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Commissioner of Sales Tax, Gujarat, Ahmedabad Vs. Anil Co-operative Credit Society - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtGujarat High Court
Decided On
Case NumberSales Tax Reference No. 14 of 1966
Judge
Reported in[1969]24STC180(Guj)
ActsBombay Sales Tax Act, 1959 - Sections 2, 2(11), 2(19), 2(27), 2(28), 3, 19, 19(1), 19(6), 22, 22(1), 22(5A), 22(6), 50, 61 and 63
AppellantCommissioner of Sales Tax, Gujarat, Ahmedabad
RespondentAnil Co-operative Credit Society
Appellant Advocate J.M. Thakore, Advocate-General and; H.V. Chhatrapati, Adv. i/b., Bhaishanker Kanga and;Girdharlal
Respondent Advocate K.H. Kaji, Adv.
Cases Referred and Bhopal Sugar Industries Ltd. v. D. P. Dube
Excerpt:
sales tax - interpretation - sections 2 (11) and 22 (5-a) of bombay sales tax act, 1959 - respondent engaged in sale of articles and running canteen for benefit of its members on no profit no loss basis - such activity does not amount to business - respondent not dealer within meaning of section 2 (11) - respondent not required to pay sales tax under section 22 (5-a). - - , delivering the judgment of the supreme court has observed at page 609 of the report :it is a well-recognised rule of construction that 'when two or more words which are susceptible of analogous meaning are coupled together noscitur a sociis, they are understood to be used in their cognate sense. ''17. the legislative history as to whether sales tax can be levied on the goods sold or supplied by a society or club.....divan, j. 1. in this reference under section 61 of the bombay sales tax act, 1959 (hereinafter referred to as the act), the following two questions have been referred by the tribunal to this court :- '(1) whether on the facts and in the circumstances of the case, in respect of the sales effected by the canteen during the periods from 16th february, 1960 to 30th june, 1960, 1st july, 1960 to 30th june, 1961, 1st july, 1961 to 30th june, 1962 and 1st july, 1962 to 30th june, 1963, the opponent-society is a dealer within the meaning of the definition of the term 'dealer' contained in clause (11) of section 2 of the bombay sales tax act, 1959 (2) if the answer to question no. (1) is in the negative, whether on the facts and in the circumstances of the case the opponent-society would still be.....
Judgment:

Divan, J.

1. In this reference under section 61 of the Bombay Sales Tax Act, 1959 (hereinafter referred to as the Act), the following two questions have been referred by the Tribunal to this Court :-

'(1) Whether on the facts and in the circumstances of the case, in respect of the sales effected by the canteen during the periods from 16th February, 1960 to 30th June, 1960, 1st July, 1960 to 30th June, 1961, 1st July, 1961 to 30th June, 1962 and 1st July, 1962 to 30th June, 1963, the opponent-society is a dealer within the meaning of the definition of the term 'dealer' contained in clause (11) of section 2 of the Bombay Sales Tax Act, 1959

(2) If the answer to question No. (1) is in the negative, whether on the facts and in the circumstances of the case the opponent-society would still be liable to pay tax during the period it holds registration certificate by virtue of sub-section (5-A) of section 22 of the Bombay Sales Tax Act, 1959 '

2. We may point out that in question No. (1), the reference to '30th January, 1961' in the period 1st July, 1960 to 30th June, 1961, is obviously a mistake and the correct period which should be deemed to have been mentioned in question No. (1) is 1st July, 1960 to 30th June, 1961. In the second line of the first question referred to us, the words 'in respect of' after the word 'case' and before the word 'sales' are not to be found; but we have added those words as on reading those words, the question may be properly understood.

3. The opponent, who is the assessee-society, is a co-operative credit society formed by the employees of Anil Starch Products Ltd., which is a public limited company. The assessee-society was formed with the of acting as broker for the purpose of making collective purchases of household and other articles required by the members and managing hotel and cheap grain shop for the benefit of the members. The assessee-society took over the management of the canteen run in the premises of the Anil Starch Products Ltd. for the benefit of the members. The Sales Tax Officer assessed the society and levied sales tax and general tax on the sales effected by the society during the periods from 16th February, 1960 to 30th June, 1960, 1st July, 1960 to 30th June, 1961, 1st July, 1961 to 30th June, 1962, and 1st July, 1962 to 30th June, 1963. The assessee-society preferred four appeals to the Assistant Commissioner of Sales Tax in respect of each of these four assessment periods. It was contended before the Assistant Commissioner that the assessee-society's members were employees of the company, which company was required to maintain a canteen under the provisions of the Factories Act and that the assessee-society which managed the canteen was not a dealer within the meaning of the definition of 'dealer' under the Act, inasmuch as there was no profit-motive in the canteen activity of the society. The Assistant Commissioner rejected this contention and held that the canteen catered to outside parties over and above the employees and the members of the staff of the factory and, therefore, the activities of the assessee-society were such as would bring it within the purview of the Act. He, therefore, confirmed the order of the Sales Tax Officer and dismissed the four appeals.

4. Against the orders passed by the Assistant Commissioner, four appeals were preferred by the assessee-society to the Sales Tax Tribunal and the Tribunal disposed of the four appeals by a common judgment. The Tribunal held that the third part of the definition of the word 'dealer' in section 2(11) of the Act was not an independent part which was added to the definition but was employed for the purpose of clarification and that the third part would, therefore, be governed by the first part; and the Tribunal in the light of this conclusion held that the opponent-society did not buy or sell any goods to its members in the course of its business and hence was not a dealer. The Tribunal also held that the assessee-society was not liable to be taxed under section 22(5-A), and hence the Tribunal held that the sales effected by the canteen of the assessee-society were not liable to be taxed and it allowed the appeals and set aside the orders passed by the Assistant Commissioner. Thereafter, at the instance of the State of Gujarat, the above-mentioned two Questions have been referred by the Tribunal to this Court.

5. Section 2(11) of the Act provides 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 a 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.'

6. Explanation to section 2(11) is not relevant for the purposes of this judgment.

7. Section 2(28) of the Act defines 'sale' as follows :

'(28) 'Sale' means a sale of goods made within the State, for cash or deferred payment or other valuable consideration, and includes any supply by a society or club or an association to its members on payment of a price or of fees or subscription, but does not include a mortgage, hypothecation, charge or pledge; and the words 'sell', 'buy' and 'purchase', with all their grammatical variations and cognate expressions, shall be construed accordingly.'

8. Explanation to section 2(28) is not relevant for the purposes of this judgment. Section 2(19) of the Act defines a 'person' by an inclusive definition and is as follows :

'(19) 'Person' includes any company or association or body of individuals, whether incorporated or not, and also a Hindu undivided family, a firm and a local authority.'

9. It is common ground before us that under the provisions relating to co-operative societies under which the assessee-society was registered and incorporated, it is an incorporated body having a separate legal entity and common seal and perpetual succession. Section 22 of the Act provides as follows :

'22. (1) No dealer shall, while being liable to pay tax under section 3 or under sub-section (6) of section 19, carry on business as a dealer, unless he possesses a valid certificate of registration as provided by this Act.

* * * (2) Every dealer, required by sub-section (1) to possess a certificate of registration, shall apply in the prescribed manner, to the prescribed authority.

* * * (5-A) If any person upon an application made by him has been registered as a dealer under this section, and thereafter it is found that he ought not to have been so registered under the provisions of this section, he shall be liable to pay tax on his sales or purchases made during the period commencing on the date on which his registration certificate took effect and ending with its cancellation, notwithstanding that he may not be liable to pay tax under section 3.'

10. Before I go to discuss the effect of the different provisions set out above, I will refer to the principles which are required to be followed by courts while interpreting the provisions of taxing statutes and provisions in statutes similar to the present one.

11. In The Empress Mills, Nagpur v. The Municipal Committee, Wardha, (A.I.R. 1958 S.C. 341.), the Supreme Court has pointed out in para. 5 of the judgment at page 344 that in construing the words of a taxing statute, if there are two possible interpretations, then effect is to be given to the one which favours the citizen and not the one that imposes a burden on him. The Supreme Court in that particular case was dealing with the provisions of the C.P. and Berar Municipalities Act of 1922 and the Terminal Tax Rules framed under the Act; and the principle which was applied by the Supreme Court was that if in the interpretation of a particular term, there is a doubt, the doubt must be construed against the taxing authority and in favour of the taxpayer and the construction to be placed on the term should be one that favours the taxpayer in accordance with the principle of construction of taxing statutes which must be strictly construed. It was held by the Supreme Court in that case that the terms of the section cannot be enlarged by mere construction so as to include within the operation of the term 'terminal tax', goods which are in transit and are being transported across the jurisdictional limits of the municipality.

12. In Kalidas Dhanjibhai v. The State of Bombay (A.I.R. 1955 S.C. 62.), the Supreme Court interpreted the meaning of the word 'shop' in section 2(27) of the Bombay Shops and Establishments Act, 1948; and the question was whether 'such trade or business' occurring in that definition related to the earlier part of the definition. The 'shop' in that particular statute was defined as follows :

''Shop' means any premises where goods are sold, either by retail or wholesale or where services are rendered to customers, and includes an office, a store room, godown, warehouse or work place, whether in the same premises or otherwise mainly used in connection with such trade or business but does not include a factory, a commercial establishment, residential hotel, restaurant, eating house, theatre or other place of public amusement or entertainment.'

13. It was contended that the word 'such' occurring in the phrase 'such trade or business' related to the opening words of the definition which read 'any premises where goods are sold'. This contention was negatived by the Supreme Court and it was held that the words 'such trade or business' meant business of the kind defined in the earlier part of the definition.

14. In M. K. Ranganathan v. Government of Madras (A.I.R. 1955 S.C. 604.), the Supreme Court dealt with the principles of interpretation of statutes and in para. 21 of the judgment, Bhagwati, J., delivering the judgment of the Supreme Court has observed at page 609 of the report :

'It is a well-recognised rule of construction that 'when two or more words which are susceptible of analogous meaning are coupled together noscitur a sociis, they are understood to be used in their cognate sense. They take, as it were, their colour from each other, that is, the more general is restricted to a sense analogous to the less general' (Maxwell on Interpretation of Statutes, Edition 10, page 332). The Judicial Committee of the Privy Council also expressed itself in similar terms in Angus Robertson v. George Day ((1879) 5 App. Cas. 63 at p. 69.) :

'It is a legitimate rule of construction to construe words in an Act of Parliament with reference to words found in immediate connection with them'. Having regard therefore to the context in which those words 'any sale held without leave of the court of any of the properties' have been used in juxtaposition with 'any attachment, distress or execution put into force without leave of the court against the estate or effects' it would be a legitimate construction to be put upon them that they refer only to sales held through the intervention of the court and not to sales effected by the secured creditor outside the winding up and without the intervention of the court.

15. There is also a presumption against implicit alteration of law and that is enunciated by Maxwell on Interpretation of Statutes, Edition 10, at page 81, in the following terms :

'One of these presumptions is that the Legislature does not intend to make any substantial alteration in the law beyond what it explicitly declares, either in express terms or by clear implication, or, in other words, beyond the immediate scope and object of the statute. In all general matters outside those limits the law remains undisturbed.

It is in the last degree improbable that the Legislature would overthrow fundamental principles, infringe rights, or depart from the general system of law, without expressing its intention with irresistible clearness ......'

16. This passage from Maxwell was approved by their Lordships of the Privy Council in Murugiah v. Jainudeen (1954] 3 W.L.R. 682 at p. 684.), and their Lordships agreed that the law was correctly stated in the passage just cited. To the same effect are also tile observations of the Court of Appeal in England in National Assistance Board v. Wilkinson ([1952] 2 Q.B. 648.), where it was held that the statute is not to be taken as effecting a fundamental alteration in the general law unless it uses words pointing unmistakably to that conclusion. Lord Goddard, C.J., observed in that case :

'But it may be presumed that the Legislature dos not intend to make a substantial alteration in the law beyond what it expressly declares. In Minet v. Leman ([1855] 20 Beav. 269.), Romilly, M.R., stated as a principal of construction which could not be disputed that 'the general words of the Act are not to be so construed as to alter the previous policy of the law, unless no sense or meaning can be applied to those words consistently with the intention of preserving the existing policy untouched.''

17. The legislative history as to whether sales tax can be levied on the goods sold or supplied by a society or club to its members is quite interesting. In several case in the past, i.e., before the enactment of Bombay Sales Tax Act, 1959, both of the Bombay High Court and of other High Courts, this question was considered and it was held, for instance, in Gondwana Club, Nagpur v. Sales Tax Officer No. II, Nagpur, ([1958] 9 S.T.C. 450.), that when a club sold or supplied goods to its members, it was not a dealer within the meaning of the C.P. and Berar Sales Tax Act.

