1. At the instance of the State Government, the following two questions have been referred to us for our opinion under section 61 of the Bombay Sales Tax Act, 1959 (hereinafter referred to as 'the Bombay Act') :
'(1) Whether, on the facts and in the circumstances of the case, the opponent-society is a dealer within the meaning of section 2(11) of the Bombay Sales Tax Act, 1959, and is liable to registration and payment of tax
(2) Whether, on the facts and in the circumstances of the case, the Tribunal is justified in holding that the period of limitation under section 35 of the Bombay Sales Tax Act, 1959, should be of five years and not eight years prior to the issue of assessment notice and further that the period of limitation under section 35 should be considered on the basis of the subsequent notices in form 28 dated 6th March, 1973, instead of the earlier notice in form 28 dated 11th March, 1971, for the combined period ?'
2. Briefly stated, the facts giving rise to this reference are as under : The opponent-society is a co-operative society registered under the Bombay Co-operative Societies Act. It has 62 members on its register of members. The objects, inter alia, of the society for which it was incorporated are to safeguard the interest of the labourers engaged in the business of winning minor minerals such as sand and kankro from the river bed and for sale thereof to the prospective customers. These labourers are popularly known as vanjaras who are mostly illiterate people, and they are exploited by the selfish business interests on account of their illiteracy and want of business experience. It is with a view to put an end to the exploitation of these labourers and to ensure them payment of reasonable wages for the labour which they put in that the opponent-society was incorporated. The opponent-society (hereinafter referred to as 'the assessee') entered into an agreement of lease with the President, Jhilla Panchayat, Mehsana, on 29th January, 1965, and it was agreed by and between the parties that the assessee was to win the aforesaid materials from the river bed on payment of the lease amount of Rs. 16,000 per year. This lease was renewed in subsequent years when the lease amount was increased to Rs. 20,000. The assessee was not entitled to transfer its right or interest in the said lease by way of sub-lease or otherwise, and it was not entitled to collect more than the fixed charges as agreed between the parties for sale of the materials. These charges comprised of royalty of Rs. 5 per brass of sand and maram, Rs. 7 per brass of kankro, the labour charges at the rate of Rs. 8 per brass of sand and maram and Rs. 26 per brass of kankro. The assessee was required to maintain full and complete accounts as directed by the jhilla panchayat. It was also under obligation to issue bills to the purchasers. In these bills, the amounts of royalty and labour charges were shown separately. The amounts recovered by way of royalty charges were credited in the trading books of the assessee-society to the royalty account, and the labour charges to the individual member's accounts responsible for winning the materials. The delivery of the materials is given only on the river bank and no customer was entitled to employ his own labourers to win the materials from the river bank covered by the lease agreement.
3. The Sales Tax Officer, having come to know about the dealings of the opponent-society, made an inquiry and found that the assessee should have obtained registration under the Bombay Sales Tax Act, 1959, from 1st April, 1962. He, however, directed that the society should be held liable from 1st April, 1964, for payment of tax on all its turnover of sales of the materials extracted by it having regard to the nature of the members. The assessee contended that it was not a dealer since it was not engaged in carrying on any business in the commercial sense, and it was formed only for the purposes of providing employment to its members who are illiterate. This contention did not find favour with the Sales Tax Officer. The Sales Tax Officer, therefore, assessed the assessee for 4 periods, namely, (i) 1964-65, (ii) 1965-66, (iii) 1966-67 and (iv) 1967-68. The assessments were set aside since the Sales Tax Tribunal, held that the assessments were bad because a consolidated notice was issued for a combined period of four years on 11th March, 1971. On remand, fresh notices were issued on 6th March, 1973, for each of the assessment periods and the assessment was made under section 35 of the Bombay Act.
4. The assessee, therefore, carried the matter in appeal before the Assistant Commissioner by filing four appeals who dismissed the same.
5. The assessee, therefore, carried the matter in appeal before the Tribunal by filing four appeals. The Tribunal held that if the assessee was held to be a dealer, the Sales Tax Officer could have assessed it within a period of five years prior to the date of the issue of notice, that is, 6th March, 1973, and, therefore, all the assessments were time-barred. The Tribunal further held that the assessee was not a dealer since its objects, inter alia, were to safeguard the interest of the labourers and to provide them with gainful employment, and that it was not carrying on any business in a commercial sense with a view to earn profits. Consequently therefore the Tribunal held that the assessee-society was not liable to registration and pay tax under the Bombay Act :
Four contentions were raised before the Tribunal on behalf of the assessee-society. The first contention urged on behalf of the assessee-society before the Tribunal was that since there was no concealment on the part of the assessee, the period of limitation for purposes of assessment should be five years immediately preceding the date of issuance of the notice after remand, that is, 6th March, 1973 and not the original notice of 11th March, 1971, the assessments in pursuance of which were set aside. The second contention was that the assessee acted as an agent for jhilla panchayat, and therefore, could not be held liable for payment of tax under the Bombay Act. The third contention was pertaining to the quantum of sale price which, according to the assessee-society, should be exclusive of the labour charges which are collected on behalf of the individual members, credited as labour charges in the individual member's account and paid to them directly by the society. The fourth contention was that the assessee-society was not a dealer.
