TaxTMI 
TaxTMI 
1968 (5) TMI 49
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....spite of objection, made assessment of Rs. 13,625.33 and a penalty of Rs. 2,000 for the year 1965-66 and assessed Rs. 2,538.64 and a penalty of Rs. 500 for the quarter ending 30th June, 1966. The total demand so far by the opposite parties on the petitioner thus comes to Rs. 27,071.24. 2.. The contentions presented in the writ petition and advanced on behalf of the petitioner at the time of argument are: firstly, that the petitioner is not engaged in any trade or business of selling or supplying goods to any person other than its own members and, as such, the supply of goods by the petitioner-society to its members does not constitute a sale as defined in the Orissa Sales Tax Act, 1947; secondly, even otherwise, the sale or supply to its members is not in the course of business, and as such, the petitioner is not a "dealer" as defined in section 2(c) of the Act and lastly, section 2(c) of the Act, so far it purports to include within the definition of "dealer" any society, club or association which sells or supplies goods to its members is ultra vires of the Legislature. 3.. According to the opposite parties, the contention that the society merely distributes commodities amon....
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....ble consideration ....." 6.. It is not disputed that the Orissa Sales Tax Act was enacted by the State Legislature on the basis of powers conferred on it under Article 246(3) read with Entry 54 of List 11 of the Seventh Schedule of the Constitution, which reads: "Taxes on the sale or purchase of goods other than newspapers, etc." It is not disputed that the ratio of the decision of the Supreme Court in State of Madras v. Gannon Dunkerley & Co. (Madras) Ltd.[1958] 9 S.T.C. 353; A.I.R. 1958 S.C. 560. will govern the interpretation of the aforementioned Entry 54. It is thus well-settled that the term "sale of goods" occurring in Entry 54 should be understood in the same manner as it is understood in section 4 of the Sale of Goods Act, 1930. To constitute a valid sale, the following requirements should be satisfied: (1) there must be two parties who are competent to contract; (2) there must be mutual assent; (3) the absolute or general property in the goods is transferred from the seller to the buyer, and (4) a price in money is paid or promised. If it only amounts to a release by a joint owner of his interest in the property in favour of another joint owner even for a price,....
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....totally absent. The more important contention is that a transaction between the society and its members will not amount to a sale, because of the absence of two parties competent to contract and by mutual assent the absolute or general property is transferred from the society for a price to the members who take supply of articles. The pertinent questions that arise for consideration are: firstly, whether it can be said that a co-operative society and its members are two distinct parties and, secondly, whether while supplying articles the society transfers its absolute or general property in the articles to the members. The answer will necessarily depend on the determination of the question whether the petitioner-society is a distinct legal entity by being a body corporate having an existence independent of its members. Learned counsel for the petitioner has referred to various decisions in support of his contention that an association or a society cannot be a legal entity distinct from its members. We do not consider it necessary to notice all the decisions referred to by the petitioner, as it will be sufficient to refer to the decisions in Board of Trustees v. State of DelhiA.I.R.....
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....m to their respective members were not sales. Regarding the two registered clubs, the contention was that they being bodies corporate are distinct legal entities and supplies of articles by them to their members for a price amounted to a sale as thereby absolute or general ownership in the property passed from the clubs to the individual members obtaining the supply. This contention was negatived relying on the observations of the Supreme Court aforementioned. It was held that societies registered under the Societies Registration Act, though may possess a status in many respects analogous to a corporation strictly socalled they cannot be corporate bodies without being technically incorporated. Both these decisions dealt with the question whether societies registered under the Societies Registration Act are corporate bodies and, as such, distinct legal entities. The position of a co-operative society with which we are concerned here, cannot be equated with a registered society and, therefore, the principles applicable to determine the status of registered societies or other registered bodies will not be strictly applicable to a co-operative society. 10.. Among other things, two o....
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....d winding up of certain types of corporations. Similarly, the first part of entry 32 of List II refers to incorporation, regulation and winding up of corporations other than those covered by entry 43. The second part refers to unincorporated trading, literary, scientific and religious societies and other associations and the third part is a distinct power relating to co-operative societies which has been expressly excluded from the purview of entry 43 of List I. If, as contended by learned counsel for the petitioner, incorporation of all trading corporations is within the exclusive competence of the Central Legislature and the State Legislature cannot enact a law for their incorporation, it will lead to an absurd situation, because co-operative societies having been expressly excluded from the ambit of entry 43, the Central Legislature cannot provide for their incorporation and it will be outside the competence of the State Legislature. From a reading of entry 32 of List II, the only reasonable conclusion is that this entry consists of three parts: firstly, laws in respect of incorporation, regulation and winding up of corporations other than those specified in List I; secondly, la....
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....not be held to be such a corporate body, because section 9 will be applicable only to such societies as were registered under the Orissa Cooperative Societies Act, 1962, and not to co-operative societies that existed from before. In this context, reference has been made to section 133 of the Orissa Co-operative Societies Act which lays down that any society now existing which has been registered under the previous Act shall be deemed to be registered under this Act. A distinction is sought to be made between co-operative societies registered under the 1962 Act and cooperative societies to which the provisions of the Act have been made applicable by virtue of section 133. We do not find any force in this contention. Section 133 expressly lays down that all existing societies registered under the previous Act shall be deemed to be registered under the 1962 Act. In the eye of law, it will have the same legal status as cooperative societies registered under the said Act. Thus, considered from any point of view, we find no merit in the contentions advanced on behalf of the petitioner and hold that the incorporation of the co-operative societies under section 9 is valid. The petitioner-s....
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....overnment which carries on such business and any firm or Hindu joint family, and any society, club or association which purchases goods from or sells or supplies goods to its members and also includes a casual dealer as hereinbefore defined." According to the petitioner, imposition of sales tax can be made only on sales of goods in the course of trade or business. Transactions between the co-operative society and its members cannot be treated as sales in the course of business in its commercial sense, inasmuch as, in pursuing the activity engaged in by the co-operative society, the profit-motive does not exist. In support of this contention, reliance has been placed on the decisions in Young Men's Indian Association (Regd.), Madras v. Joint Commercial Tax Officer[1963] 14 S.T.C. 1030; A.I.R. 1964 Mad. 63., Nizam Sugar Factory Ltd. v. Commissioner of Sales Tax, Hyderabad[1957] 8 S.T.C. 61. and Southern Railway Co-operative Canteen Ltd. v. Commercial Tax Officer[1967] 20 S.T.C. 96. It is argued that although an activity may involve the occupation of time, attention and labour and may also involve the person carrying on that activity in a liability to other persons, so long as the pur....