18. So far as this aspect of the matter is concerned, the matter has now been set at rest by the Supreme Court in Deputy Commercial Tax Officer, Saidapet, Madras, and Another v. Enfield India Ltd. Co-operative Canteen Ltd. ([1968] 21 S.T.C. 317.) In that particular case it was held by the Supreme Court that a co-operative society registered under the Madras Co-operative Societies Act, 1932, and formed with the object of providing a canteen for supplying refreshments to the employees of a limited liability company without a profit-motive, was liable to pay sales tax under the Madras General Sales Tax Act, 1959, on its turnover from refreshments supplied to its members. The Supreme Court held in that case that a co-operative society registered under the Madras Co-operative Societies Act, 1932, is by virtue of section 20 of that Act a body corporate with perpetual succession and a common seal, and with power to hold property, to enter into contracts, to institute and defend suits and other legal proceedings and to do all things necessary for the purposes for which it was constituted. Such a co-operative society which carries on the business of supplying goods to its members for cash or deferred payment falls within the definition of 'dealer' in section 2(g) of the Madras Sales Tax Act; and at page 322 of the report it was pointed out by Shah, J., delivering the judgment of the Supreme Court as follows :

'When a co-operative society supplies to its members for a price refreshment in the canteen maintained by it, the four constituent elements of sale are normally present : the parties are competent to contract; there is mutual assent; refreshments which belonged absolutely to the society stand transferred to the buyer and price is either paid or promised.

* * * The society is a person : the property in the refreshments which it supplies to its members is vested in the society and when refreshments are supplied for a price paid or promised transfer of property in the refreshments results. In the case of an unincorporated society, club or a firm or an association ordinarily the supply and distribution by such a society, club, firm or an association of goods belonging to it to its members may not result in sale of the goods which are jointly held for the benefit of the members by the society, club, firm or the association, when by virtue of the relinquishment of the common rights of the members the property stands transferred to a member in payment of a price, and the transaction may not prima facie be regarded as a 'sale' within the meaning of the Act. By providing that a transfer of property ill goods from a corporate body to its members for a price, the Legislature does not overstep the limits of its authority, and it cannot on that account be held that the first Explanation to section 2(n) is in its entirety ultra vires the State Legislature.

* * * There is nothing on the record of the case which shows that the society is acting merely as an agent of its members in providing facilities for making food available to the members. From the mere fact that the society supplying refreshments to its members only and claims to make no profit, it, cannot be inferred that in preparing refreshments, and making them available to its members it is acting as an agent of the members. Nor can it be said that the society is holding its property including refreshments prepared by it for supply to its members as a trustee for its members.'

19. The Supreme Court in that case distinguished the decisions of the Courts in England dealing with cases of quasi-criminal nature, where the substance of the transaction, rather than the legal form in which it might have been clothed, had to be determined. In those cases decided by the Courts in England, it was held that if in substance the property in the liquor held by the club - whether incorporated or unincorporated - was vested in the members, when a member received and paid for it, there was no sale within the meaning of the Licensing Act, but there was a transfer of a special property in the goods from all the other members of the club to the consumer in consideration of the price paid. After thus pointing out the point of distinction between those cases decided by the Courts in England and the case before it, the Supreme Court observed at page 325 of the report :

'We are not dealing in this case with liability, criminal or quasi-criminal. The question is one of liability under a taxing statute and the court in determining the liability of the society to pay tax cannot ignore the form and look at what is called the 'substance of the transaction. Ex facie, the transaction is one in which the legal owner of property transfers it to another pursuant to a contract for a price, and that transaction must be regarded as a sale. Whether by appropriate provisions in the Articles of Association or Rules, a scheme may be devised under which the goods supplied may be treated as belonging to the members of the society, and the society merely acts as an agent in supplying the food to its members, need not be considered in the present case. It will suffice to state that it cannot be urged as a proposition of law that when a co-operative society supplies to its members refreshments for a price under a scheme for distribution or supply of refreshments, the transaction can in no event be regarded as a sale of the refreshments supplied for a price.

We are not called upon in this case to decide whether an unincorporated club supplying goods for a price to its members may be regarded as selling goods to its members.'

20. Thus so far as the question of an incorporated society supplying the goods to its members is concerned, the above decision of the Supreme Court clearly establishes that such supply of goods by the incorporated society to its members would amount to a sale and when the Legislature provides that such supply amounts to a sale, the Legislature does not overstep the limits of its authority; and it cannot be held that such provision in the legislation is entirely ultra vires the State Legislature.

21. The above decision of the Supreme Court has to be borne in mind while interpreting the meaning of the word 'sale' occurring in the sales tax legislation, because in its earlier decision in The State of Madras v. Gannon Dunkerley & co. (Madras) Ltd. ([1958] 9 S.T.C. 353.), the Supreme Court had pointed out that the expression 'sale of goods' in entry 48 in List II of Schedule VII of the Government of India Act, 1935, cannot be construed in its popular sense but must be interpreted in its legal sense and should be given the same meaning which it has in the Sale of Goods Act, 1930; and it is a nomen juris its essential ingredients being an agreement to sell movables for a price and property passing therein pursuant to that agreement. I may point out that so far as the provision in the Constitution of India is concerned, entry 54 in List II (State List) of the Seventh Schedule to the Constitution provides :

'54. Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92A of List I.'

22. Entry 92-A of List I provides :

'Taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce.'

23. The above entry 54 of List II was substituted, and entry 92A of List I was inserted, by the Constitution (Sixth Amendment) Act, 1956. The result, therefore, is that the observations of the Supreme Court in Gannon Dunkerley's case ([1958] 9 S.T.C. 353.) regarding the meaning of the expression 'sale of goods' occurring in the relevant entry in the Government of India Act, 1935, would also apply to the expression occurring in entry 54 of List II, Seventh Schedule, to the Constitution of India. The decision of the Supreme Court in Enfield Canteen's case ([1968] 21 S.T.C. 317.) makes it clear that so far as an incorporated society is concerned, when it supplies goods to its members for a price, it is a sale within the meaning of the Sale of Goods Act and, therefore, if the definition of the word 'sale' in a legislation enacted by a State Legislature provides that supply by an incorporated society to its members for a price is a sale, such a provision in the State legislation is not ultra vires.

24. It was urged before us on behalf of the State by the learned Advocate-General that even if the definition of the word 'dealer' in section 2(11) of the Act were to be so interpreted as to mean that even a society, a club or other association of persons, which buys or sells goods to its members, must carry on the business of buying goods from or selling goods to its members, the word 'business' must be interpreted as a regular and well-continued activity and that the profit-motive does not form part of a business activity. In this connection, it may be pointed out that whatever the scope of the word 'business' might be in other pieces of legislation, so far as the sales tax legislation is concerned, it has been held in three different decisions of the Supreme Court that in connection with the sales tax legislation the word 'business' must be ordinarily interpreted as an activity carried on with a profit-motive.

25. In The State of Andhra Pradesh v. H. Abdul Bakshi and Bros. ([1964] 15 S.T.C. 644.), the Supreme Court interpreted the expression 'business' occurring in the Hyderabad General Sales Tax Act, 1950. There the Supreme Court pointed out that 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 dealing either actually continued or contemplated to be continued with a profit-motive, and not for sport or pleasure. But to be a dealer under the Hyderabad General Sales Tax Act, 1950, a person need not follow the activity of buying, selling and supplying the same commodity. Mere buying for personal consumption, i.e., without a profit-motive, will not make a person dealer within the meaning of the Act, but a person who consumes a commodity bought by him in the course of his trade, or use in manufacturing another commodity for sale, would be regarded as a dealer.

26. In The State of Gujarat v. Raipur . ([1967] 19 S.T.C. 1.), Shah, J., delivering the judgment of the Supreme Court pointed out :

'Under the Bombay Sales Tax Act, 1953, the aggregate of the price received and receivable by a person carrying on business of selling goods is liable to be included in his taxable turnover. It follows as a corollary that in the turnover of a person carrying on the business of selling one commodity will not be included the price received by him by sale of another commodity unless he carries on the business of selling that other commodity. That is so because within the meaning of section 2(6) of Bombay Act 3 of 1953 to be a dealer a person must carry on the business of selling those goods, price whereof is sought to be included in the turnover. In other words, he must carry on the business of selling a commodity before his turnover from the sale of that commodity is taxable. As pointed out by this Court in State of Andhra Pradesh v. Abdul Bakshi and Bros. ([1964] 15 S.T.C. 644.), a person to be a dealer must be engaged in the business of buying or selling or supplying goods. 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 dealing, 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, the 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.'

27. In that particular case, the Supreme Court applied the test of a casual trading activity as distinguished from a regular trading activity and held that when a subsidiary product turned up regularly and continuously and was being sold from time to time, intention to carry on business in such a product may be reasonably attributed to the assessee. It was also held that a person who sells goods which are unserviceable to his business does not become a dealer in those goods, unless he has an intention to carry on business in selling those goods.

28. The same meaning of the word 'business' so far as a taxing statute was concerned was again held to be the meaning in Director of Supplies and Disposals, Calcutta v. Board of Revenue ([1967] 20 S.T.C. 398.). There Sikri and Ramaswami, JJ., cited the decisions in H. Abdul Bakshi & Bros.'s case ([1964] 15 S.T.C.) and Raipur Mfg. Co.'s case ([1967] 19 S.T.C. 1.); and it was held by Sikri and Ramaswami, JJ., (Shah, J., case dissenting) that the Director of Supplies and Disposals was not carrying on the business of buying or selling goods within the meaning of section 2(c) of the Bengal Finance (Sales Tax) Act, 1941. He was not selling surplus goods for profit but he was merely disposing of the surplus material by way of realisation and the transactions were therefore not taxable as sales under the Act; and the Director was not a dealer within the meaning of section 2(c). The learned Judges who constituted the majority applied the test of the profit-motive in order to decide whether the Director of Supplies and Disposals was carrying on the business of buying or selling goods.

29. In the light of these three decisions of the Supreme Court, it is clear that so far as the expression 'business' occurring in section 2(11) of the Act is concerned, it must be interpreted to mean an activity carried on with the profit-motive. It is common ground before us that the assessee-society in the instant case is not carrying on its canteen activities with a profit-motive and I will proceed in the course of this judgment on the footing that there is no profit-motive of the assessee-society in running its canteen. In arriving at my conclusions in the course of this judgment, I will not take into consideration the fact that on some occasions the canteen of the assessee-society supplies goods to non-members as well because the primary object of the society is to supply refreshments etc. to its members. In the light of this conclusion regarding the profit-motive, the contention urged before us by the learned Advocate- General, whereby he canvassed for the wider meaning of the word 'business' must be rejected and it must be held that in order to amount to 'business' in the definition of 'dealer' in section 2(11) of the Act, the activity must be carried on ordinarily with a profit-motive.

30. In Gondwana Club, Nagpur v. Sales Tax Officer No. II, Nagpur ([1958] 9 S.T.C. 450.), a Division Bench of the Bombay High Court sitting at Nagpur, held that in order that a person may be a 'dealer' under the C.P. and Berar Sales Tax Act, 1947, he must carry on the business of selling or supplying goods. The words 'selling' or 'supplying goods' in the latter part of the definition of 'dealer', which speaks of a society, club or association, must also be construed to mean selling or supplying goods in the course of business. Therefore, in the case of a members' club unless the selling or supplying of goods by the club to its members is done as a business, that is, with a profit-making motive, the club cannot be a dealer under the Act. At page 452 of the report, the definition of the word 'dealer' occurring in section 2(c) of the C.P. and Berar Sales Tax Act has been set out as follows :

'Dealer' 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, club or association selling or supplying goods to its members.'

31. At page 453 of the report, Vyas, J., delivering the judgment of the Division Bench observed :

'A society, club, or association is referred to in the concluding portion of the definition of 'dealer' and the concluding portion of the definition says that the term 'dealer' includes also 'a society, club or association selling or supplying goods to its members'. The well settled rule of construction requires that the two parts of the definition must be harmonized. The words 'selling or supplying goods' occur in the earlier part of the definition of 'dealer', and they also occur in the latter part of the definition, and at both the places they must be so construed as to bear the same connotation. To start with, the definition of 'dealer' says that a dealer means a person who does selling or supplying of goods as a business. Therefore, in the context, the words 'selling or supplying goods' in the latter part of the definition, which speaks of a society, club or association, must also be construed to mean selling or supplying goods in the course of business. If the element of business is excluded from the connotation of the words 'selling or supplying goods', when they are used in the context of a society, club or association in the latter part of the definition, a conflict would arise between the two parts of the definition and that must be avoided. It is, therefore, clear that unless the selling or supplying of goods by the club to its members is done as a business the club cannot be a 'dealer' under the Act. On the other hand, if the club sells goods or supplies them to its members and does it as a business, it would be a dealer under the Act and it would be illegal for it to carry on that business unless it has been registered as a dealer and possesses a registration certificate.'