As regards the second and third contentions, the Tribunal was not impressed having regard to the manner in which the bills were drawn on and paid by the customers and also having regard to the fact that the assessees received the entire consideration comprising of the royalty as well as labour charges. As regards the first contention, the Tribunal agreed with the submission made on behalf of the assessee-society that if at all any liability of the assessee was to be fixed, it should not be for a period beyond five years from 1972-73 since there was no concealment on behalf of the assessee-society, and therefore, the period of limitation should be five years immediately preceding the date of the notice after remand, that is, 6th March, 1973. As regards the last and most important contention that the assessee-society was not a dealer, the Tribunal, having regard to the definition of the term 'dealer' in section 2(11) of the Bombay Act, agreed with the assessee that a mere activity of buying or selling would not amount to business unless the activity is commercial in nature. In the opinion of the Tribunal, the main object of the society was to safeguard the interest of the labourer-members and to provide them with proper and sufficient remuneration and there was no profit-motive which prompted the society to carry on that activity. The Tribunal, therefore, held that the assessee-society was not a dealer within the meaning of section 2(11) of the Bombay Act. It is in the light of these findings that the State Government prayed for reference of the two questions set out above for opinion of this Court.
6. At the time of hearing of this reference, the learned Government Pleader appearing on behalf of the State Government urged that the Tribunal committed an error of law in holding that the assessee-society was not a dealer inasmuch as it failed to appreciate the relevant bye-laws of the society which defined the objects in promoting the society which, according to the learned Government Pleader, are commercial in the true sense of the term and the entire organisation of the society was promoted for carrying out commercial activity though in its process the exploitation of its labourer-member was sought to be prevented by ensuring adequate and reasonable wages for their labour. The relevant bye-laws providing for distribution of profits were relied upon for purposes of persuading us that the profit-motive was also present in the mind of the pro-motors of the society and the fact that the society earned profit or not was irrelevant for purposes of determining whether the society was a dealer or not.
7. On behalf of the assessee-society the above contentions were sought to be repelled by urging that the dominant object for promotion of this society was ensuring reasonable wages and thereby protecting the illiterate and unskilled workers engaged in winning minor minerals, and if in order to achieve that object, such workers have set up a co-operative organisation which can effectuate the objects, inter alia, of undertaking some commercial activity of sale and supply, it cannot be urged successfully that the Tribunal was in error in law in holding that the assessee was not carrying on any commercial activity with profit-motive.
8. In order to answer the questions posed before us, it would be profitable to advert to, in the first place, what is the definition of the term 'dealer' in the Bombay Act. Section 2(11) of the Bombay Act defines the term 'dealer' and the said definition of the term 'dealer' at all the relevant times of the assessment periods under reference was as under :
'2. (11) '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 carries on such business, and also any society, club or other association of persons which buys goods from, or sells goods to, its members;
Exception. - An agriculturist who sells exclusively agricultural produce grown on land cultivated by him personally, shall not be deemed to be a dealer within the meaning of this clause.'
Simultaneously it should be noted here that the Bombay Act did not define the term 'business' as the Gujarat Sales Tax Act, 1969, or in some corresponding Acts of other States.
9. Before we proceed to consider a few decisions cited at the Bar, we may refer to the relevant clauses of the bye-laws of the society which have a bearing on the question before us. The original bye-laws are in Gujarati and clause 2 thereof when translated in English reads as under :
'2. The objects of the society are as under :-
(a) To ameliorate the economic conditions of skilled and unskilled labourers doing physical labour by entering into contracts of executing public or private work, obtained on tender or otherwise so as to provide the labour work for them.
(b) To evolve methods for eliminating unemployment of the members.
(c) To cultivate sense of economy, self-sufficiency and co-operation amongst the members of the society by opening provident fund accounts for them.
(d) To provide employment to its workers by purchasing tools and instruments propelled by machines.'
