TMI Blog1968 (1) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... on 37 of the said Act, held that the applicant-Club was a dealer. The applicant-Club then applied in revision to the Sales Tax Tribunal which dismissed the revision application and confirmed the view taken by the Commissioner of Sales Tax. At the instance of the Club, the two questions set out above have thereafter been referred to us under the Act. The first question that arises for the purpose of determining whether or not the applicant-Club is a dealer is one which turns entirely on a construction of the definition of the term "dealer" in section 2(11) of the Bombay Sales Tax Act, 1959. In construing the provisions of the definition contained therein, it is necessary, first and foremost, to bear in mind that the Mahabaleshwar Club is an unincorporated body and, indeed, that is what distinguishes the case on the present reference from the reference in the case of Versova Koli Sahakari Vahatuk Sangh Ltd. in Sales Tax Reference No. 27 of 1964 which was determined by us on 12th January, 1968*, in which the applicants were a registered society and were, therefore, a body corporate and were held by us to fall within the substantive opening portion of the definition of "dealer" in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cing with the words "and also" can be read. One way of reading that part would be to read it as being governed by the verb "means" in the opening portion of that definition. So read, section 2(11), omitting irrelevant words, would read as follows: "'Dealer' means any person who whether for commission, remuneration or otherwise carries on the business of buying or selling goods in the State, and also any society, club or other association of persons which buys goods from, or sells goods to, its members." If section 2(11) is read in that manner, it may well be contended that the requirement of the activity of buying or selling being in the nature of a business is not necessary in order to constitute a person a dealer. The other way of reading the definition is to read the last part commencing with the words "and also" as governed by the verb "includes", or as if the verb "includes" were present between the words "and" and "also". Section 2(11) would then read as follows: "'Dealer' means any person who whether for commission, remuneration or otherwise carries on the business of buying or selling goods in the State, and includes the Central Government or any State Government, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the conclusion that the Legislature did not intend the requirement of business to be necessary for the second inclusive clause which follows it, and which relates to societies, clubs and other associations. In that view of the matter, unregistered societies, clubs or other associations of persons which buy goods from or sell goods to their members, would fall within the definition of "dealer" in section 2(11) and be liable to sales tax, only if such sales or purchases have been effected by way of "business". Mr. Banaji has sought to contend that we should not place such a construction upon the definition in section 2(11), and he has urged upon us that the construction which should be placed upon the definition in section 2(11) should be that an unregistered club or association which effects sales or purchases by way of business would fall with the substantive opening portion of section 2(11) since such a club or association is included within the definition of the term "person" in section 2(19) of the Act, and that the last part of section 2(11) was necessary and was enacted expressly to rope in unregistered clubs or associations in those cases in which the sales or purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion from, or a sale by it to, its members should be liable to taxation and a similar transaction should not be liable to taxation, if it takes place between it and a non-member, if, in either case, the transaction is a stray transaction of a value exceeding the taxable turnover. To take an illustration, if a club were to purchase a motor car worth Rs. 35,000 from a non-member, and that transaction were a stray transaction, it is quite clear that the club would not fall within the definition of a "dealer" by virtue of that transaction, since it has not been effected by way of business so as to fall within the opening clause of section 2(11). If, however, a club were to purchase a motor car worth Rs. 35,000 from one of its members, then, according to Mr. Banaji, such a transaction, though not by way of business, would be taxable because the club would be a dealer within the last part of the definition of that term in section 2(11) of the Act. There is no reason why the law relating to sales tax should make that distinction in respect of an identical transaction between a club and its member, and between a club and a non-member, nor do we see any reason why the law on this point sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervations of Chagla, C. J., mentioned above, on which he has relied, are obiter dicta. It may, however, be pertinent to point out that the learned Chief Justice has, in the course of his judgment, enunciated what, according to him, is the object of the Sales Tax Act. He has observed (at pages 500-501) that the object was a very narrow object, that it was not to tax every sale and every supply, but was only to tax such of them as are effected by persons carrying on the "business" of selling or supplying. A Division Bench of the Madras High Court has, in the case of The Deputy Commissioner of Commercial Taxes, Coimbatore v. Sri Thirumagal Mills Ltd.[1967] 20 S.T.C. 287 at pp. 289 and 290. , stressed that, in order to be liable to tax, the activity must be of a commercial character and in the course of trade or commerce. It is, however, not necessary for us to deal with the judgment in that case in detail because it deals with the corresponding enactment in Madras, and also because it was a case in which the main business of the assessee-company was something totally different, viz., of manufacturing cotton, from the activity which was sought to be taxed. The Supreme Court has, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "and includes" which are absent in the definition in section 2(11) in the Act before us. The presence of those words would, in our opinion, make all the difference, in so far as it would make it perfectly clear that the last clause is merely of an inclusive nature, in which case what is sought to be included therein must necessarily partake of the commercial character which is expressly stated to be necessary in the substantive part of the definition of "dealer ". On the other hand, the very question before us is whether the word "includes" which does not occur in the concluding part of section 2(11) should be read into it. The second decision, which is an unreported decision, relating to the Gondwana Club, Nagpur, was also given on a writ petition. In that case, the question having arisen under the C.P. and Berar Sales Tax Act, 1947, the presence of the words "and includes" in the last clause of the definition of "dealer" in section 2(c) of the said Act made it unnecessary for the learned Judges to consider, and they did not, in fact, consider the question whether the requirement of business was necessary in the case of a club which is an unincorporated body. Moreover, the learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore cautela, as observed earlier in this judgment. The nature of the dealings between an unincorporated body and its own members has also been discussed in similar terms in the unreported decision of the Supreme Court dated 23rd November, 1967, in the case of the Deputy Commercial Tax Officer v. Enfield India Ltd. Co-operative Canteen Ltd.Since reported at [1968] 21 S.T.C. 317. , but the question which we are considering was not decided in that case, and, therefore, it is unnecessary for us to deal with the said decision in detail. It may be mentioned that both the cases last referred to by us in this judgment arose under the Madras General Sales Tax Act in which the position is clarified by the words "whether or not in the course of business" which occur in the explanation to the definition of "dealer" in section 2(g) thereof. The result of this discussion of the authorities is that there is no decided case in which the question of construction that we have to determine has directly arisen, or has been considered and decided. Some of those authorities do, however, support the construction that we have placed upon section 2(11), namely, that the commercial character of the activi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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