32. This decision of the Division Bench of the Bombay High Court delivered prior to the bifurcation of the State of Bombay in 1960, would ordinarily be binding on us but there are certain points of distinction between the C.P. and Berar Sales Tax Act and the Bombay Sales Tax Act, 1959. So far as the C.P. and Berar Sales Tax act was concerned, the definition of the word 'sale' occurring in that enactment did not include any supply by a society or club or an association to its members on payment of price, which has been included in the definition of the word 'sale' occurring in section 2(28) of the Bombay Act. Further the words 'selling or supplying goods' which occur in section 2(c) of the C.P. and Berar Sales Tax Act took colour from the context in which they were occurring. The principle of noscitur a sociis, which has obviously been applied by the Division Bench was applicable in that particular case because the definition of the word 'dealer' started as meaning a person who carried on the business of selling or supplying goods and included a from, a partnership, Hindu undivided family and the Central or State Government or any of their departments and also included a society or a club or association selling or supplying goods to its members. Therefore, this definition under section 2(c) of the C.P. and Berar Sales Tax Act clearly indicated that so far as a firm, a partnership, a Hindu undivided family and the Central or State Governments were concerned, each of those entities would be a 'dealer' only if that entity carried on the business of selling or supplying goods. Thus, the words 'selling or supplying goods' occurring in that statute were so much associated with the business of selling or supplying goods so far as the rest of the entities occurring in section 2(c) of the C.P. and Berar Sales Tax Act were concerned that the same words 'selling or supplying goods' occurring in the context of society, club or association were held by the Division Bench to take colour from the earlier portion of the definition; and it was held by the Division Bench that the principle of harmonious construction must be applied and 'selling or supplying goods' when used in the context with a society, or a club or an association also indicated that the society, club or association must be carrying on the business of selling or supplying goods. On the other hand, under section 2(11) of the Bombay Act, a 'dealer' means any person who 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, meaning thereby that the Central Government or any State Government carrying on the business of buying or selling goods shall be included in the definition of the word 'dealer'; and there is no indication in the definition under section 2(11) that a society, club or association of persons must carry on the business of buying goods from or selling goods to its members in order to be included in the definition of a dealer. In the first portion of the definition of 'dealer', where the business of buying and selling of goods is referred to the expression is 'buying or selling goods'. In the second portion of the definition of the word 'dealer', which refers to the Central Government or any State Government, it has been expressly stated, 'which carries on such business', meaning thereby the business of buying or selling of goods. The context makes it clear that the words 'such business' occurring in the second portion of the definition which refers to the Central Government or any State Government, are only referable to the activities of the Central Government or any State Government. It is, therefore, clear that so far as the first two portions of the definition are concerned, viz., portions dealing with any person and the Central Government or any State Government, the Legislature has defined a dealer as either meaning a person who carries on the business of buying or selling goods, or Central or State Government which carries on the business of buying or selling goods in the State. So far as any society, club or other association of persons is concerned, on the other hand, the words 'such business' occurring in the second portion of the definition do not govern 'such society, club or other association of persons'; and moreover, instead of using the expression 'buying or selling persons goods', the expression is 'buys goods from or sells goods to'. Therefore, the principle of noscitur a sociis or what the Division Bench of the Bombay High Court in Gondwana Club's case ([1958] 9 S.T.C. 450.) has referred to as the principle of harmonious construction, does not come into play since the expressions used in the first portion of the definition of 'dealer' and the expression used in the third portion of the said definition are entirely different. In the first portion the words are 'buying or selling goods'. In the last portion the words are 'buys goods from or sells goods to'. The two expressions occurring in the first and the third portions of the definition being different, there is no question of the words 'buys goods from or sells goods to' occurring in the last portion of the definition deriving colour from the first portion of the definition. In my opinion, therefore, the decision of the Division Bench in Gondwana Club's case (A.I.R. 1955 S.C. 604.) can be clearly distinguished because of the definition of the word 'dealer' before us and that decision is not binding on us so far as the definition of the word 'dealer' in section 2(11) of the Act is concerned.

33. It was contended on behalf of the assessee-society in this connection that the Legislature does not intend to make any substantial alteration either in express terms or by clear implications, beyond the minimum scope and object of the statute referred to by Bhagwati, J., in M. K. Ranganathan's case (A.I.R. 1955 S.C. 604.), and it was urged on behalf of the assessee that when the Legislature enacted the Bombay Sales Tax Act, 1959, it must not have intended to alter the position qua any society, club or other association of persons supplying or selling goods to its members. After the decision of the Supreme Court in M. K. Ranganathan's case (A.I.R. 1955 S.C. 604.), it is clear that if the Legislature explicitly declares, either in express terms or by clear implication, that it intends to make any substantial alteration law as it existed prior to such enactment, then those express terms or clear implications in the subsequent piece of legislation must be given effect to. In the instant case, as I will point out later in the course of this judgment, by the definition of the word 'sale' in section 2(28) and by providing that the words 'sell', 'buy' and 'purchase' with their grammatical variations and cognate expressions have to be construed in the light of the word 'sale' occurring in section 2(28), the Legislature clearly expressed its intention to depart from the position of law which prevailed prior to the enactment of the Bombay Sales Tax Act, 1959.

34. In my opinion, if the word 'dealer' occurring in section 2(11) were to be interpreted in the manner in which the assessee wants us to interpret it, viz., in the sense that the society, club or other association of persons must carry on the business of buying goods from or selling goods to its members before that entity can be said to be a dealer within the meaning of section 2(11), it would render the last portion of the definition of the word 'dealer' mere surplusage. Both under the Bombay General Clauses Act as well as under section 2(19) of the Bombay Sales Tax Act, 1959, any company, association or body of individuals, whether incorporated or not, is included in the definition of the word 'person' and, therefore, any society, club or other association of persons carrying on the business of buying or selling goods in the State would automatically come within the first portion of the definition of 'dealer' in section 2(11) of the Act. If the last portion of the definition of the word 'dealer' in section 2(11) dealing with any society, club or other association of persons were to be included in the wording of the definition only when such society, club or other association buys goods from or sells goods to its members in the course of business, i.e., the business activity carried on with profit-motive, there was no necessity to provide for such society, club or other association of persons in the last portion of the definition of the word 'dealer'.

35. That takes me to the meaning to be attributed to the word 'includes'. It is true that in the definition of the word 'dealer' immediately before the words 'any society, club or association of persons' only the words 'and also' are used and the word 'includes' is not used expressly in connection with society, club or other association of persons; but it is common ground before us that in the context of the definition of the word 'dealer' the word 'includes' which precedes 'Central Government or any State Government' would also govern the last portion dealing with any society, club or other association of persons.

36. There are several authorities regarding the scope of the word includes' occurring in the definition clauses of statutes. The leading case on the subject is the decision of the Privy Council in Dilworth and Others v. The Commissioner of Stamps ([1899] A.C. 99.), At page 105 of the report Lord Watson delivering the judgment of their Lordships of the Privy Council observed :

'The word 'include' is very generally used in interpretation clauses in order to enlarge the meaning of words or phrases occurring in the body of the statute; and when it is so used these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import, but also those things which the interpretation clause declares that they shall include. But the word 'include' is susceptible of another construction, which may become imperative, if the context of the Act is sufficient to show that it was not merely employed for the purpose of adding to the natural significance of the words or expressions defined. It may be equivalent to 'mean and include', and in that case it may afford an exhaustive explanation of the meaning which, for the purposes of the Act, must invariably be attached to these words or expressions.'

37. Therefore, according to this passage in the above case, the word 'includes' must be construed as comprehending, not only such things as it signifies according to its natural import, but also those things which the interpretation clause declares that they shall include. The other construction of the word 'include' is susceptible to make it equivalent to 'mean and include' if the context of the Act so requires. But it must be pointed out that Lord Watson in this leading case does not mention that the second meaning is for the purpose of removing doubts or by way of abundant caution.

38. In re Power : Public Trustee v. Hastings ([1947] 1 Ch. 572.), Jenkins, J., was dealing with the expression 'including' occurring in the investment clause of a will and the question was whether the purchase of a freehold house for the testator's widow and children was an investment in a freehold property within the meaning of investment clause 8. At page 572 of the report, the relevant clause of the will has been reproduced and is in these terms :

'All moneys requiring to be invested under this my will may be invested by the trustee in any manner in which he may in his absolute discretion think fit in all respects as if he were the sole beneficial owner of such moneys including the purchase of freehold property in England or Wales.'

39. Interpreting this word 'including' at page 574 of the report Jenkins, J., observed :

'It seems to me that the words 'including the purchase of freehold property in England or Wales' can be sufficiently accounted for by regarding them as having been inserted by the draftsman ex super abundanti cautela to make sure that no one could suggest that this clause did not extend to the purchase of freehold property as an investment. I think it is pressing the argument altogether too far to say that the effect of inserting those words must be to introduce some process which is not investing at all. If one look at the grammar of the clause, one finds that including' refers back to 'in any manners. So one gets 'moneys ............. may be invested ........... in any manner ............. including' a particular manner. That seems to me to lead to the conclusion that what is said in clause 8 is that the manners or modes of investment authorized are to include investment in the purchase of freehold property. Therefore, it seems to me that this clause, on its true construction, only authorizes the purchase of freehold property as an investment.'

40. In B. P. Krishnamurthy v. State of Mysore ([1962] 13 S.T.C. 436.), the Mysore High Court after citing the observations of Lord Watson in Dilworth's case ([1899] A.C. 99.) observed :

'Ordinarily, the word 'including' as contrasted with the word 'namely imports addition indicating something not already included, whereas the word 'namely' imports interpretation.

But that is not how, in my opinion, the word 'including' has necessarily to be interpreted and understood wherever that expression occurs in a statute or elsewhere. It is common knowledge that in definitions contained in many statutes the definition is merely inclusive and the word 'includes' is employed in such definitions by way of abundant caution so that the expression defined might not be understood to eliminate from its ambit, matters and things which the definition says should be included.'

41. The question then arises whether in the context of the word 'dealer' occurring in section 2(11) of the Act, the last portion of the definition dealing with any society, club or association of persons, was included by way of abundant caution or was brought into the definition to include a category which, but for such inclusion, would not be within the definition of the word 'dealer's. It is clear that so far as the first two categories are concerned, unless any person other than a society, club or association of persons is carrying on the business of buying or selling goods, he cannot be a dealer. It is also clear from the second portion of the definition that the Central Government or any State Government which ordinarily would not be a person would not become a dealer but for the inclusive definition applied to the second part, and the Central or State Government is included in the definition of the word 'dealer' when such Government carries on the business of buying or selling goods in the State. So far as the last portion of the definition of the word 'dealer' is concerned, there was no necessity, as I have pointed out earlier, for the recourse to the inclusive definition for the purpose of bringing 'any society, club or other association of persons' within the ambit of the word 'dealer' only if such society, club or other association of persons which bought goods from or sold goods to its members as a business activity with a profit-motive was to be brought within the definition of the dealer. The purpose of not leaving out of the definition of the word 'dealer' such society, club or association of persons carrying on the business of buying goods from or selling goods to its members, was amply served by the definition of the word 'sale' occurring in section 2(28) of the Act, where the words are 'includes any supply by a society or club or an association to its members'. What was supplied by a society or an association to its members was included within the definition of the word 'sale'; and the expressions 'sell', 'buy' and 'purchase', with all their grammatical variations and cognate expressions have got to be construed with reference to the word 'sale'. It is, therefore, clear to me that the words 'any society, club or other association of persons which buys goods from, or sells goods to, its members' occurring in the third portion of the definition of the word 'dealer' have not been included by way of abundant caution but have been enacted in the third portion of the definition of the word 'dealer' in order to bring within its category certain entities which would not otherwise have been included within the definition of the word 'dealer' since they are not persons carrying on the business of buying or selling goods with a profit-motive. In my opinion, the word 'includes' so far as it is applicable to any society or club or other association of persons occurring in the third portion of the definition is concerned, it enlarges the class of persons which would be falling within the first portion and has not been enacted merely with a view to indicate that the society, club or other association of persons carrying on the business of buying goods from or selling goods to, its members, have not been excluded from the purview of the definition of the word 'dealer'.

42. In view of this conclusion of mine, and particularly in the light of the judgment of the Supreme Court in Enfield India Canteen's case, ([1968] 21 S.T.C. 317.), it is clear that the assessee-society which is an incorporated body, is a dealer within the definition of the word 'dealer' occurring in section 2(11) of the Act.

43. It is true that in the definition of the Madras General Sales Tax Act, 1959, the words 'whether or not in the course of business' occur in explanation (1) to section 2(n), which defines 'sale'; and in the explanation to section 2(g), which defines 'dealer' it was provided :

'A society (including a co-operative society), club or firm or an association which, whether or not in the course of business, buys, sells, supplies or distributes goods from or to its members for cash, or for deferred payment, or for commission, remuneration or other valuable consideration, shall be deemed to be a dealer for the purposes of this Act.'

44. In my opinion, the fact that the words 'whether or not in the course of business' are not to be found in the third portion of the definition of the word 'dealer' occurring in section 2(11) of the Act, makes no difference so far as the definition in section 2(11) is concerned. In the manner in which that definition has been framed, it is clear that the business of buying and selling has to be carried on only by any person referred to in the first portion of the definition, or by the Central Government or any State Government referred to in the second portion of the definition; and, therefore, in the context in which it occurs and the words in which the definition has been couched, the non-inclusion of the words 'whether or not in the course of business' makes no difference to the interpretation of the words occurring in the third portion of the definition of the word 'dealer'. It was not necessary to have recourse to the words 'whether or not in the course of business' so far as the society, club or other association of persons referred to in the third portion of the definition were concerned, because the definition of the word 'sale' makes it clear that any supply by a society, club or an association to its members on payment of a price or of fee or subscription is a sale; and it is a sale of that category which is referred to in the last portion of the definition of the word 'dealer' in section 2(11) of the Act, viz., 'buys goods from, or sells goods to, its members'. Any society, club or other association of persons which buys goods from or sells goods to its members as defined in the definition of the word 'sale' in section 2(28) of the Act, would automatically come within the third portion of the definition and, therefore, it was not necessary for the Legislature to mention 'whether or not in the course of business' when laying down the third portion of the definition. In my opinion, the absence of the words 'whether or not in the course of business' in the third portion of the definition makes no difference to the interpretation of the word 'dealer'.