10. Clause 7 provides for qualification of being a member of the society. Any person who is a resident of Vijapur Taluka not below the age of 18 years and being a worker or labourer engaged in winning sand or kankro, and who is not a member in any other similar society and also not being a contractor himself could be a member of the society on his written application being sanctioned by the majority of the working committee. Clause B provides that in the case of the society employing any worker or labourer who is not a member, he would be paid at the labour rate prevalent in the area where he is employed for purposes of the work, and such non-member worker shall be entitled to make an application for being a member on completion of one year of his employment. The opponent-society was registered under the Bombay Co-operative Societies Act, 1925, as it appears from the certificate of incorporation of 8th February, 1962, which must be under the Bombay Co-operative Societies Act, 1925, because the Gujarat Co-operative Societies Act came into force on 1st March, 1962. Clause 32 of the bye-laws provides for prior charges on account of different heads on the gross profits. The amounts on account of past losses, depreciations, insurance premiums, subscriptions and other donations to Co-operative Board, or other institutions, the wages and other expenses of the contract work, are to be deducted from the gross profits and only the amount remaining after such deductions were treated as net profit. According to these bye-laws an appropriate amounts as may be determined in consultation with the Joint Registrar was to be credited to equalisation fund created for purposes of meeting with the situation arising on account of any change in the prices of the work. Similarly an amount at the rate of 37 paise per hundred rupees of the upset price of the work was to be credited in the insurance funds from which contributions would be made to Central Insurance Scheme. Clause 33 provides for the distribution of net profits - 25 per cent of the net profit is to be taken to reserve fund and a dividend not exceeding six per cent in the paid-up capital of the society, but not exceeding 25 per cent of the net profit can be distributed. Such other amounts on account of institution education fund as required by the Co-operative Act was to be paid to the District Co-operative Board. After appropriating the net profits as above the following appropriations would be made :
(i) 25 per cent shall be set apart for payment of bonus to the labourers and workers;
(ii) 15 per cent shall be set apart for purposes of payment of bonus to salaried staff so as not to exceed in aggregate two months' salaries;
(iii) 20 per cent shall be set apart for building fund;
(iv) 20 per cent shall be set apart for carrying on social activities amongst the members and non-members;
(v) 10 per cent shall be set apart for carrying on the activity of propagating about co-operative movement and
(vi) 10 per cent shall be set apart for dividend equalisation fund.
11. Clause 39 envisages creation of provident fund and unemployment funds which are to be appropriately invested after obtaining the approval of the Registrar from time to time. It is provided that provident fund shall be administered according to the regulations made by the general meeting in that behalf. The working committee may, as it deems proper and necessary in its discretion, utilise the unemployment funds for payment of maintenance allowance to its unemployed members. A certified copy of the bye-laws together with the certificate of incorporation sent under the cover of the letter of the Registrar dated 8th February, 1962, have been produced before us by the learned Advocate with the consent of the learned Government Pleader. Leaflet 'GG' annexed to the said certified copy gives an idea as to what is the true nature of this workers' society. It, inter alia, states that the workers' societies are ordinarily included in and treated as producers' societies. The term 'producers' society' has been defined by the Bombay Co-operative Societies Act, 1925, as under :
'3. (2) A '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.'
12. The only difference between a workers' society and a producers' society is, according to this leaflet, that a producers' society is formed of skilled workers and they require workshops, mechanical tools, workers, etc., for purposes of production of their goods. An illustration has been given of such societies which are formed by goldsmiths, blacksmiths, weavers or producers of cloth who not only invest their labour but also contribute looms and furnaces. On the other hand in the workers' societies the members have nothing to invest except their labour, and for the production, they require very small tools and the main object of such societies is to ensure the full compensation for their labour, and in order to effectuate that object, they must also be entitled to share in the profits of such societies and control and manner and methods of their labour. In the present set up the society the labour of such workers is purchased at the minimum rate and they have no voice in the management of the work and their tenure is at the pleasure of the employers with the result that the workers have neither heart nor incentive in the work. In order to eliminate these evils and in order to get the best work from the workers concerned such societies of workers are formed. It is in this background that we have to determine whether the assessee-society can be said to be 'a dealer'.
13. A few relevant decisions may be noted in this connection. The first and the foremost decision rendered by the Bombay High Court under the Bombay Sales Tax Act, 1946, was in State of Bombay v. Ahmedabad Education Society  7 STC 497. A Division Bench of the Bombay High Court was concerned in that case with the question whether the transactions of sale of the excess steel obtained by the Ahmedabad Education Society and the supply of bricks manufactured by the society in the factory put up for purposes of construction of its buildings for its colleges, residential quarters for staff and hostels for students, to other sister educational institutions and individuals at cost price, would render the society a dealer within the meaning of the term in section 2(c) of the Bombay Sales Tax Act, 1946, which is in pari materia with the definition of the term 'dealer' in section 2(11) of the Bombay Act with which we are concerned in this reference. The Division Bench, speaking through Chagla, C.J., held that it was clear from the definition of the term 'dealer' that it was not merely the act of selling as defined in the Act which constituted a person dealer in the sense of transferring a property in goods which would be determinative of the question whether a person is a dealer or not but the activity of selling must be with a view to carrying on business. The Division Bench held as under in that case :
'..... The Bombay Sales Tax Act has a much narrow ambit and scope. Its object is not to tax income or to tax profits. Its object, which is a very narrow object, is to tax sales effected by persons carrying on the business of selling or supplying. Let us again emphasise that its object is not to tax sales; its object is to tax only those sales which are effected by persons who carry on the business of selling or supplying goods. In our opinion if construe the expression 'carrying on the business of selling or supplying goods' in a commercial sense, then it is clear that the object of the person who carried on that business must be to sell or to supply. A person may either produce goods or purchase goods with the object ultimately of selling them. Unless that object is present and unless that intention is clear, the mere activity of selling or supplying would not constitute the carrying on of business of selling or supplying. If the Advocate-General's contention were to be accepted any continuous activity or any repeated activity seriously undertaken which results in the supply or sale of goods would attract the sales tax. But what the Advocate-General overlooks in putting forward that contention is that the activity, although it may be serious, although it may be continuous, unless it assumes the characteristics of a business, it is not an activity which can come within the ambit of section 2(c). If the intention of the legislature was simply to tax every sale and every supply, then it was unnecessary to state that the person must carry on the business of selling or supplying goods. A further indication is given as to the nature of the activity by the legislature including in this definition any society, club or association which sells or supplies goods to its members. The legislature realised that a club or society does not carry on the business of supplying goods to its members, its business is to give amenities, to provide a place where people can spend their leisure hours, and realising that a society, club or association would not come within the definition, the legislature had to extend the definition of a dealer and include in that definition a society, club or association.'
