TMI Blog1957 (4) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts of the club. The club was also asked to get itself registered under section 8 of the said Act and a notice was served under section 10 of the Act for submitting a return of accounts within two months of the date of the receipt of the said notice. The petitioner contends that it supplies goods to its members only, that the transaction is not a "sale", that the club is not a "dealer" and that it does not require registration. It further contends that it is not carrying on business of selling or sup- plying goods and that the levy of sales tax on "supply of goods" in the Act is ultra vires the Constitution. The petitioner, therefore, files this petition for quashing the orders of the respondents. 3.. In the return, on behalf of the respondents, it is urged that the club supplies goods to its members on a commercial basis; that the club sells foreign liquor without registration under the Act; and that it was, therefore, asked to produce its books of account from 1948 and also to register under section 8 of the Act. It is also contended that the club is an entity separate from the members composing it and the transactions regarding the supply of goods to its members come with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inted out that in that case sales tax was already paid by the club, and therefore a decision on the point was necessary. In the present case there is nothing to show that the club has already paid any sales tax. The club's registers and accounts have yet to be inspected. However, as the point arising in this case is important and has been fully argued before us and as other cases are awaiting decision, we think we should express a considered opinion on the questions canvassed. 7. "Dealer" in the Act means "any person who, whether as principal or agent, carries on in Madhya Pradesh the business of selling or supplying goods, whether for commission, remuneration or otherwise and includes a firm, a partnership, a Hindu undivided family and the Central or a State Government or any of their departments and includes also a society, a club or association selling or supplying 1. [1952] 3 S.T.C. 77; On appeal 6 S.T.C. 1. goods to its members." The word "sale" has been defined in the Act, but not the word "supply". This word is absent in the Madras Act, the relevant section of which was stated and explained in para 15 by Mack, J., in Cosmopolitan Club, Madras v. The Deputy Commercial Tax O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, he shall be liable to a penalty." In Clarke v. Griffiths: Peacock v. Same [1927] 1 K.B. 226, the section came up for interpretation. Avory, J., at page 230 observed that the word "supply" is substituted for the word "sell" in other parts of the Act. It is really equivalent to "serve". At page 231 Shearman, J., stated: "It is only necessary to turn to section 93 and other sections in order to make it plain that 'supply' relates to members and 'sell' to other persons, and the supply begins when the members order the intoxicating liquor." 9.. Graff v. Evans(1882) 8 Q.B.D. 375. is authority for the proposition that when the members of a bona fide club are the owners of the liquor consumed, which is merely distributed among them, that distribution is not sale. In the words of Darling, J., at page 123 of Humphrey v. Tudgay[1915] 1 K.B. 119."the liquor being the liquor of the whole association, the member who takes some of it puts back into the club, not the liquor, but its equivalent in money. He only takes what is his own and replaces it with something of his own although not of the same kind or quality". It was pointed out by Banks, J., at page 180 of Metford v. Edwards[1915] 1 K. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o have been granted under the Indian Electricity Act, 1910, of goods for use by it in generation or distribution of such energy; (iv) such other sales as may be prescribed; and (b) such part of the balance remaining after making the deductions allowed by paragraphs (i) to (iv) of sub-clause (a) as is equal to- (i) one-seventeenth part in respect of sales of goods mentioned in Part I of Schedule I; (ii) one-sixty-fifth part in respect of sales of goods mentioned in Part II of Schedule I; and (iii) one-thirty-third part in respect of sales of goods not mentioned in Schedule I or Schedule II;" It will be manifest that the Act seeks to levy tax only on the aggregate of the amounts of sale prices and parts of such prices received or receivable by a dealer in respect of the sale or supply of goods. Reading this definition with those of "sale" and "dealer" we think that the word "supply" should not be interpreted in its literal absolute sense, but must be given a limited and qualified sense. In The State of Bihar v. The Bengal Chemical and Pharmaceutical Works Ltd.[1954] 5 S.T.C. 28., the majority view ex- pressed was that the word "supply " should be interpreted noscitur a sociis, that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsisted exclusively of persons employed at a colliery, had as its object, the business of delivering to its members coal supplied to them from the colliery by the colliery company. For the purposes of its business the society owned a motor vehicle in respect of which it held "a C licence" under the above sub-section. The society used the vehicle for making a delivery of coal at the house of one of its members, the charge for the delivery being deducted from the wages of the member payable by the colliery company and subsequently paid by that company to the society. On an information against the society for having failed to comply with the condition, to which the licence was subject under the above sub- section, by using the vehicle for the carriage of goods for hire or reward, it was held that, as the society was incorporated, it was a legal entity separate and distinct from its individual members; and consequently that in using the vehicle for the carriage of coal to one of the members at a charge, it used the vehicle for "the carriage of goods for hire or reward" within the meaning of the sub-section and was guilty of the offence with which it was charged. In another; case (Wurze ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raff v. Evans(1882) 8 Q.B.D. 375. 13.. In Trebanog Working Men's Club v. Macdonald[1940] 1 K.B. 576., it was held that the incorporated societies being legal entities as distinct from the members can act as their agents or trustees, the real interest in the liquor being in the members; and the supply of the liquor to individual members would not constitute a sale thereof. In this view of the matter the question whether a club is incorporated or not will not be material. 14.. A club can do the business of supplying goods to its members; but if it is found that this business is "for commission, remuneration, or otherwise" the club must be held to be a "dealer" within the defini- tion of the term in section 2(c) of the Act. The words "or otherwise" are important and very wide. Generally, when they follow an enumeration they receive an ejusdem generis interpretation. But sometimes the context may show that the doctrine of ejusdem generis may not be applicable. In National Association of Local Government Officers v. Bolton Corporation(1) the definition of "workman" as given in the conditions of Employment and National Arbitration Order, 1940, and identical with that given in the Eng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. 17.. In our opinion, the rule should be applied in the present case, as "commission" and "remuneration" both belong to the same genus, i.e., they refer to some payment or consideration in some form for services rendered. We do not think that in a non-proprietary members' club the element of "profit" in the price charged to the member makes any difference. The excess paid by the member does not entirely cease to be his property. He has a share in it just as he has a share in the stocks carried by the club. The same is, however, not true if goods are sold or supplied to non-members. The profit thus made is on a different footing and the club can be said to run a business. In such an event the club as an entity is viewed vis a vis persons not belonging to the club. But where the club supplies goods to its own members an excess charged to build up a fund to provide other amenities does not make the transaction a business one, nor the supply a sale. In such a case the payment is a voluntary contribution to the funds of the club to enable it to cater for other needs and amenities. This will be so if the goods are supplied to the members bona fide by the club, even if some of the go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rokerage, even then, ordinarily, the sup- ply of goods would not amount to a transaction of sale and the transfer of property from the incorporated club to its members will not amount to a sale within the definition of the Act or even of the Sale of Goods Act. In this view we are fortified by the observations made in Sista's Limited v. The State of Bombay [1956] 7 S.T.C. 343. and Pannalal Babulal v. Com- missioner of Sales Tax, U.P., Lucknow [1956] 7 S.T.C. 722. The ground of attack that the Act is ultra vires loses its significance when the words "supply" and "club" are thus read to indicate only "sales" and "supplies" for price and in the course of business. The transactions between a non-proprietary club and its members stand outside the Act. 21.. As mentioned above, no sales tax has yet been levied on the petitioner club and so, in our opinion, no legal right of the petitioner has yet been infringed. It will be advisable for the club to produce its books of account before the Commissioner so that the authorities concerned may decide whether the petitioner should be registered as a dealer or not. The petition on this point is dismissed. Without inspecting the accounts and the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