45. In coming to my conclusions, I have borne in mind that the Legislature should not be presumed to have done anything in vain and that all the words occurring in a statute should be given their proper meaning and the Legislature should not be attributed the intention of providing any surplusage.

46. I, therefore, answer question No. (1) in the affirmative. Question No. (2) does not arise for consideration because it requires consideration only if question No. (1) is answered in the negative and, therefore, ordinarily I would not have answered that question in view of my answer to question No. (1); but since the question has been referred and since arguments have been advanced before us on the interpretation of section 22(5-A) of the Act. I will deal with the same. It appears to me that the governing words of section 22-(5A) are : 'notwithstanding that he may not be liable to pay tax under section 3.' Therefore, section 22(5-A) is a non obstante clause to section 3 of the Act and lays down the circumstances in which a person who would not otherwise be liable to pay tax under section 3 can still be made liable to pay tax and those circumstances are :-

(1) He must be a person;

(2) He must have been registered as a dealer upon an application made by him under section 22 of the Act; and

(3) Subsequently, after registration it has been found that he ought not to have been so registered under the provisions of section 22.

47. If all these conditions are satisfied, then such person is made liable to pay tax on his sales or purchases made during the period commencing from the date on which the registration certificate took effect and ending with its cancellation. The reason for making this provision is clear, viz., that a registered dealer under the scheme of the Sales Tax Act has not to pay tax on his sales or his purchases during the period for which the registration is in existence. Cancellation has been provided for under section 22(6) and until the cancellation takes effect by virtue of the registration as a dealer, any person who ought not to have been so registered under section 22 but has in fact been so registered enjoys the benefit of exemption of his sales or purchases made to or from registered dealers from sales tax and purchase tax. Under these circumstances, what is sought to be done by the Legislature is to collect the tax from such a person who could have avoided levy because of the existence of registration certificate. Section 22(5-A) of the Act does not deal with a 'dealer' at all. It deals with a person whose purchases and sales have escaped taxation because of registration when in fact he ought not to have been registered at all under section 22. It is in this exceptional case that section 22(5-A) comes into play and, in may opinion, since these conditions which are analysed above, apply to the assessee-society, even if I were wrong in my conclusion regarding question No. (1) the assessee-society would still be liable to pay tax under section 22(5-A); and even if I were wrong in my conclusion regarding question No. (1), I would answer question No. (2) in the affirmative.

48. In my opinion, the questions referred to us should be answered as follows :-

Q. No. Answers

(1) In the affirmative.

(2) Does not arise in view of my answer to question No. (1). If necessary, in the affirmative.

49. The assessee-society should pay the costs of this reference to the State of Gujarat.

50. P. C. - In view of the difference of opinion on the points which clearly emerge from our respective judgments, the case should now be placed under clause 36 of the Letters Patent of this High Court before one or more of the other Judges and the points should be got decided as laid down in that clause.

Mehta, J.

51. With great respect to my learned brother, I beg to differ on the first Question referred to us. I, therefore, record my separate opinion in this reference as under.

52. The short question which arises in this reference is :

'Whether a co-operative society canteen which sells or supplies articles to its members and which is run without any profit-motive, in compliance with the provisions of the Factories Act, 1948, can be called a 'dealer' under section 2(11) of the Bombay Sales Tax Act, 1959, hereinafter referred to as the 'Act'. If not, whether merely because the society was registered as 'a dealer' it is liable to be taxed on its sales.'

53. The short facts which have given rise to this reference are as under :

The opponent-society, viz., Anil Co-operative Credit Society Limited, hereinafter referred to as 'the society', was formed by the employees of the Anil Starch Products Ltd., hereinafter referred to as 'the company'. The object of the society was to act as a broker for the purpose of making collective purchases of household and other articles required by the members and to manage a hotel or canteen and to run a cheap grain shop for the benefit of the members. The society took over the management of the canteen run in the premises of the company in accordance with the provisions of the Factories Act, 1948, for the benefit of its members. There is no dispute that under the provisions of the Factories Act and its Rules, such a canteen has to be run on a no profit or loss basis. Rule 78(2), particularly, provides that food, drinks and other items served in the canteen shall be sold on a non-profit basis and in computing the charges to be made for such food, drinks or other items, the following items shall not be taken into consideration :

(a) the rent for the land and buildings;

(b) the depreciation and maintenance charges of the buildings and equipment provided for the canteen;

(c) the cost of purchase, repairs and replacement of equipment, including furniture, crockery, and utensils;

(d) the water charges and other charges incurred for lighting and ventilation; and

(e) the interest on the amount spent on the provision and maintenance of furniture and equipment provided for the canteen : Provided that where the canteen is managed by a co-operative society registered under the Bombay Co-operative Societies Act, 1925, such society may include in the charges to be made for any such food, drink or other items served, a profit up to 5 per cent, on its working capital employed in running the canteen ......'

54. Under rule 74(3) also where the canteen is managed by a co-operative society registered under the Bombay Co-operative Societies Act, 1925, the occupier shall provide the initial equipment for such canteen and shall undertake that any equipment required thereafter for the maintenance of such canteen shall be provided by such co-operative society. On interpretation of these provisions, the Tribunal has come to a finding that the factory canteen in the present case was run on a non-profit basis and what was permitted to the society under the proviso to rule 78(2) was only a remuneration, but it did not lead to any inference of profit-motive on the part of the society. The Sales Tax Officer assessed the society and levied sales tax and general tax on the sales of these articles by the canteen during the four periods from 16th February, 1960 to 30th June, 1963. In the four appeals the Assistant Commissioner of Sales Tax held that the canteen catered to the outside parties, over and above the employees and members of the staff and, therefore, its activities were such as would bring it within the provisions of the Act. In the four appeals filed before the Tribunal against this order, the Tribunal recorded a categorical finding that the canteen in the present case was not catering to the outsiders. The factory had to bear initial expenditure in the form of building and equipment and cost of purchase, repairs, and replacement of equipment. The water charges and other charges incurred for lighting and ventilation and the interest on the amounts spent on the provision and maintenance of furniture and equipment provided for the canteen were not to be taken into consideration. In these circumstances, the guests of the factory or the guests of the members could not be considered as outsiders and if the canteen catered to the needs of such persons who were the guests of the company or the members it could not be said to be catering to the outsiders. The Tribunal, therefore, held that as tile sales by the canteen were not with any profit-motive, the present society cannot fall within the definition of a 'dealer'. The Tribunal in its well-considered elaborate judgment considered various decisions and it held that even the inclusive clauses in section 2(11) were only by way of particular specification and not by way of an addition and that the Legislature had not in any way enlarged the traditional concept of business with a profit-motive, which was an integral part of the definition of a dealer in section 2(11). On these findings the Tribunal held that the society was not a dealer and merely because it held a certificate of registration, the provisions of section 22(5-A) did not prevent the society from contending that in regard to the sales effected in the canteen it was not a 'dealer' within the meaning of the Act. Accordingly, the Tribunal held that the sales effected in the canteen were not liable to be taxed. It allowed the appeals and set aside the orders in the four appeals passed 'by the Assistant Commissioner of Sales Tax. The Tribunal has, therefore, been required to make the present reference in the following two questions :

'(1) Whether on the facts and in the circumstances of the case in respect of the sales effected by the canteen during the periods from 16th February, 1960 to 30th June, 1960, 1st July, 1960 to 30th June, 1961, 1st July, 1961 to 30th June, 1962,and 1st July, 1962 to 30th June, 1963, the opponent-society is a dealer within the meaning of the definition of the term 'dealer' contained in clause (11) of section 2 of the Bombay Sales Tax Act, 1959

(2) If the answer to question No. (1) is in the negative, whether on the facts and in the circumstances of the case the opponent-society would still be liable to pay tax during the period it holds registration certificate by virtue of sub-section (5-A) of section 22 of the Bombay Sales Tax Act, 1959 ?'

55. The main controversy in the present case as to whether the society running this canteen without any profit-motive, is a dealer or not will have to be resolved by resorting to two definitions in the Act, namely, section 2(28), which defines a sale, and the definition of a 'dealer' in section 2(11) of the Act. Section 2(28) defines a 'sale' to mean a sale of goods made within the State, for cash or deferred payment or other valuable consideration, and includes any supply by a society or club or an association to its members on payment of a price or of fees or subscription ............... and the words 'sell', 'buy' and 'purchase' with all their grammatical variations and cognate expressions, shall be construed accordingly. Section 2(11) defines a 'dealer' to mean 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. The exception is not material for our purpose.

56. The main substantive part of the definition of a 'dealer' so far as it is material for our purpose, means, (1) any person, (2) who carries on business, (3) of buying or selling, (4) in the State. The definition then includes specifically the Central or State Government, if it carries on such business. Thereafter in the third part, there is a further inclusion by words 'and also' of any society, club or other association of persons which buys goods from, or sells goods to, its members.

57. The first argument of the learned Advocate-General is that the case of the present society would directly fall within the main definition clause, as the activity of business need not necessarily involve a profit-motive and the term 'business' must be construed in a wider sense. The other ingredient of business, being to buy or sell goods in the State, would be satisfied by the society, even when it sold such goods to its members because such distribution sales or supplies by a society to its members were specifically covered within the meaning of sale in section 2(28). We cannot agree with the learned Advocate-General in his submission that in a taxing statute the term business should be construed in such widest sense, viz., of any occupation in which a man becomes busy. The term would have to be understood in the ordinary commercial sense as any activity of trade or business by which a person earns his livelihood. Therefore, in ordinary commercial parlance the term 'business' will always mean only a business with profit-motive, irrespective of the fact whether the activity actually results in profit or loss. The business activity in the traditional sense must, therefore, necessarily involve a profit-motive. The position of law in this connection is now well settled. In the State of Andhra Pradesh v. H. Abdul Bakshi & Bros. ([1964] 15 S.T.C. 644.), their Lordships of the Supreme Court at page 647 construed an identical definition of 'dealer' as a person engaged in the business of buying or selling or supplying goods. Their Lordships observed 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, and not for sport or pleasure. But to be a dealer a person need not follow the activity of buying, selling or supplying the same commodity. Mere buying for personal consumption, i.e., without a profit-motive, will not make a person dealer within the meaning of the Act, but a person who consumes a commodity bought by him in the course of his trade, or use in manufacturing another commodity for sale, would be regarded as a dealer. The Legislature has not made sale of the very article bought by a person a condition for treating him as a dealer; the definition merely requires that the buying of the commodity mentioned in rule 5(2) must be in the course of business, i.e., must be for sale or use with a view to make profit out of the integrated activity of buying and disposal.'

58. The ratio of this decision was reiterated in the State of Gujarat v. Raipur . ([1967] 19 S.T.C. 1.) At page 5 their Lordships construed an identical section 2(6) of the Bombay Act 3 of 1953 in which a dealer was defined as a person carrying on the business of selling goods in the State. Reiterating the aforesaid observations in the State of Andhra Pradesh v. Abdul Bakshi and Bros., ([1964] 15 S.T.C. 644.) their Lordships observed at page 5 :-

'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.'

