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TMI Blog1994 (9) TMI 293X X X X Extracts X X X X X X X X Extracts X X X X ..... peration and joint farming methods, so that members can take maximum advantage of their modern large- scale agricultural production. The appellant-society supplies to its members seeds, manure, agricultural implements and expert advice and assistance, for production of sugarcane. Sugarcane supplied by the members are utilised by the society at its factory for manufacturing sugar. The society grants loans to the producer- members against sugarcane entrusted by them to the society. The society crushes the sugarcane and manufactures sugar and sells the same in the market, subject to such restrictions as have been laid down by the Central or the State Government. At the end of the season, the society passes a resolution fixing the rate per ton ex-field delivery for the payment to be made to its members for the supply of sugarcane by them. This payment is worked out in accordance with a formula on the basis of the price realised by sale of sugar by the appellant-society. The society makes an effort to see that the proceeds out of the sale are distributed to the maximum possible extent amongst the members. It has been contended on behalf of the appellant that having regard to the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formed for the benefit of the members and the sale proceeds from the sugar manufactured and sold, are to be distributed as far as possible amongst its members, but the society cannot be described as an agent of the members to sell sugarcane grown by them. The position is made clear by the following bye-laws: "8. Every member shall be bound to sell sugarcane grown on all his lands in factory area to the factory. The factory will, however, be bound to buy sugarcane only up to the total acreage covered by the shares held by a member. 27.. The duties of the board of directors shall be:........ (6) to fix the price for the purchase of sugarcane and the terms and conditions thereof. 32.. The board of directors shall each year fix the price to be paid for sugarcane supplied by members. (This price per ton of sugarcane ex-field delivery shall not exceed by more than Rs. 10, the average per maund of sugar realised by the society during the particular season.). In special cases this may exceed Rs. 10. However, when a price exceeding Rs. 10 is fixed, all the amount payable to a producer-member in respect of the excess of the price above Rs. 10 shall be credited as a deposit by him under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... embers by way of price of sugarcane as the price of sugarcane is linked with the price of sugar under bye-law No. 32. (viii) Distribution by way of price of sugarcane supplied had no relation to the quality of sugarcane supplied by each member. It depended upon the quantity alone. The Tribunal was of the view that the question involved in the aforesaid appeals were covered by the judgment of the Gujarat High Court in Bileshwar Khand Udyog Khedut Sahakari Mandali Ltd. v. State of Gujarat, being Sales Tax Reference No. 7 of 1966, decided on July 5, 1968. The Tribunal distinguished the case of Khedut Sahakari Ginning and Pressing Society Ltd. v. State of Gujarat [1972] 29 STC 105 (SC); [1971] 3 SCC 480 by holding that the facts and the bye-laws were quite different in that case. At the instance of the appellant, the Tribunal referred the following questions of law for decision of the High Court: (1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the judgment of the Gujarat High Court in the case of Bileshwar Khand Udyog Khedut Sahakari Mandali Ltd. (Sales Tax Reference No. 7 of 1966 decided on July 5, 1968) has not been supersed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re or less identical. In this appeal, it has been contended that the Full Bench of the High Court had failed to recognise the overriding effect and scope of co-operative principles in interpreting the bye-laws of the society. The co-operative society was primarily formed with the object of encouraging better production of sugarcane crop of its members and to fetch the best available return for the said produce by converting sugarcane into sugar and marketing the same in the country. The real object of the society was to provide help to the members of the society, so that the members could be self-sufficient and not dependent on outside help for cultivation and sale of sugarcane. Another primary object was to provide mutual aid amongst its members, so that the best possible return could be made available to the members by joint co-operative ventures. The members had given large powers to the society as their collective agent, so that produce could fetch the best possible return in the ultimate analysis. By and large, the farmers are illiterate and do not know the ways of business. To prevent exploitation by the middlemen, the producer-societies were formed, so that the farmers coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is definition. Therefore, it is clear from the provisions of the Bombay Sales Tax Act as well as the Gujarat Sales Tax Act that a society, which purchases goods from its members, is a "dealer". If that be so, the only way the society could get out of the net of taxation was by showing that it did not purchase sugarcane from its members. In the case of Khedut Sahakari Ginning and Pressing Society Ltd. [1972] 29 STC 105 (SC); [1971] 3 SCC 480, this Court went into the bye-laws of the society and came to the conclusion that the society acted as an agent for its members for selling their products. The society itself did not purchase anything from its members. The bye-laws have been extensively set out in that judgment. In the case before us, the bye-laws which have been set out earlier in the judgment are altogether different. The society is not a selling agent on behalf of its members. It runs a factory to manufacture sugar. The factory has to pay for the sugarcane supplied by the members and non-members. The purchase price is fixed by the board of directors. The bye-laws also cast a duty upon every member of the society to sell sugarcane grown by him to the factory run by the co-o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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