Having defined the width of the definition of 'dealer' the Division Bench proceeded to examine whether the Ahmedabad Education Society fell within the ambit and width of the definition. The Division Bench held as under :
'..... Shorn of its technicalities the position really is very simple. The society wishes to put up buildings, it employs a contractor, the buildings cannot be put up without bricks, and bricks have to be purchased for the construction of the buildings. The society realises that if the contractor were to go into the market and buy the bricks it would cost him and ultimately them Rs. 48 per thousand. To economise on the construction of the buildings they decide to set up a brick factory and a lime kiln. Therefore the object and the clear object of setting up the brick factory and the lime kiln was not to sell these bricks after they were manufactured, but the object was to use these bricks for the purpose of their own buildings in order to make the cost of the buildings less than it would have been if the bricks had been purchased in the market. It is difficult to understand how this activity can possibly be characterised as carrying on business of selling or supplying bricks to anybody. The Advocate-General says that the statement of the case makes it clear that bills were furnished to M/s. Gannon Dunkerley & Co., they were debited with the amount of the bricks supplied to them, and this, says the Advocate-General, clearly shows that the transaction was transaction of sale and that the society was carrying on the business of selling. Now, in all these taxing matters we must not look on the form but to the substance of the transaction. Inasmuch as the contractor had to purchase bricks and that would have formed part of the bill which the contractor would have ultimately submitted to the society for the purpose of book-keeping, the society adopted a particular form of accounts, but that form does not in any way affect the real nature of the transaction, and the real nature of the transaction is what we have already indicated. It is absurd to suggest that on these facts the society was selling bricks to their contractors, M/s. Gannon Dunkerley & Co. Even the Advocate-General could not really press this part of the case.
But the Advocate-General was more eloquent with regard to the other aspect of the matter and that is the sale of the surplus bricks to sister societies and other individuals, and according to him there could be no doubt that as far as that activity was concerned it was a business activity of selling bricks. Here again, what we have to consider is what was the object of starting this brick factory and this lime kiln. If the object was to prepare bricks which would be used in the construction of the buildings of the society and to produce more bricks and sell them, then undoubtedly when the society ultimately sold the bricks it would be carrying on business of selling. But again the finding of fact is clear that the sole object of the society was to make bricks for their own buildings and for various reasons a larger quantity was produced, that quantity was liable to deteriorate, and therefore they had to be disposed of, and the important fact which cannot be overlooked is that these bricks were disposed of without the society making any profit whatsoever ......
...... As we have already pointed out, the reasons for our decision is not the absence of the profit-motive but the absence of any intention on the part of the society to sell the goods at the time when the bricks were manufactured or the steel was imported .....'