59. Their Lordships also stated that by the use of the expression 'profit- motive' it was not intended that profit must in fact be earned. Nor did the expression cover a mere desire to make some monetary gain out of a transaction or even a series of transactions. It predicated a motive which pervaded the whole series of transactions effected by the person in the course of his activity. Further proceeding, their Lordships observed that 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 was decisive of the intention to carry on the business : in the light of all the circumstances an inference that a person desired to carry on the business of selling goods might be raised. The learned Advocate-General relied upon this statement and argued that no test was decisive and the characteristics of volume, frequency, continuity and regularity of activity would have to be considered to find out whether the activity was business activity. The tests have been evolved by their Lordships only to find out whether a person has an intention to carry on a business activity as distinguished from casual sales or sales not in the course of business, e.g., sales by a manufacturer of the discarded, surplus or the unserviceable articles. All these tests would be material to find out whether the person carried on a business. But even after the application of all these tests, the further ingredient, which must exist in all cases, is whether these transactions of sale were ordinarily entered into only with a profit-motive in the sense explained by their Lordships. In the last decision in this connection in Director of Supplies & Disposals v. Board of Revenue, ([1967] 20 S.T.C. 398.) v. both in the minority judgment by Shah, J., and in the majority judgment delivered by Ramaswami, J., on behalf of himself and Sikri, J., the same tests have been approved. At page 401 Shah, J., in terms observed that by merely realising the value of a capital asset, the owner did not become a dealer. Where, however, he set up an organisation a substantial and systematic course of activity - to sell the goods with a profit-motive, he might in the light of circumstances be deemed to have entered into an activity in the nature of business or trade. At page 405 Ramaswami, J., in the majority decision also reiterated the observations in the State of Andhra Pradesh v. Abdul Bakshi & Bros. ([19694] 15 S.T.C. 644.) to the effect that in taxing statutes, the term 'business' was used in the sense of an occupation or profession which occupied 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 profit-motive; there must be some real and systematic and organised course of activity and conduct with a set purpose of making profit. To infer from a course of transactions that it was intended thereby to carry on business, ordinarily there must exist the characteristics of volume, frequency, continuity and system indicating an intention to carry on tile business. It must be decided in the circumstances of each particular case whether an inference could be relied that the assessee is carrying on the business of purchasing or selling goods within the meaning of the statute. Here also, those observations that no single test or group of tests is decisive of the intention to carry on business have been made in the same context that there must be a systematic or organised course of activity, which must be for a set purpose of making profit. Thus, the settled position of law is that in taxing statutes 'business' must be construed in the restrictive sense which it has in commercial parlance, viz., of a business with profit-motive, and in order that a person can be said to be carrying on business both these elements must co-exist. There must be a systematic or organised course of activity and its set purpose must be of making profit, and unless these two ingredients exist, the person cannot be said to be carrying on 'business' in this restrictive sense. The learned Advocate - General, however, vehemently relied upon the decision of the Supreme Court in Deputy Commercial Tax Officer v. Enfield India Ltd. Co-operative Canteen Ltd. ([1968] 21 S.T.C. 517.), where a co-operative society running a canteen was held to be a dealer. Their Lordships reached this decision by departing from the ordinary or traditional concept of business, which must always have a profit accrues' because the definition of 'business' in section 2(d) of the relevant Madras General Sales Tax Act, 1959, expressly defined business as meaning 'any trade or commerce or manufacture, whether or not any profit accrues' from such trade, commerce, manufacture, adventure or concern. And that is why at page 322 their Lordships held 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. The society was, therefore, held to be a 'dealer' within the meaning of section 2(g) of that Act because the Legislature had expressly departed from the traditional concept of business and had given such a wide meaning to the term 'business' to cover activities actuated by profit-motive or not. That decision could have no application to the facts of the present case where we have no such wide definition of 'business' in our Act. 'Business' has to be construed in its traditional sense, as ordinarily used in all such taxing statutes, viz., it must be an organised and systematic activity carried on with the set purpose of making profit. In the aforesaid decision in Enfield India Ltd. [1968] 21 S.T.C. 317.), their Lordships also considered the question as to whether section 2(n) of the Madras Act, which included in the definition of 'sale' such distribution of goods by a society or a club to its members, was ultra vires or not. Explanation I to the definition of sale in section 2(n) was as under :-

'The transfer of property involved in the supply or distribution of goods by a society (including a co-operative society) for cash or for deferred payment, or other valuable consideration, whether or not in the course of business shall be deemed to be a sale for the purpose of this Act.'

60. At page 323 their Lordships pointed out that the society was a person : the property in the refreshment which is supplied to its members was vested in the society and when refreshments were supplied for a price paid or promised, the transfer of property in the refreshments resulted. Their Lordships pointed out that in the case of an unincorporated society, club or firm or an association ordinarily the supply and distribution by such a society, club, firm or association of goods belonging to it to its members might not result in sale of the goods which were jointly held for the benefit of the members by the society, club, firm or association, when by virtue of the relinquishment of the common rights of the members the property stood transferred to a member in payment of a price, and the transaction might not, prima facie, be regarded as a 'sale' within the meaning of the Act. By providing that a transfer of property in goods from a corporate body to its members for a price would be a 'sale', the Legislature did not overstep the limit of its authority, and it could not on that account be held that the first explanation to section 2(n) was in its entirety ultra vires the State Legislature. In fact, their Lordships went further and observed that so far as the incorporated society in that case was concerned, the case directly fell within the definition of 'sale' and no assistance need be sought from the first explanation to section 2(n). It is in the light of the limitation on the power of the State Legislature to tax only the sale within the meaning of the Sale of Goods Act that the explanation to section 2(n) was construed by their Lordships in this narrower sense of a sale by transfer of property in the goods from the society to the members. That part of this decision only clarifies that even when such distribution sales to the members by a co-operative society are included within the definition of 'sale', the inclusion is not by way of any addition to the general concept of 'sale' but only by way of a particular specification to clear all doubts as to whether such distribution sales would be within the category of 'sales'. This aspect would have great relevance in our subsequent discussion and, therefore, we have referred to it at this stage. As a result of the aforesaid discussion, the position that emerges is that so far as the main substantive definition is concerned in the first part of section 2(11), the present society cannot fall within the definition of a 'dealer', because it never carried on the business of sales to its members with any profit-motive.

61. The learned Advocate-General next argued that in any event the present case falls within the ratio of Enfield India Ltd.'s case. ([1968] 21 S.T.C. 317.), because the Legislature has by the two inclusive clauses in section 2(11) enlarged the definition in the main substantive part and has achieved the same object which was achieved in the Madras case by giving a wider definition of the term 'business', whether actuated by a profit-motive or not.

62. It is well settled that the term 'includes' is not only used by way of an addition but also by way of specification. In Dilworth v. Commissioner of Stamps, ([1899] A.C. 99 at p. 105.), Lord Watson speaking for the Judicial Committee of the Privy Council observed as under :-

'The word 'include' is very generally used in interpretation clauses in order to enlarge the meaning of words or phrases occurring in the body of the statute; and when it is so used these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import, but also those things which the interpretation clause declares that they shall include. But the word 'include' is susceptible of another construction, which may become imperative, if the context of the Act is sufficient to show that it was not merely employed for the purpose of adding to the natural significance of the words or expressions defined. It may be equivalent to mean and include', and in that case it may afford an exhaustive explanation of the meaning which, for the purposes of the Act, must invariably be attached to these words or expressions.'

63. In Power, In re : Public Trustee v. Hastings ([1947] 1 Ch. D. 572, at p. 574.), when Jenkins, J., was referred to the aforesaid observations in support of the proposition that the effect of the word 'including' was prima facie to enlarge the meaning of that word, the learned Judge held that the word 'including' could be sufficiently accounted for by regarding it as having been inserted by the draftsman ex super abudanti cautela. In Montello Salt Company v. State of Utah ([221 U. S.S.C.R. 452 at p. 463.), Mr. Justice Makenna, delivering the opinion of the court, has referred to various decisions where the word 'including' is used both by way of specification and by way of addition. At page 463 it is observed as under :-

'... the word 'including' is sometimes used merely to specify particularly that which belongs to the genus, and sometimes to add to the general class a species which does not naturally belong to it'.

64. In view of this settled legal position, we cannot accept the argument of the learned Advocate-General that the term 'includes' must always be interpreted as extending the scope of the definition, as in the context, it might really indicate the sense of means, and 'includes' would imply that the definition is exhaustive of what belongs to the genus by particularly specifying what is included in its ambit.

65. As far as the definition of the word 'sale' in section 2(28) is concerned, even though 'sale' includes any supply by a society or club or association to its members on payment of a price or of fees or subscription, as we have already shown from the ratio of the Enfield India Limited case ([1968] 21 S.T.C. 317.), the said inclusion is only by way of a particular specification and is in the same sense as sale within the meaning of the Sale of Goods Act. It only clarifies all doubts by way of abundant caution, that even such distribution supplies or sales between the society and its members would be covered within the genus of sale, so long as it is 'sale' within the meaning of the Sale of Goods Act. Turning now to the definition of the expression 'dealer' in section 2(11), on a plain literal construction, it means (1) any person, (2) who carries on the business, (3) of buying or selling goods, (4) in the State. Such a person who carries on such business of buying or selling goods in the State may be an individual person, natural or artificial, or even the Government, viz., Central or State Government, or even a society, a club or an association of persons. All these categories have been particularly specified in the two inclusive clauses only to clarify that they all belong to the same genus and to settle all doubts as to the person who carries on business, whether he may be a natural or artificial person or even a body of persons like a society, club, or other association or even Government. Whatever view might be taken as to this particular specification, which exists as regards the category of persons who carry on business of buying or selling goods in the State, whether by way of particular specification or by way of addition in a limited sense, it is clear that in so far as the other three ingredients are concerned, the Legislature has not in any manner affected their import and content in the two inclusive parts. Whatever the specification or addition, the Legislature has made, is in respect of the category of persons who carry on business of buying or selling goods in the State and in so far as the remaining three ingredients are concerned, the Legislature has neither specified nor added anything to those three ingredients. Even in respect of buying or selling goods, as we have already clarified, the inclusion of distribution sales or supplies in the case of a society, club or association to its members is only in the sense of 'sale' within the meaning of the Sale of Goods Act and no further. Even without resorting to such a particular specification, the expression 'sale' would have the same meaning. Therefore, on a plain literal construction, we can never agree with the learned Advocate-General that the Legislature added anything so as to widen the definition of the term 'business' in the traditional sense, of a business with the set purpose of a profit-motive, especially when nothing has been stated in that connection by the Legislature, whether by way of a particular specification or even by way of addition.

66. There is also intrinsic evidence in this case of the intention of the Legislature, which is furnished by the very language of the inclusive part. In the first inclusive part when the category of the Central Government or State Government carrying on business in the State is concerned, the Legislature is careful to specify that it is not each and every activity or business of the Government which was covered, but only such business. The expression 'such' takes in the traditional concept of business, which inheres in the main substantive part of the definition. It is true that the learned Advocate-General has vehemently argued that the expression 'such business' would not mean the business in the traditional sense, but we do not agree with him in this contention. In Kalidas v. State of Bombay (A.I.R. 1955 S.C. 62.), the Supreme Court had to interpret the expression 'shop' in section 2(27) of the Bombay Shops and Establishments Act, 1948, and in that connection the expression 'such business' had to be interpreted. The question had arisen in connection with the owner of a small establishment, called the Honesty Engineering Works, who employed three workers in his workshop and did business in a very small way by going to certain local mills, collecting orders from them for spare parts, manufacturing the parts so ordered in his workshop, delivering them to the mills when ready and collecting the money therefor. No buying or selling was done on the premises of the workshop and so, a question arose as to whether a concern of this nature was a 'shop' within the meaning of section 2(27), which was as under :-

''Shop' means any premises where goods are sold, either by retail or wholesale or where services are rendered to customers, and includes an office, a store room, godown, warehouse or work place, whether in the same premises or otherwise mainly used in connection with such trade or business ....'

67. At page 63, their Lordships referred to the contention that the main definition is extended by including in it matters which would not be there without the words of extension, and in that portion the emphasis ceases to be on the 'premises' and shifts to the nature of the business. Provided there is a business of selling, any work place wherever situate and mainly used in connection with it will fall within the definition. Their Lordships, however, repelled this contention by pointing out that the rest of the definition merely links on the main definition ancillary places, such as store rooms, godowns, work places etc. which are mainly used in connection with the 'business', and 'business' means the kind of business defined in the earlier Part of the definition, that is to say, not business in general or even the business of selling in general, but that portion of the business of selling which is confined to selling on some defined premises. To illustrate this graphically, the business of selling in general may be regarded as a big circle and the business of selling on defined premises as a small portion which is carved out of the larger whole. Their Lordships in terms pointed out that the second part of the definition was linked on to the carved out area and not to the circle as a whole. The word 'such' confines what follows to what has gone before and what has gone before is not the trade of selling in general, but only that part of the trade of selling which is carried on on defined premises. It is, therefore, settled that suck business in section 2(11) in the first inclusive part must mean the kind of business defined in the earlier part which is business in the traditional sense of a business with profit-motive. Therefore, the first inclusive part covers Government as a dealer in particular specification only so far as the Government also carries on business in the traditional sense, viz., business with profit-motive. Therefore, so far as the first inclusive part is concerned, there is no addition as contended by the learned Advocate-General to the concept of 'business' by including business, actuated by a profit-motive or not.

68. The learned Advocate-General next argued that in any event, the second inclusive part enlarges the concept of business because it covers even distribution schemes by way of supplies or sales by a society to its members. This contention of the learned Advocate-General is also wholly misconceived and it ignores the ratio in the Enfield India Limited case ([1968] 21 S.T.C. 317.). Their Lordships have in terms pointed out that such distribution schemes wherever they are included would not enlarge the meaning of the 'sale', because the Legislature has the taxing power only to tax those sales which come within the meaning of the Sale of Goods Act, i.e., in which there is a transfer of property in the goods. Even without any such inclusive words, such sales between the registered society and its members where there is a transfer of property for a monetary consideration would fall within the definition of 'sale'. Therefore, so far as the second inclusive part is concerned, it does not in any manner enlarge or add to the traditional concept of business. If at all, it particularly specifies that the business of sales may be of sales even as between the society and its members. It does not in any manner affect the ingredient of 'business' which must still be fulfilled. The learned Advocate-General also argued that once the definition of 'sale' included distribution schemes in section 2(28), the expression 'dealer' as defined in the main part would include sales as between a society and its members. In that event, the Legislature must have held to have spoken in vain by adding the third part. It is a well settled rule of construction that we should avoid such a construction which leads to such redundancy. We do not agree with this contention of the learned Advocate-General. Once the definition of 'sale' was clarified by this particular specification of such distribution sales between the society and its members under section 2(28), the Legislature had to clarify the same concept even in the definition of a 'dealer' in section 2(11), as merely consequential or by way of abundant caution. There is also another reason why the Legislature must have specified this in the second inclusive part, because the concept of dealer involved the business of buying or selling. When, therefore, such distribution sales were covered, which were normally capable of creating a doubt as being included within the ambit of business of selling, this specification had to be particularly made so as to settle all doubts that such distribution sales would also form a part of a business activity. Even if the second inclusive part was interpreted in the widest manner the addition which the Legislature could be deemed to have made would be only in so far as the Legislature has settled all doubts by bringing within the genus of 'sale' even distribution sales between the society and its members. The Legislature has clearly stopped short at that and by any implied or presumed extension, we cannot hold that the Legislature intended to cover such distribution sales between the society and its members, whether in the course of a business with a profit-motive or not. Therefore, the second part cannot be interpreted in the manner as contended for by the learned Advocate-General that it widens the traditional scope of business in the main clause by means of such inclusion of distribution sales between the society and its members.

