1965 (8) TMI 65

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....buted to the retailers to be sold at controlled rates. The syndicate consisted of 92 wholesalers who fulfilled the condition of having been continuously in business during the basic years 1940 to 1944. No quota-holder could be a member of this syndicate unless he surrendered his 3% profits to the syndicate. The syndicate was allowed a margin of 3% profit in addition to the 3% margin of profit originally allowed to importers. The syndicate was debarred from handling the cloth physically. The cloth was to pass from the importing agency direct to the retailers, and the retailers, on depositing money with the importing agency were entitled to obtain the cloth from the specified godown or godowns. On 28th June, 1948, cloth was decontrolled. The ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....price at which they would have been sold to the retailers; that the transaction between the syndicate and its members was a sale even though in some cases the price of the cloth had been adjusted out of the money already invested by the purchasers in the syndicate particularly for the reason that the syndicate even in the sale invoice issued to its members had clearly charged a profit over and above the price of the cloth in the same manner as it would have charged to any other retailer. The Judge (Appeals) confirmed the assessment. On a reference being asked for, the following question has been referred to this Court: "Whether on the facts and in the circumstances of the case, cloth given by the syndicate to its members on payment was a....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....e." A contract of sale between the parties is a pre-requisite. In the instant case undoubtedly the property in the goods was transferred by the syndicate to its members for valuable consideration. The only contention urged by Mr. Kacker for the assessee was that the sale was a result of a resolution and not by the volition of the parties and therefore it cannot be said to amount to a contract of sale. There is no force in this contention. There was no element of compulsion and as found by the Sales Tax Officer, cloth was in short supply even though cloth had been decontrolled and if any member did not wish to take his quota it would have been readily disposed of. A resolution was admittedly passed by all the members of the syndicate agreein....