14. In State of Gujarat v. Raipur . : 1SCR618 the Supreme Court was concerned with the question as to whether a company manufacturing cotton textiles can be said to be carrying on business of selling goods when it sold old discarded goods, coal, by-products and subsidiary products. The Supreme Court referred in this connection to its earlier decision in State of Andhra Pradesh v. H. Abdul Bakshi and Bros. : 7SCR664 that a person to be a dealer must be engaged in the business of buying or selling or supplying goods. The Supreme Court, speaking through Shah, J., thereafter considered the width and import of that term 'business' as under :
'The expression 'business' though extensively used in taxing statutes, is a word of indefinite import. In taxing statutes, it is used in the sense of an occupation, or profession which occupies the time, attention and labour of a person, normally with the object of making profit. To regard an activity as business there must be a course of dealings, either actually continued or contemplated to be continued with a profit-motive, and not for sport or pleasure. Whether a person carries on business in a particular commodity must depend upon the volume, frequency, continuity and regularity of transactions of purchase and sale in a class of goods and the transactions must ordinarily be entered into with a profit-motive. By the use of the expression 'profit motive' it is not intended that profit must in fact be earned. Nor does the expression cover a mere desire to make some monetary gain out of a transaction or even a series of transactions. It predicates a motive which pervades the whole series of transactions effected by the person in the course of his activity. In actual practice, they profit-motive may be easily discernible in some transactions : in others it would have to be inferred from a review of the circumstances attendant upon the transaction. For instance, where a person purchases a commodity in bulk and sells it in retail it may be readily inferred that he has a profit-motive in entering into the series of transactions of purchase and sale. A similar inference may be raised where a person manufactures finished goods from raw materials belonging to him or purchased by him, and sells them. But where a person comes to own in the course of his business of manufacturing or selling a commodity, some other commodity which is not a by-product or a subsidiary product of that business and he sells that commodity, cogent evidence that he has intention to carry on business of selling that commodity would be required. Where a person in the course of carrying on a business is required to dispose of what may be called his fixed assets or his discarded goods acquired in the course of the business, an inference that he desired to carry on the business of selling his fixed assets or discarded goods would not ordinarily arise. To infer from a course of transactions that it is intended thereby to carry on business ordinarily the characteristics of volume, frequency, continuity and regularity indicating an intention to continue the activity of carrying on the transactions must exist. But no test is decisive of the intention to carry on the business : in the light of all the circumstances an inference that a person desires to carry on the business of selling goods may be raised.'
15. In State of Gujarat v. Shri Surat Panjarapole  23 STC 57, a Division Bench of this Court was concerned with the question whether an institution to preserve lives to stray cattle and other stray animals could be said to be carrying on business, and therefore, a dealer within the meaning of section 2(11) of the Bombay Act, if it sells cotton grown on its land, carcasses of animals, milk and dung for use as fertiliser, and therefore, liable to sales tax under the Bombay Act. The Division Bench of this Court held that the assessee was actuated entirely by charitable, religious or philanthropic motive or non-violence by preserving the lives of voiceless animals and it did not carry on any business activity with any profit-motive and merely because incidental sales were done of the animal products, it could not considered as carrying on the business of selling those goods, and so far as the sale of cotton produced on its lands was concerned, it was covered by exception to the definition of the term 'dealer' in section 2(11) of the Bombay Act. After referring to the decision of the Supreme Court in Raipur .'s case : 1SCR618 the Division Bench applied the principle enunciated therein on the facts before it and held as under :
'..... In the present case, the institution before us a Panjarapole institution and admittedly, its object, as stated in the indenture dated 21st October, 1896, which was made (after sic) before 100 years is that the institution was established for the purpose of keeping and preserving the lives of stray dogs, stray cattles and other stray animals. The institution is actuated entirely by charitable or religious or philanthropic motive of non-violence by preserving the lives of those voiceless animals. It is this essential activity whose stamp is borne on all the sales which are in dispute before us, except probably the agricultural activity of growing cotton on the lands ....... We cannot agree with this contention of the learned Advocate-General for the simple reason that the essential character of this institution is one of maintaining animals to save the lives of those voiceless animals and it does not carry on any business activity with any profit-motive and merely because incidental sales are done of the animal products, it could not be considered as carrying on business of selling these goods.'
In Deputy Commercial Tax Officer v. Enfield India Ltd. Co-operative Canteen Ltd. : 2SCR421 the Supreme Court was concerned with the question whether a co-operative society running a canteen could be held to be a dealer liable to pay tax under the Madras General Sales Tax Act, 1959. The Supreme Court held that the co-operative society to be a dealer having regard to the definition of the term 'business' under section 2(d) of the Madras General Sales Tax Act, 1959, which defined 'business' to mean any trade or commerce or manufacture, whether or not any profit accrues from such trade, commerce, manufacture, adventure or concern. The Supreme Court, therefore, ruled that a scheme for supplying goods to its members by a society for price may partake of the activity of the nature of adventure or concern in the nature of trade, even if the activity was not actuated by profit-motive.
16. In Commissioner of Sales Tax, Gujarat v. Anil Co-operative Credit Society  24 STC 180 a Division Bench of this Court was concerned with the question as to whether the society which was a co-operative society registered under the Bombay Co-operative Societies Act, 1952, running a canteen for the benefit of its members without any profit-motive could be held to be a dealer within the meaning of section 2(11) of the Bombay Sales Tax Act, 1959. J. B. Mehta, J., held on the facts and in the circumstances of that case as under :
'So far as the present case is concerned, we hold that the legislature has not given any such wider inclusion, and the principles of construction do not permit implication of any such radical alteration from the pre-existing law, as interpreted even by the Bombay High Court. We must, therefore, hold that the Tribunal was right in holding that the present society which managed the canteen in question and supplied goods to its members or to the guests of the factory or the members, without any profit-motive was not a 'dealer'.'