69. Even on the settled principles of construction, we must reach the same result. So far as the Bombay High Court was concerned, in Gondwana Club, Nagpur v. Sales Tax Officer, No. II, Nagpur ([1958] 9 S.T.C. 450.), a similar provision as in the present second inclusive clause in the definition of 'dealer' in the C.P. and Berar Sales Tax Act, 1947, was already construed. Section 2(c) of that Act defines 'dealer' as meaning 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 or association, selling or supplying goods to its members. At page 453 the Division Bench, consisting of Vyas and Badkas, JJ., pointed out that in order that a person may be a dealer under the Act, he must do the business of selling or supplying goods. A society, club or association is referred to in the concluding portion of the definition of 'dealer' and the concluding; portion of the definition says that the term 'dealer' includes also a society, club or association selling or supplying goods to its members. The well settled rule of construction requires that the two parts of the definition must be harmonized. The words 'selling' or 'supplying goods' occur in the earlier part of the definition of 'dealer' and they also occur in the latter part of the definition, and at both the places they must be so construed as to bear the same connotation. To start with, the definition of 'dealer' says that a dealer means a person who does selling or supplying goods as a business. Therefore, in the context, the words 'selling or supplying goods' in the latter part of the definition, which speaks of a society, club or association, must also be construed to mean selling or supplying goods in the course of business. If the element of business is excluded from the connotation of the words, 'selling or supplying goods', when they are used in the context of a society, club or association In the latter part of the definition, a conflict would arise between the two parts of the definition and that must be avoided. It is, therefore, clear that unless the selling or supplying of goods by the club to its members is done as a business the club cannot be a dealer under the Act. On the other hand, if the club sells goods or supplies them to its members and does it as a business, it would be a dealer under the Act and it would be illegal for it to carry on that business unless it has been registered as a dealer and possesses a registration certificate. In view of this settled position such inclusion even in the second inclusive part would only mean selling of goods by the society to its members only in the course of business as in the main substantive definition. If the Legislature wanted to depart from the traditional concept of business in the main definition, it should have used express words which would carry out that purpose, as was done by the Legislature in the aforesaid Enfield India Limited case ([1968] 21 S.T.C. 317.) by defining 'business' to include business actuated by profit-motive or not. The fact remains that after the settled legal position in our State by the said decision of the Bombay High Court, the Legislature did not expressly enlarge the term business by covering business actuated with profit motive or not. We cannot hold that by retaining the very same definition, as interpreted by the Bombay High Court, the Legislature sought to achieve that purpose as contended for by the learned Advocate-General. The learned Advocate-General tried to distinguish the aforesaid decision in Gondwana Club case ([1958] 9 S.T.C. 450.) on the ground that there was a slight difference in the language in our definition of the term 'dealer' in section 2(11). The said distinction is without substance and the real position is concluded by the aforesaid decision so far as this Bench is concerned. In M. K. Ranganathan v. Government of Madras, (A.I.R. 1955 S.C. 604.), in view of the settled position of law as it prevailed before the amendment, the wide amendment in section 232(1) in the Companies Act by the general words 'any sale held without leave of the court of any of the properties', was restricted to 'sale effected through the intervention of the court and not to sales effected by the secured creditors without the intervention of the court,' especially when these words were used in juxtaposition, with 'any attachment, distress etc. put into force without the leave of the court against the estate or effects ...' Their Lordships pointed out a well recognised rule of construction as under :-

'When two or more words which are susceptible of analogous meaning are coupled together noscitur a sociis, they are understood to be used in their cognate sense. They take, as it were, their colour from each other, that is, the more general is restricted to a sense analogous to the less general : (Maxwell on Interpretation of Statutes, Edition 10, page 332). The Judicial Committee of the Privy Council also expressed itself in similar terms in Angus Robertson v. George Day ([1879) 5 App. Cas. 63 at p. 69.). It is a legitimate rule of construction to construe words in an Act of Parliament with reference to words found in immediate connection with them.'

70. Their Lordships also referred to another doctrine on the same page 609 :-

'There is also a presumption against implicit alteration of law and that is enunciated by Maxwell on Interpretation of Statutes, Edition 10, at page 81, in the following terms :-

'One of these presumptions is that the Legislature does not intend to make any substantial alteration in the law beyond what it explicitly declares, either in express terms or by clear implication, or, in other words, beyond the immediate scope and object of the statute. In all general matters outside those limits the law remains undisturbed.

'It is in the last degree improbable that the Legislature would overthrow fundamental principles, infringe rights, or depart from the general system of law, without expressing its intention with irresistible clearness .....'

'This passage from Maxwell was approved of by their Lordships of the Privy Council in Murugiah v. Jainudeen ([1954] 3 W.L.R. 682 at p. 687.), and their Lordships agreed that the law was correctly stated in the passage just cited. To the same effect are also the observations of the Court of Appeal in National Assistance Board v. Wilkinson ([1952] 2 Q.B. 648.), where it was held that the statute is not to be taken as effecting a fundamental alteration in the general law unless it uses words pointing unmistakably to that conclusion. In that case Lord Goddard, C.J., at page 658 observed :-

'But it may be presumed that the Legislature does not intend to make a substantial alteration in the law beyond what it expressly declares. In Minet v. Leman ([1855] 20 Beav, 269.) Sir Jo Romilly, M. R., stated as a principle of construction which could not be disputed that the general words of the Act are not to be so construed as to alter the previous policy of the law, unless no sense or meaning can be applied to those words consistently with the intention of preserving the existing policy untouched.' Applying these principles, their Lordships observed :

'If the construction sought to be put upon the words 'or any sale held without leave of the court of any of the properties' by the appellants were accepted it would effect a fundamental alteration in the law as it stood before the amendment was inserted in section 232(1) by Act 22 of 1936. Whereas before the amendment the secured creditor stood outside the winding up and could if the mortgage deed so provided, realise his security without the intervention of the court by effecting a sale either by private treaty or by public auction, no such sale could be effective by him after the amendment and that was certainly a fundamental alteration in the law which could not be effected unless one found words used which pointed unmistakably to that conclusion or unless such intention was expressed with irresistible clearness.

Having regard to the circumstances under which the amendment was inserted in section 232(1) by Act 22 of 1936 and also having regard to the context we are not prepared to hold that the Legislature in inserting that amendment intended to effect a fundamental alteration in law with irresistible clearness. Such a great and sudden change of policy could not be attributed to the Legislature and it would be legitimate, therefore, to adopt the narrower interpretation of those words of the amendment rather than an interpretation which would have the contrary effect.'

71. If these principles of construction were to be applied, it is clear that these general words of inclusion of distribution sales between a society and its members in the second inclusive part of section 2(11) could never be construed so as to alter the previous policy of law in such a taxing statute, where the term 'business' is always interpreted in a traditional sense as business activity with a profit-motive. If we were to interpret the second inclusive clause, consistently with the intention of preserving the policy untouched in the light of settled principles of interpretation of law, we must hold that the Legislature has left undisturbed all the three ingredients in the main definition of 'dealer' in section 2(11). Whatever specification has been done is only in respect of one who carries on the business of selling in the State in the traditional sense, as to whether he may be an individual person or body of persons like a society, club or association or even the Government. The Legislature has clearly stopped short at that and has not gone further, and we must presume against any implicit alteration of law in this surreptitious manner by resorting to these general words, especially when they could be given a proper meaning or sense, by holding that the Legislature specifically included even distribution sales, provided they were effected in tire course of business between the society and its members in the traditional sense and not otherwise. In Empress Mills v. Municipal Committee, Wardha ([A.I.R. 1958 S.C. 341 at p. 347.), their Lordships laid down another principle which must also be borne in mind, while construing the term 'includes' by way of specification or by way of addition and to what extent. In that case the term 'terminal' had an additional meaning also and that meaning signified the termini or the jurisdictional limits of the municipal area. Even then, the construction to be placed on the term was held to be one that favours the taxpayers. Their Lordships, in terms, pointed out :-

'That the construction to be placed on the term should be the one that favours the taxpayer, in accordance with the principle of construction of taxing statutes, which must be strictly construed and in case of doubt must be construed against the taxing authorities and doubt resolved in favour of the taxpayer. In Crawford on Statutory Constructions in para 257 at page 504 the following passage pertaining to construction of taxing statutes taken from Bedford v. Johnson (102 Colo. 203; 78 Pac. (2) 373.), is quoted :- 'Statutes levying taxes or duties upon citizens will not be extended by implication beyond the clear import of the language used, nor will their operation be enlarged so as to embrace matters not specifically pointed out, although standing upon a close analogy, and all questions of doubt will be resolved against the Government and in favour of the citizen, and because burdens are not to be imposed beyond what the statute expressly imparts.' '

72. Therefore, even if the term 'include' is capable of the alternative meaning as contended for by the learned Advocate-General, and even if two constructions are possible, we must adopt the strict construction and resolve the doubt in favour of the subject, especially when such radical departure is involved from the pre-existing law and when such fundamental concept of business in the traditional sense in a taxing statute is sought to be altered on a mere implication from such vague words.

73. There are also other provisions in the Act which indicate that business in the commercial sense is an element which must exist as the main in-gredient in the definition of a 'dealer'. In section 2(11) no dealer while being liable to pay tax shall carry on business as a dealer, unless he possesses a valid certificate of registration. This is an imposition of restriction on the fundamental right to carry on business and in that context the term 'business' must be construed strictly in the traditional sense, Section 19(1) provides for special liability to pay tax where the dealer dies and the business carried on by the dealer is continued or discontinued after his death or where a dealer transfers or otherwise disposes of his business or where the dealer is a guardian of a ward on whose behalf the business is carried on or where the dealer is a trustee who carries on the business under a trust for a beneficiary, Section 50 requires a dealer to declare the name of the manager of the business. Therefore, it is clear from all these provisions that the carrying on of the business is an ingredient which applied to all category of dealers, whether it may be a person, natural or artificial, Government or a body of persons like a society, club or association. The term 'business' must, therefore, have the same meaning in the context of 'dealer', irrespective of the fact as to who carries on the business, whether a person, Government or society, club or any other association of persons. There would be no reason whatever to adopt the different test of 'business' only in the case of a society, club or association of persons. Unless the Legislature has used express words in the context, we cannot hold on any canon of interpretation that the society in the present case, which did not carry on business of selling in the traditional sense, viz., with the set purpose of making profit, can be included in the definition of dealer under section 2(11) of the Act. In the case of a society only the first ingredient would be fulfilled and also the last, as there would be no doubt left after this particular specification that even in the case of a society, where there are distribution sales with the members, the society would be a person selling goods. However, it must satisfy the other two conditions, viz., that it was carrying on a business of selling these goods in the State, with the set purpose of making profit.

74. We are also referred to various decisions, which have been referred to even by the Tribunal but they would be hardly useful. The line of cases, represented by Southern Railway Co-operative Canteen v. Commercial Tax Officer ([1967] 20 S.T.C. 96.), is based on the definition, corresponding to the main part of our section 2(11) and in such cases it has been held that such a canteen would not be falling within the definition of a 'dealer' as its distribution sales to its members would not be with a profit-motive, which is an ingredient of the term 'business'. In the other line of cases, represented by Southern Railway Employees' Workshop Canteen v. Deputy Commercial Tax Officers ([1965] 16 S.T.C. 187 at p. 190.), it has been held that in view of the amendment introduced by the Legislature in the term 'business', which included business carried on, whether or not any profit accrued from such trade, the Legislature had provided wider inclusion and the profit-motive was, therefore, not held to be essential. 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'. We must, therefore, answer the first question in the negative.

75. As regards the second question, the learned Advocate-General vehemently argued that so long as the society's registration was not cancelled, it was liable to pay tax under section 22(5-A) of the Act, which runs as under :-

'If any person upon an application made by him has been registered as a dealer under this section, and thereafter it is found that he ought not to have been so registered under the provisions of this section, he shall be liable to pay tax on his sales or purchases made from the date on which his registration certificate took effect until it is cancelled not-withstanding that he may not be liable to pay tax under section 3.'

