he total expenses. Essentially, in the view of the Court, the matter is not different from the case of a number of persons in a family purchasing jointly an article and later sharing the same among themselves. In such a case, it was said, there is no element of transfer of property from one to another, and the fact that the club helps its members in arranging to run a common mess will not make it the owner of the articles supplied to the members, for it is at best an agent or mandatory whose services are utilised by the members for obtaining their needs, and there is no transfer of property involved in the arrangement. The Court proceeded further to observe that the distinction between members' clubs unincorporated and incorporated is that in the former the distribution made by the club to one of its members is a release by all the members in favour of a joint owner who takes the goods, in the latter the supply of articles- to a member is tantamount to delivery by an agent or trustee to the principal or beneficiary, and there is in either case no transfer of ownership by a person absolutely entitled to the property to another who acquires title thereto on such transfer. In these....
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....or price may partake of the activity of the nature of adventure or concern in the nature of trade, even if the activity is not actuated by a profit-motive. The respondent-Society which has according to its object of incorporation made arrangements for the supply and distribution of refreshments to its members without a profit- motive may be regarded as carrying on trade and would on that account fall within the definition of a "dealer" within the meaning of section 2(g). A co-operative society registered under the Madras Co-operative Societies Act (6 of 1932) is by virtue of section 20 of that Act a body corporate with perpetual succession and a common seal, and with power to hold property to enter into contracts, to institute and defend suits and other legal proceedings and to do all things necessary for the purposes for which it was constituted. Such a co-operative society which carries on the business of supplying goods to its members for cash or deferred payment falls within the definition of "dealer" in section 2(g). We are unable to hold that by the Explanation to section 2(g) it was intended to overstep the limits- of legislative power. By the Explanation the State Legisl....
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....ding to its constitution and to apply the property for the purposes for which it is held, but on that account the property of the Society cannot be treated as the property of the members. The Society is a person: the property in the refreshments which it supplies to its members is vested in the Society and when refreshments are supplied for a price paid or promised transfer of property in the refreshments results. In the case of an unincorporated Society, club or a firm or an association ordinarily the supply and distribution by such a Society, club, firm or an association of goods belonging to it to its members may not result in sale of the goods which are jointly held for the benefit of the members by the Society, club, firm or the association, when by virtue of the relinquishment of the common rights of the members the property stands transferred to a member in payment of a price, and the transaction may not prima facie be regarded as a "sale" within the meaning of the Act. By providing that a transfer of property in goods from a corporate body to its members for a price, the Legislature does not overstep the limits of its authority, and it cannot on that account be held that th....
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....hich he subscribed a sum to the funds of the club, and on that account he became entitled to have liquor supplied to him as a member at a certain price. In Metford v. Edwards [1915] 1 K.B. 172., a working men's club was registered under the Friendly Societies Act, 1896. It was held that liquor kept on the premises of the club by the members who are owners of the liquor and intended for consumption by the members, is distributed to the members by one of them in return for payment, is not sold by retail within the meaning of the Licensing (Consolidation) Act, 1910. In National Sporting Club Ltd. v. Cope [1900] 82 L.T. 352., it was held that a members' club formed into a joint stock company, of which shares were held by persons who were not members, was guilty of breaches of section 17 of the Beerhouse Act, 1834, and section 19 of the Refreshment Houses Act, 1860, when in carrying on the club retail intoxicating liquors and tobacco were supplied to the members of the club. The Court held in that case that the company was a separate legal entity from the members, and the sale of intoxicating liquors to members was not a distribution of the common property of the members among the....