17. Since Divan, J. (as he then was), the other member of the Division Bench did not agree with J. B. Mehta, J., the matter was referred to Bhagwati, C.J. (as he then was) (who agreed with J. B. Mehta, J.). Bhagwati, C.J., referred to three decisions of the Supreme Court, namely, Raipur .'s case : 1SCR618 H. Abdul Bakshi's case : 7SCR664 and Director of Supplies and Disposals v. Board of Revenue : 3SCR778 and concluded as under :
'These three decisions leave no doubt that at least so far as the taxing statutes are concerned, the word 'business' connotes some real, substantial and systematic or organised course of activity or conduct with the set purpose of making profit. Two elements must be present in order to constitute business : first, there must be a systematic or organised course of activity or conduct and secondly, it must be pursued with the set purpose of making profit. It is only if these two elements co-exist that a person can be said to be carrying on the business so as to fall within the main part of the definition in section 2(11).'
18. The last decision which requires a reference is that of the Supreme Court in Director of Supplies and Disposals v. Member, Board of Revenue : 3SCR778 . The Supreme Court was concerned with the Directorate of Disposals which was an organisation of the Government of India responsible for disposal of the surplus American was equipment which had been taken over by the Government of India. The surplus goods were sold to public in a series of transactions, and therefore, a question which arose was as to whether the Director of Supplies and Disposals carried on business of selling the goods in West Bengal within the meaning of section 2(c) of the Bengal Finance (Sales Tax) Act, 1941. The majority Court comprising of Sikri and Ramaswami, JJ., held, on consideration of the totality of circumstances, that the activity of disposal was merely realisation of the assets, and therefore, not sales liable to be taxed under the said Act, and the Director was not a dealer within the meaning of section 2(c) thereof. Shah, J., referred to the earlier decision of the Supreme Court in Narain Swadeshi Weaving Mills v. Commissioner of Excess Profits Tax : 26ITR765(SC) where the court had spelled out the connotation of the word 'business' as amounting to some real, substantial and systematic or organised course of activity or conduct with a set purpose of making profit. Shah, J., in his opinion, observed as under :
'An owner of goods may dispose of his property in one lot or from time to time in different lots. By merely realising the value of a capital asset, the owner does not become a dealer. Where, however, he sets up an organisation - a substantial and systematic course of activity to sell the goods with a profit-motive, he may in the light of other circumstances be deemed to have entered into an activity in the nature of business or trade. The line between the two classes of cases in thin and sometimes may be blurred. But in the present case, it cannot be said that the activity undertaken by the Government of India for disposal of the American surplus was equipment was merely an activity of the nature of realisation of capital ..... The tests of frequency, continuity and system which are generally employed in determining whether an activity for the disposal of goods owned by a person indicates an intention to carry on business ..... does not arise merely from the existence of a selling organisation or systematic sales, but from the totality of circumstances.'
19. Ramaswami, J., in his concurring opinion, held as under :
'The expression 'business' though extensively used is a word of indefinite import. In taxing statutes, it is used in the sense of an occupation or profession which occupies the time, attention and labour of a person, normally with the object of making profit. To regard an activity as business there must be a course of dealings, either actually continued or contemplated to be continued with a profit-motive; there must be some real and systematic or organised course of activity or conduct with a set purpose of making profit. To infer from a course of transactions that it is intended thereby to carry on business, ordinarily there must exist the characteristics of volume, frequency, continuity and system indicating an intention to continue the activity of carrying on the transactions for a profit. But no single test or group of tests is decisive of the intention to carry on the business. It must be decided in the circumstances of each particular case whether an inference could be raised that the assessee is carrying on the business of purchasing or selling of goods within the meaning of the statute.'
20. In this decision, Shah, J., has referred to the decision of the Judicial Committee in Commissioner of Taxes v. British Australian Wool Realization Association Ltd.  AC 224. The facts in the case before the Judicial Committee were that the assessee-company was incorporated for the purpose of selling surplus wool originally acquired during the war. The Commonwealth Government of Australia transferred its undivided half of the Australian wool to the assessee-company which also agreed to sell on behalf of the British Government the rest of the wool for a commission. A large surplus remained in the hands of the company after meeting with all the liabilities of the sale proceeds of the wool. The Supreme Court of Victoria held that the surplus proceeds of the sale did not arise from trade and were therefore not taxable under the Income Tax Act, 1915. The Judicial Committee agreed with the said view having regard to the fact that the company was floated with a view to devise an effective machinery to serve the twin objective that the realisation of surplus wool should not destroy the market for the current production and at the same time the legitimate interests of the British consumers were not jeopardised. The Judicial Committee observed in that case as under at pages 249-252 :
'............. in truth and in fact the Association's interest in the wool always was fixed capital and never was circulating capital. Its purpose with reference to it was to realise the asset, having done so to distribute the proceeds among those entitled and then itself to disappear ............. In other words, in their Lordships' judgment there is in the special case neither a finding, nor any statement of facts warranting the conclusion that this Association ever indulged in any activity except that of realisation which, as Rowlatt, J., has said, 'is not a trade' ........'