76. We are unable to understand how this provision can help the learned Advocate-General. If the society was not a dealer at all qua the sales in the canteen, it could never be taxed for the simple reason that it is not a registered dealer qua these sales. Section 22(5-A) in terms indicates what would be the cases which would fall in the Section. The tax liability is for the period commencing on the date on which the registration certificate took effect ending with its cancellation. If a person was not a dealer at all, there could be no question of a registration certificate legally taking any effect, as the certificate if issued on the basis of such sales would be no certificate within the eye of law and would be honest. It would never require any cancellation and therefore no question could arise of that person being liable on the strength of the registration certificate by resorting to section 22(5-A). The distinction between nullity and invalidity must be borne in mind while interpreting such provisions like section 22(5-A). In fact qua these sales the society would not be a registered dealer at all, and there would be no question of its liability to pay tax qua these sales. There can be no estoppel against a statute as pointed out by their Lordships in the aforesaid decision in Kalidas's case (A.I.R. 1955 S.C. 62.). In fact the assessee must succeed on the short ground on this question that it was not a registered dealer qua the sales in the canteen and, therefore, it was not taxable at all. The Tribunal was, therefore, right in fielding that the society was not taxable merely because of the fact that the society held the registration certificate. Therefore, as regards the second question our answer must also be in the negative. In the result, my opinion on the questions referred to is as under :

Question No. (1) in the negative, that is to say, the society is not a dealer within the meaning of section 2(11).

Question No. (2) in the negative, that is to say, the society is not liable to pay tax during the period it held registration licence by virtue of section 22(5-A) of the Act. The State shall pay costs of this reference to the assessee. Reference is answered accordingly.

77. In view of the difference of opinion between the two learned Judges, the case came on for hearing before BHAGWATI, C.J., under clause 36 of the Letters Patent and the learned Chief Justice delivered the following judgment on 11th November, 1968.

Bhagwati, C.J.

78. This reference comes before me on a difference of opinion between Divan, J., and Mehta, J. The reference arises out of assessment to sales tax made on Anil Co-operative Credit Society Limited (hereinafter referred to as the assessee) for the periods 16th February, 1960 to 30th June, 1960, 1st July, 1960 to 30th June, 1961, 1st July, 1961 to 30th June, 1962 and 1st July, 1962 to 30th June, 1963. The assessee is a co-operative society registered under the provisions of the Bombay Co-operative Societies Act, 1925. During the relevant accounting periods, the assessee carried on the business of purchasing household and other articles and selling them to its members. The assessee also ran a canteen for the benefit of its members and according to the finding of the Tribunal which was not challenged in this Court on behalf of the revenue, the canteen was run without any profit-motive. The question which arose before the Sales Tax Officer in the course of assessment of the assessee for the relevant accounting periods was as to whether the sales effected by the assessee in the canteen were includible in the taxable turnover of the assessee for the purpose of sales tax. The assessee contended that in regard to the sales effected in the canteen the assessee was not a dealer within the meaning of section 2(11) of the Bombay Sales Tax Act, 1959, which was the law applicable during the relevant accounting periods and those sales were therefore not liable to be taxed under the provisions of the Act. This contention was negatived by the Sales Tax Officer and the view taken by the Sales Tax Officer was affirmed in appeal by the Assistant Commissioner of Sales Tax. The Tribunal on further appeal disagreed with the view taken by the revenue authorities and held that since the canteen was run by the assessee without any profit-niotive the activity of running the canteen did not constitute a business of the assessee and the assessee was therefore not a dealer within the meaning of section 2(11) vis-a-vis the sales effected in the canteen and those sales were not taxable under the provisions of the Act. The Tribunal also rejected the contention of the revenue based on section 22(5-A) and held that that section did not assist the revenue in taxing the sales effected in the canteen since the assessee was not a dealer in respect of those sales. The State was dissatisfied with this decision of the Tribunal and at the instance of the State the following two questions were referred for the opinion of this Court :-

'(1) Whether on the facts and in the circumstances of the case the sales effected by the canteen during the periods from 16th February, 1960 to 30th June, 1960, 1st July, 1960 to 30th June, 1961, 1st July, 1961 to 30th June, 1962 and 1st July, 1962 to 30th June, 1963, the opponent-society is a dealer within the meaning of the definition of the term 'dealer' contained in clause (11) of section 2 of the Bombay Sales Tax Act, 1959

(2) If the answer to question No. (1) is in the negative, whether on the facts and in the circumstances of the case the opponent-society would still be liable to pay tax during the period it holds registration certificate by virtue of sub-section (5-A) of section 22 of the Bombay Sales Tax Act, 1959 ?'

79. The reference was heard by a Division Bench of this Court consisting of Divan and Mehta, JJ., but on both the questions the learned Judges could not agree and there was a difference of opinion. Divan, J., took the view that since there was no element of profit-motive in the activity of running the canteen, the assessee could not be said to be carrying on the business of buying or selling goods in the canteen so as to attract the main part of the definition of 'dealer' in section 2(11) but the assessee being a society which sold goods to its members, fell within the second inclusive clause of the definition and was therefore a dealer within the meaning of section 2(11) and answered the first question in favour of the revenue. The second question was also, in the view of Divan, J., liable to be answered in favour of the revenue since according to the learned Judge the conditions specified in that section were satisfied and the sales effected in the canteen were taxable under that provision. Mehta, J., agreed with Divan, J., on the question whether the activity of the assessee of running the canteen amounted to business and he held that the profit-motive being absent, the assessee could not be said to be carrying on the business of selling goods in the canteen but on the other questions Mehta, J., disagreed with the view taken by Divan, J. Mehta, J., held that the second inclusive clause in which the case of the assessee was sought to be brought did not dispense with the requirement that the selling of goods must be in the course of business and since the assessee was not carrying on the business of selling goods in the canteen, it could not be brought within the second inclusive clause. The second inclusive clause in the opinion of Mehta, J., was introduced in the definition not for the purpose of enlarging the ambit of the main part of the definition but for the purpose of specifying particularly that which already fell within the main part of the definition with the view to eliminating any doubt or controversy which might arise in regard to its inclusion. The second question also produced a difference of opinion and Mehta, J., taking a view different from that taken by Divan, J., held that section 22(5-A) had no application since the assessee was not a dealer and the certificate of registration even if granted was therefore non est. There being a difference of opinion between the two learned Judges the reference has come before me as a third Judge under clause 36 of the Letters Patent.

80. The main controversy between the parties centres round the first question as to whether the assessee running the canteen without the element of profit-motive could be said to be a dealer within the meaning of section 2(11) in regard to the sales effected in the canteen. The determination of this question obviously depends on a true interpretation of section 2(11) which defines the term 'dealer' but in order to arrive at the true import of that definition, it is necessary to refer to the definitions of two other terms as well. Section 2(19) says :

'(19) 'person' includes any company or association or body of individuals, whether incorporated or not, and also a Hindu undivided family, a firm and a local authority.'

81. Section 2(28) defines 'sale' to mean :

'(28) ... a sale of goods made within the State, for cash or deferred payment or other valuable consideration, and includes any supply by a society or club or an association to its members on payment of a price or of fees or subscription, but does not include a mortgage, hypothecation, charge or pledge, and the words 'sell', 'buy' and 'purchase', with all their grammatical variations and cognate expressions, shall be construed accordingly.' Section 2(11) defines a 'dealer' in the following terms : '(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.'

82. The definition of 'dealer' consists of a main part and two inclusive clauses. The argument of the revenue was that the assessee fell within the main part of the definition since the assessee was a person within the meaning of section 2(19) and it carried on the business of selling goods to its members. It is nor doubt true, said the revenue, that the element of profit-motive was absent in the activity of selling goods to the members in the canteen but it was not an essential ingredient of business that there should be a profit-motive present in it, so long as there was a systematic and organised activity of selling goods to the members, it was sufficient to constitute that activity business of the assessee within the meaning of the definition. The revenue also submitted in the alternative that in any event if the element of profit-motive was essential in a business and consequently the activity of selling to the members in the canteen could not be said to be a business of the assessee, the assessee was yet a dealer within the meaning of the second inclusive clause since the requirement that there should be a business of selling goods was not a necessary ingredient of the second inclusive clause and it was sufficient to attract the applicability of the second inclusive clause that the assessee should be a society, club or other association which sold goods to its members irrespective of whether there was profit-motive or not. The assessee disputed the validity of both these contentions and urged that the assessee fell neither within the main part of the definition nor within the second inclusive clause. The main part of the definition did not apply because in the absence of profit-motive the assessee could not be said to be carrying on the business of selling goods to its members and the second inclusive clause had also no applicability because it did not enlarge but merely clarified the scope and ambit of the main part of the definition by providing that even a society, club or other association of persons which buys goods from or sells goods to its members would be a dealer if it satisfies the other requirements of that part, that is, buys or sells goods to its members by way of business. These were the rival contentions of the parties before me and they raise an interesting question of construction of the definition of 'dealer' in section 2(11).

83. So far as the main part of the definition is concerned, there can be no doubt that the case of the assessee does not come within it. What the main part of the definition requires is that a dealer must be a person who carries on the business of buying or selling goods. I will assume with the revenue that the assessee is a person within the meaning of section 2(19) but the question is whether it could be said of the assessee that it was carrying on the business of buying or selling goods. The assessee was undoubtedly selling goods to its members but there was no element of profit-motive in it and in the absence of profit-motive, this activity could not be regarded as business. It is now well settled that in taxing statutes the word 'business' must be understood to mean an activity which occupies the time, attention and labour of a person with the object of making profit. Whether profit in fact results or not is immaterial but the activity must necessarily involve a profit-motive and it must be pursued with the object of making profit. This is the view consistently taken by different High Courts in india without exception, [vide Gannon Dunkerley & Co. (Madras) Ltd. v. The State of Madras ([1954] 5 S.T.C. 216.), Sree Meenakshi Mills Ltd. v. State of Madras, ([1954] 5 S.T.C. 291.), Deputy Commercial Tax Officer v. The Compilation Club ([1955] 6 S.T.C. 1.), Bangle Nagpur Cotton Mills Club v. Sales Tax Officer ([1957] 8 S.T.C. 781.), Davanagere Cotton Mills Ltd. v. State of Mysore ([1957] 8 S.T.C. 793.), Gondwana Club v. Sales Tax Officers ([1958] 9 S.T.C. 450.). Trustees of the Port of Madras v. The State of Madras ([1960] 11 S.T.C. 224.), State of M.P. v. Bengal Nagpur Cotton Mills Ltd. ([1961] 12 S.T.C. 333.). The State of Mysore v. The Bangalore Woolen, Cotton and Silk Mills Company Ltd. ([1962] 13 S.T.C. 106.0 and Madras Electricity Department Canteen v. The State of Madras ([1962] 13 S.T.C. 288.), and this view has has been affirmed by the Supreme Court in no less than three decisions arising under sales tax legislation. The first decision to which reference may be made is the Stale of Andhra Pradesh v. H. Abdul Bakshi and Bros. ([1964] 15 S.T.C. 644.). The Supreme Court in this case, construing an identical definition of dealer in section 2(e) of the Hyderabad General Sales Tax Act, observed :-

'A person to be a dealer must be engaged in the business of buying or selling or supplying goods. 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, and not for sport or pleasure. But to be a dealer a person need not follow the activity of buying, selling and supplying the same commodity. Mere buying for personal consumption, i.e., without a profit-motive, will not make a person dealer within the meaning of the Act, but a person who consumes a commodity bought by him in the course of his trade, or use in manufacturing another commodity for sale, would be regarded as a dealer. The Legislature has not made sale of the very article bought by a person a condition for treating him as a dealer : the definition merely requires that the buying of the commodity mentioned in rule 5(2) must be in the course of business, i.e., must be for sale or use with a view to make profit out of the integrated activity of buying and disposal.'

84. The necessity of the element of profit-mofive in a business was also emphasized by the Supreme Court in the State of Gujarat v. Raipur . ([1967] 19 S.T.C. 1.) This was also a case in which the Supreme Court was called upon to consider whether a particular activity of selling stores, machinery and other sundry articles carried on by the assessee could be regarded as a business. Shah, J., speaking on behalf of the Supreme Court, after referring to Abdul Bakshi's case ([1964] 15 S.T.C. 644.), observed :-

'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 value, frequency, continuity and regularity of transactions of purchase and sale in a class of goods and the transactions must ordinarily by enters into with a profit-motive. By the us 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.'

85. The same view was again reiterated by the Supreme Court in Director of Supplies and Disposals v. Member, Board of Revenue ([1964] 15 S.T.C. 644.). Both Shah J., in his minority judgment and Ramaswami J., in the majority judgment delivered on behalf of himself and Sikri, J., emphasized that the activity in order to be a business must be carried on with the object of making profit. Shah, J., dealing with the facts of the case observed :

'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 ...... There was an organised course of activity, it was systematic and it was with a set purpose of making profit.'

86. Ramaswami, J., on the facts of the case reached a conclusion different from that reached by Shah, J., but the test applied by him was the same, namely, that there must be an element of profit-motive if the activity of the assessee is to be regarded as business.

