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TMI Blog1971 (9) TMI 160X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court for its opinion. The High Court has answered that question in the affirmative. Aggrieved by that decision, the assessee has brought this appeal. The material facts are these: The assessee is a co-operative society registered under the Bombay Co-operative Societies Act, 1925 (to be hereinafter referred to as the Act). The assessee will hereinafter be referred to as the "society". It carries on the business of ginning and pressing cotton brought by its members. During the assessment period, viz., November 1, 1960, to October 31, 1961, the assessee received large quantity of cotton from its members and the same was sold by it either after ginning and pressing or without ginning and pressing. The society is a registered dealer under the Bombay Sales Tax Act, 1959. It filed its return for sales tax for the year in question. But therein it did not show any purchase turnover. The Sales Tax Officer accepted the return submitted by it, and assessed it on the basis of that return as per his order dated May 31, 1963. He did not levy any purchase tax on the society. The Assistant Commissioner of Sales Tax, Range III, Baroda, however, issued a notice dated August 6, 1963, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a case of a "producers' society". "Producers' society" is defined in section 3(h)(2) of the Act. That definition reads: "'Producers' society' means a society formed with the object of producing and disposing of goods as the collective property of its members and includes a society formed with the object of the collective disposal of the labour of the members of such society." The society with which we are concerned in this case was evidently formed primarily with the object of selling the produce of its members as their collective produce. The preamble to that Act says: "Whereas it is expedient further to facilitate the formation and working of co-operative societies for the promotion of thrift, self-help and mutual aid among agriculturists and other persons with common economic needs so as to bring about better living, better business and better methods of production and for that purpose to consolidate and amend the law relating to co-operative societies in the Presidency of Bombay..." Hence two of the objectives intended to be achieved by the Act were to provide for self-help by the members of the society and for mutual aid amongst its members. We must examine the bye-laws ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be carried out according to the regulations and resolutions and to sell, purchase and get baled goods other than unginned cotton according to the instructions that may be given and to give facilities of every other kind." Clause (14) reads: "To lend money against the security of goods come in possession of the society according to the convenience and if possible subject to the rules." Clause (16) reads: "To get goods managed through the society and the machinery, building etc. of the society insured." Clause (18) says: "To arrange to sell agricultural produce other than cotton, unginned cotton and cotton seeds of the members and produce of village industries which may have been brought for sale through the society and to make arrangements to purchase goods according to the requirement of the members on a request being made by the members." These provisions clearly go to indicate that the society was selling the produce of others and not its own goods. Its duty is to arrange to sell the agricultural produce of its members. Bye-law 45(1) to the extent necessary for our present purpose reads thus: "An amount not more than 75 per cent. of the estimated value at the market rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iety and the charges for ginning, pressing the goods and expenses for sale etc." This bye-law refers to the goods of the members of the society and not to the goods of the society. Because of that bye-law the members of the society, who are bound by that bye-law, must be deemed to have authorised the society to pool their goods, grade them, if necessary, and sell them either after ginning or without ginning. That bye-law also prescribes the mode in which the price fetched should be distributed amongst the persons whose goods are sold. The society is the agent of all its members. Its principals are many. Because of the various bye-laws, the several principals must be deemed to have appointed a common agent, the society, for disposing of their goods in the manner most advantageous to them. To achieve that object they must be held to have empowered the society to pool their goods, grade them if necessary, and sell them either after ginning or without ginning. Such an authority in our opinion does not violate the law of agency. A person can be an agent for more than one principal and if all his principals jointly authorise him to pool their goods and sell them and pay the sale price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t by its members. The society has got its own sources of income. It charges for ginning and pressing. It has also other sources of income. It is that income that is dealt with in bye- laws 72 and 73. Our attention has not been drawn to any other bye-law from which we could conclude that the society had purchased either cotton or cotton seeds from its members. We have earlier seen that the Tribunal had placed reliance on bye-laws 37(7), 37(18), 37(19), 48, 49, 52, 53 and 55 for arriving at the conclusion that the society had purchased cotton and cotton seeds from its members. We have already examined bye-laws 37(7), 37(18), 48 and 52. We have not been able to see how those bye-laws lend any support to the conclusion reached by the Tribunal and the High Court. Bye-law 37(19) empowers the society to levy 'Haksai' on unginned cotton received from members up to Rs. 2 per Bhar (Load). This bye-law merely provides for the collection of ginning charges. Bye-law 49 authorises the society to grade the unginned cotton and cotton seeds in the manner specified by the general body. It also authorises the society to get the goods insured. This bye-law again does not in any manner indicate that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eliance on the decision of this court in Rohtas Industries Ltd.'s case [1961] 12 S.T.C. 615 (S.C.). Therein the assessee was a limited liability company manufacturing cement. The assessee and some other cement manufacturing companies entered into an agreement with the Cement Marketing Company of India Ltd., whereby the marketing company was appointed as the "sole and exclusive sales manager" for the sale of cement manufactured by the manufacturing companies and the manufacturing companies agreed not to sell directly or indirectly any cement to any person save and except through the marketing company. The manufacturing companies were entitled to be paid a certain sum per ton of cement supplied by them or at such other rate as might be decided upon by the directors of the marketing company. The marketing company was authorised to sell cement at such price or prices and on such terms as it might in its sole discretion think fit and it agreed to distribute to the manufacturing companies, in proportion to the number of tons of cement of every variety and kind supplied by the manufacturing companies, the whole of its net profit less 6 per cent. on its paid up capital. The question was wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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