21. It is in view of this settled legal position that we have to answer the question posed before us. We are of the opinion that the Tribunal was right in holding that the opponent-society was not a dealer within the meaning of section 2(11) of the Bombay Act. The reasons of our agreement with the view of the Tribunal are as under : In the first place, there is neither a finding, nor any statement of facts in the case stated to us which may warrant the conclusion that the society undertook any activity except with the object of protecting and ameliorating the interests and conditions of its member-workers. Secondly, the objects of the society do not bear out the contention of the learned Government Pleader for the State that the essential characteristic of the activity of the society was commercial and was undertaken with a set purpose of earning profit. It is no doubt true that the promoters of the society set up this organisation for entering into contracts of executing public or private works obtained on tender or otherwise and in pursuance of which it had taken the lease of the quarries from Mehsana Jhilla Panchayat, and the minor minerals won from the river-bed were sold to different customers, and therefore, the tests of frequency, continuity and systematic course which are relevant for determining the nature of the activity were present, but that would not be conclusive and the question whether the society in question was a dealer or not - since in the ultimate analysis the answer will depend on whether there was any intention to carry on business - which can be determined only on consideration of the totality of circumstances. The promoters of the opponent-society have to frame bye-laws for the society for purposes of incorporating it, and no doubt, the bye-laws of the assessee-society for provide for the distribution of profits but the question cannot be determined by looking at those bye-laws in isolation and the substance of the transaction can be ascertained by finding out the intention of the assessee-society which is to be gathered from the totality of the circumstances. The obvious purpose of promoting the society was not to undertake commercial activities with a set purpose of earning profit. No doubt the frequency, volume, continuity and regularity of transactions carried on with a profit-motive may be indicative of the intention to carry on business as held in Raipur Manufacturing Co.'s case : 1SCR618 . However, it should not be lost sight of, as emphasised in Director of Supplies and Disposals' case : 3SCR778 that no single test or group of tests is decisive of the intention to carry on the business, and that it must be decided in the circumstances of each particular case whether an inference could be raised that a particular assessee is carrying on business of purchasing or selling goods within the meaning of a given statute. Thirdly, the assessee-society was trying to realise the best price for the minor minerals which had been won by its members from the river-bed so as to provide labour work for them and ensure them adequate wages for their work with the ultimate object of eliminating unemployment and improving the economic conditions of unskilled manual labourers. The object of protecting the members of the assessee-society who belong to the weaker section of the community could have been fully achieved only through the activity of sale and supply which is apparently commercial in nature but in effect and substance was incidental to effectuate the true objects of the assessee-society. Fourthly, we are unable to read in the objects of the society that its purpose was to undertake commercial activity with a set purpose of earning profit. On the facts and in the circumstances of this case, therefore, we are of the opinion that the promoters of the society before us were solely motivated of protecting the interest of vanjara community which comprises of unskilled illiterate manual labourers engaged individually in winning minor minerals, and therefore, belonging to the weakest section of the society so as to protect them from exploitation by the middle men by providing them with an organisation which would inter alia undertake the working of quarries so as to ensure its members the full-time employment for the proposes of which the society would equip them by necessary tools and instruments and secure adequate and reasonable wages to them and thereby eliminating unemployment and ameliorating their economic conditions. We are, therefore, of the opinion that the Tribunal was perfectly justified in reaching the conclusion that the assessee-society was not a dealer within the meaning of section 2(11) of the Bombay Act and was, therefore, not liable to registration and payment of tax.
22. Our attention has been invited by the learned Government Pleader to a decision of a Division Bench of this Court in Harmadia Vividh Karyakari Sahakari Mandali Ltd. v. Commissioner of Sales Tax  34 STC 409 where the bye-laws of the assessee-society before it registered under the Bombay Co-operative Societies Act, 1925, enabled it to raise funds to advance loans at cheap rates to its members, especially for the needs of farming, and to purchase agricultural implements, household goods, etc., and sell them to its members, non-members and others working in that area, and which bye-laws authorised the society to sell on commission crops of its members as well of the members of the other co-operative societies functioning in that area and also to sell products of village co-operative societies functioning in that area and also to sell products of village industries. Every member of the said society, to whom loan had been advanced by it, was under an obligation to sell his crop in excess of the needs of his family through the society. The society maintained two sets of accounts one for money lending and another for sales and stores. In the course of assessment period from 1st January, 1960, to 6th June, 1961, the society was assessed to tax on its turnover of sale of groundnuts which were sold in a public auction after pooling the groundnuts of all its members by accepting the highest bid of the purchaser who paid the entire consideration to the society which, after deducting its market yard charges at the rate of one paise and commission at the rate of five paise per maund, credited the net sale proceeds to the individual member's account. The Tribunal found that having regard to the fact that there was only one transaction of turnover of sale, the amount of commission earned was less than the expenses incurred for sale, and therefore, the society had not made any profit out of the sale of groundnuts, and therefore, there was no profit-motive on the part of the society which had only for purposes of recovery of its loans stocked and sold the groundnuts of its loanee-members. In that context, the Division Bench of this Court, speaking through T. U. Mehta, J., as he then was, held that the definition of the word 'dealer' in section 2(11) of the Bombay Act clearly covered the case of the assess-society which for commission or remuneration, carried on the business of buying or selling goods in the State and in light of the decision of the Supreme Court in Raipur Manufacturing Co.'s case : 1SCR618 the Division Bench did not feel any doubt in its mind as to the commercial or business activity of the society which first financed its members of production of the goods in question, and after pooling the goods of its members, sold at an advantage so that its agriculturist-members would not be exploited if left to their won resources. The following observation of the Division Bench is pertinent in that behalf :
'......... The whole arrangement of formation of this society as per its bye-laws is pure and simple business arrangement so that these independent agriculturists are not exploited in business dealings if they try to rest on their own shoulders. In such a commercial business arrangement, it can hardly be contended that this is not a business activity which is carried on with a profit-motive, for even Mr. Mody does not say that it is a charitable activity, His only argument is that the society was only serving the members. Probably, the analogy of self-serving, non-profit making institutions like members' club was in the mind of Mr. Mody ..... This is purely a business transaction, where capital is invested with a profit-motive and the goods so financed and produced are ultimately sold through the society. Therefore, the society satisfies all the ingredients of carrying on business activity. It may be that in a particular transaction of auction sale, the commission amount may not be adequate to yield substantial profit to the society. But when the integrated activity of the society is considered as a whole on these undisputed facts, it could hardly lie in the mouth of the society to contend that it is not a selling organisation and its activity is not a business activity carried on with a profit-motive ......'
We do not think that this decision can be of any assistance to the case of the revenue since it is on its peculiar set up of the organisation by the bye-laws of the society that the Division Bench has held that the entire arrangement was pure and simple commercial business arrangement with a profit-motive though in a particular transaction the society might not have earned the profit. We do not think that the organisation set up by the bye-laws of the society with which we are concerned in this reference can have any semblance with the set up of the society Harmadia Vividh Karyakari Mandali referred to above.
23. That takes us to the consideration as to whether the reassessment under section 35 of the Bombay Act was within time. The material part of section 35(1), so far as relevant for the purpose of this reference, reads as under :
'35. (1) If the Commissioner has reason to believe that any turnover of sales or turnover of purchases of any goods chargeable to tax under this Act has in respect of any year escaped assessment, or has been under-assessed or assessed at a lower rate, or that any deductions have been wrongly made, then the Commissioner may, -
(b) where he has reason to believe that the dealer has concealed such sales or purchases of any material particular relating thereto, or has knowingly furnish incorrect returns, at any time within five years, and
(c) in any other case, at any time within five years,
of the end of that year, serve on the dealer liable to pay tax in respect of such turnover, a notice containing all or any of the requisition which may be included in a notice under sub-section (3) of section 33 and may proceed to assess or reassess the amount of the tax due from such dealer; and accordingly, the other provisions of this Act shall apply as if the notice were a notice served under that sub-section.'
It is common ground that there was no concealment of any sales or purchases which would justify reassessment under section 35(1), or any material particular relating thereto or has knowingly furnished incorrect returns. The assessments have been made under section 35 of the Bombay Act pursuant to the notice dated 6th March, 1973, since the earlier notice of 11th March, 1971, which was a notice for the assessment of a combined period of four years was declared to be bad in law and void. The sales tax department has also waived the liability of the assessee-society from 1st April, 1962, which supports the view that there was no wilful default or concealment because the question as to whether the assessee-society was a dealer or not was in dispute between the parties. On these facts and in the circumstances, therefore, if at all the liability of the assessee-society arises, assuming that it is held to be a dealer, it cannot go beyond a period of five years from 1972-73 in which year notices for reassessment were issued. In other words, assessments of the periods prior to 1st April, 1968, are time-barred. In that view of the mater, therefore, we have to answer question No. (2) in the affirmative.
24. The result is that we answer the questions referred to us in the affirmative, that is, in favour of the assessee and against the revenue. There would be no order as to costs in this reference since no appearance was filed on behalf of the assessee-society, and therefore, we had requested Mr. R. D. Pathak to assist us in dealing with this reference which he readily agreed for which we express our gratitude to him.
25. Reference answered in the affirmative.