87. 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 business so as to fall within the main part of the definition in section 2(11). The revenue in an attempt to combat this proposition leaned heavily on a recent decision of the Supreme Court in Deputy Commercial Tax Officer v. Enfield India Lid. Co-operationv Canteen Ltd. (1968] 21 S.T.C. 317.), but I do not think that decision can be read as laying down a contrary proposition. The assessee in that case was a co-operative society formed with the object of providing a canteen for supplying refreshments to the employees of a limited liability company without a profit-motive. The question which arose was whether it was liable to pay sales tax under the Madras General Sales Tax Act, 1959, on its turnover from refreshments supplied to its members. Section 3 which was the charging section imposed a liability to sales tax on every dealer whose total turnover in a year was not less than ten thousand rupees. 'Dealer' was defined in section 2(g) to mean :

'any person who carries on the business of buying, selling, supplying or distributing goods, directly or otherwise, whether for cash, or for deferred payment, or for commission, remuneration or other valuable consideration .......

* * * Explanation. - A society (including a co-operative society), club or firm or an association which, whether or not in the course or business, buys, sells, supplies or distributes goods from or to its members for cash, or for deferred payment, or for commission, remuneration or other valuable consideration, shall be deemed to be a dealer for the purposes of this Act.'

88. Clause (n) of section 2 defined 'sale' as follows :

''sale' with all its grammatical variations and cognate expressions means every transfer of the property in goods by, one person to another in the course of business for cash or for deferred payment or other valuable consideration, ..........

Explanation (1). - The transfer of property involved in the supply or distribution of goods by a society (including a co-operative society), club, firm, or any association to its members, for cash, or for deferred payment, or other valuable consideration, whether or not in the course of business shall be deemed to be a sale for the purposes of this Act.'

89. There was also a definition of 'business' in section 2(d) and that term was defined 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 in the context of these provisions held that the assessee was a dealer within the meaning of section 2(g) and the supplies of refreshments by the assessee to its members for a price paid or promised were sales within the meaning of section 2(n). Now clearly in view of the explanation to section 2(g) it was not necessary for the assessee, in order to be a dealer, that it should be carrying on business of supplying refreshments to its members. The words 'whether or not in the course of business' dispensed with the requirement of business and even without the element of business the assessee supplying refreshments to its members for valuable consideration would, by reason of the explanation to section 2(g), be deemed to be a dealer. But the Supreme Court did not base its conclusion on the explanation to section 2(g). The Supreme Court held that the assessee was a dealer within the main part of the definition in section 2(g). Shah, J., speaking on behalf of the Supreme Court observed :

'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 is not actuated by a profit-motive. The respondent-society which has according to its object of incorporation made arrangements for the supply and distribution of refreshments to its members without a profit-motive may be regarded as carrying on trade and would on that account fall within the definition of a dealer within the making of section 2(g).'

90. These observations were strongly relied on on behalf of the revenue and prima facie at first blush, they might seem to suggest that in the view of the Supreme Court an activity might partake of the nature of business even if it was not actuated by a profit-motive but if they are read properly in the context of the provisions of the Act, it will be apparent that they do not lay down nay such absolute proposition. In the first place, it must be remembered that in this case the Supreme Court was not concerned with the question whether an activity can be regarded as business even in the absence of profit-motive. That was not the point before the Supreme Court and indeed it could not be since the explanation to section 2(g) in so many terms dispensed with the requirement of business and even if the activity of the assessee in the absence of profit-motive could not be regarded as business, it was immaterial for the assessee would in any event be deemed to be a dealer under the explanation to section 2(g). Moreover, the definition in section 2(d) gave a wider meaning to the term 'business' by reason of the words 'whether or not any profit accrues from such trade, commerce, manufacture, adventure or concern' which had the effect of enlarging the ambit of the definition and it was in the context of this definition that Shah, J., said that a scheme for supplying goods to its members by a society might partake of the nature of business even if the activity was not actuated by a profit-motive. There can be no doubt that it was the existence of these words in the definition which led Shah, J., to observe that the activity of the assessee amounted to carrying on of business even though profit-motive was absent. It is impossible to believe that in making these observations Shah, J., could have intended to lay down an absolute proposition contradictory to what he had himself earlier stated in the three decisions above referred to. He could not have intended to overrule the view consistently taken in a long line of decisions by different High Courts in India and affirmed by the Supreme Court on no less than three occasions. If he at all intended to do so, I have no doubt, he would have referred to the earlier three decisions and expressly overruled them instead of doing so as if by a side-wind by making a stray observation and that too, in the context of an indisputably wide definition. No such definition of 'business' finds a place in our Act and in the absence of such definition, I cannot accept the contention of the revenue that the word 'business' in section 2(11) must be given a wider meaning so as to include an activity which is carried on without a profit-motive. The word 'business' in section 2(11) must therefore be interpreted to mean a systematic or organized course of activity pursued with the set purpose of making profit and since profit-motive was admittedly absent in the activity of the assessee, it could not be regarded as business within the meaning of section 2(11). This contention of the revenue must therefore be rejected.

91. Turning to the second contention, it depends on a true interpretation of the definition of 'dealer' in section 2(11). On a plain grammatical construction, as I read the definition of 'dealer', it is apparent that the two inclusive clauses, one dealing with 'the Central Government or any State Government' and the other dealing with 'any society, club or other association of persons which buys goods from or sells goods to its members' are referable to the word 'person'which occurs in the main part of the definition. 'Dealer' is defined to mean any person who carries on the business of buying or selling goods in the State and then the Legislature goes on to specify two categories of subjects who should be included in the category of such 'person', one being 'the Central Government or any State Government' and the other being 'any society, club or other association of persons which buys goods from or sells goods to its members'. As one runs through the definition it is clear that it is the idea of 'person' in the main part of the definition which is carried into the two inclusive clauses and the words 'who carried on the business of buying or selling goods in the State' which qualify 'person' are applicable to the second inclusive clause as well. If the second inclusive clause were read as wholly disjunctive from the main part of the definition so as to form a totally independent clause complete in itself, the result would be that every society, club or other association of persons which buys goods from or sells goods to its members would be a dealer and all sales effected by such a society, club or other association, whether to members or to non members and whether as part of a systematic and organized activity or otherwise, would become liable to sales tax. The adjectival clause 'which buys goods from or sells to its members' qualifies 'society, club or other association of persons' referred to in the second inclusive clause and therefore any society, club or other association of persons which possesses this quality, namely, that it buys goods from or sells goods to its members would be within the definition of 'dealer' and there being no requirement that it should be by way of business, the restriction implicit in the Act that only sales in the course of business are taxable would not apply and all sales would be liable to bear tax. Moreover, on this view, a society, club or other association of persons which sells goods to non-members without profit-motive would be beyond the pale of the taxing statute while a society, club or other association of persons which sells goods to its members would come within it. Even if it is held that a society, club or other association of persons which sells goods to its members is a dealer only in respect of the sales made to its members, it is difficult to see any reason - none at least was suggested - why the Legislature should have thought fit to dispense with the requirement of business in the case of supplies made by a society, club or other association of persons to its members when it insisted on such requirement in the case of supplies made to non-members. The element of business would clearly be necessary in order to bring within the net of taxation the supplies made to non-members. Then for what reason, it may be asked, should that element be regarded as unnecessary in the case of supplies to members I fail to see any valid ground which could have induced the Legislature to make such a distinction. To countervail this argument it was urged on behalf of the revenue that the words 'which carries on such business' which occur in the first inclusive clause were significantly absent in the second inclusive clause and that clearly showed that the Legislature did not intend to bring in the requirement of business in the second inclusive clause; if it wanted to do so, it would have employed the same phraseology in the second inclusive clause as it did in the first. This argument places undue emphasis on the presence or absence of certain words without taking into account the meaning of the definition as a whole. The words 'which carries on such business' undoubtedly occur in the first inclusive clause; but perhaps they would have been inappropriate - at least grammatically - and from a literary point of view, inelegant in the second inclusive clause. The omission of these words in the second inclusive clause appears to have been prompted more by convenience and elegance of drafting than by an intention to exclude the requirement of business. The revenue in the course of argument suggested one or two alternative formulae in which the Legislature could have couched the definition, if it wanted to introduce the requirement of business also in the second inclusive clause, but that can never be determinative of the true intent of the Legislature, for the Legislature may express itself in diverse ways and no inference can necessarily be drawn one way or the other because the Legislature has chosen to express itself in one of many ways. It is difficult to believe that the Legislature intended to make a radical departure from the existing state of the law by dispensing with the requirement of business in the case of societies, clubs or other associations buying goods from or selling goods to their members. If such had been the intention of the Legislature, I have no doubt that the Legislature would have expressed itself in clear and explicit language rather than leave its intention to be gathered from language of doubtful implication.

92. But the question might then be asked as to why the Legislature introduced the second inclusive clause in the definition of 'dealer'. The answer is clear and not far to seek. There was at one time considerable doubt whether sales tax applies when goods are supplied or distributed by a society or club, incorporated or unincorporated, to its members for valuable consideration. The view taken in England in a long line of cases dealing with the liability of clubs supplying intoxicating liquors to their members to obtain Justices' licences was that, whether the society or club was incorporated or unincorporated, the liquor held by the society or club was vested in the members and when a member received and paid for it, there was no sale within the meaning of the Licensing Act but there was a transfer of a special property in the goods from all the other members of the club to the consumer in consideration of the price paid. Following this line of authorities, it was held by a Division Bench of the Nagpur High Court in Bangle Nagpur Cotton Mills Club v. Sales Tax Officers ([1957] 8 S.T.C. 781.), that the supplies by a club registered under section 26 of the Companies Act to its members of refreshments purchased out of club funds which were composed of members' subscriptions did not entail transfer of property from the club as such to a member and the club was therefore not liable to sales tax in respect of the supplies of such refreshments. There was no decision of the Bombay High Court one way or the other and the position was unsettled and in a state of doubt. The Legislature therefore while enacting the definition of 'sale' in section 2(28) introduced an inclusive clause stating that 'sale' includes any supply by a society or club or an association to its members on payment of a price or of fees or subscription. This inclusive clause was clarificatory in nature and could not be regarded as extending the meaning of 'sale', for it is now well settled as a result of the decisions of the Supreme Court in The State of Madras v. Gannon Dunkerley & Co. ([1958] 9 S.T.C. 353.), New India Sugar Mills Ltd. v. Commissioner of Sales Tax ([1963] 16 S.T.C. 316.) and Bhopal Sugar Industries Ltd. v. D. P. Dube, Sales Tax Officers, that the Legislature cannot by fictitiously treating a transaction which is not a sale as a sale bring it within the ambit of the taxing statute. Of course now in view of the decision of the Supreme Court in Enfield India's case ([1968] 21 S.T.C. 317.), it is clear that supply by an incorporated society or club of goods to its members for valuable consideration would be a sale but there was at one time, as already pointed out, considerable doubt about it and the Legislature therefore introduced the inclusive clause in the definition of 'sale' ex abundanti cautela with a view to eliminating such doubt. While introducing this inclusive clause in the definition of 'sale', the Legislature also introduced for the purpose of completeness and symmetry of drafting the second inclusive clause in the definition of 'dealer' as a counterpart of the inclusive clause in the definition of 'sale'. The Legislature was anxious to secure that the clarification made by introducing the inclusive clause in the definition of 'sale' might not be rendered introducing by an argument based on the absence of a corresponding inclusive clause in the definition of 'dealer' and the Legislature, therefore, ex abundanti cautela, introduced the second inclusive clause. What the Legislature wanted to make clear by introducing the second inclusive clause in the definition was that even a society, club or other association of persons which buys goods from or sells goods to its members would be within the ambit of the main part of the definition and would be a dealer if it carries on the business of buying or selling goods in the State.

93. But apart from the language of the definition, there is sufficient intrinsic evidence in the Act itself which considerably fortifies this conclusion. The concept that a dealer should be carrying on the business of buying or selling goods before he can be subjected to the liability to pay sales tax runs through the entire scheme and fabric of the Act. Section 22, sub-section (1), provides that no dealer shall, while being liable to pay tax under section 3 or under sub-section (6) of section 19, carry on business as a dealer, unless he possesses a valid certificate of registration as provided by the Act. The form of application for a certificate of registration is also prescribed by Rules made under the Act and that Form, which is Form No. 1 at the end of the Bombay Sales Tax Rules, 1959, clearly shows that a dealer who applies for registration must be carrying on business. The opening part of that Form clearly postulates that even a society, club or association of persons applying for registration should be carrying on business. Section 22, sub-section (6), also proceeds on the basis that there must be a business carried on by a dealer in order that he should be liable to pay tax and obtain a certificate of registration. Section 63, sub-section (1), clause (a), provides that whoever carries on business as a dealer without being registered in contravention of section 22 shall be punishable with imprisonment or fine. The idea that there can be a dealer who does not carry on business is foreign to the scheme of the Act and it is difficult to believe that the Legislature could have dispensed with the requirement of business because a society, club or other association of persons buys goods from or sells goods to its members. Such a body would be a stranger within the accepted framework of the Statute. I therefore agree with the view expressed by Mehta J., that the second inclusive clause does not dispense with the requirement of business but the only function which it discharges is to include any society, club or other association of persons which buys goods from or sells goods to its members within the category of 'person' for the the purpose of the main part of the definition. The first question referred to this Court for its opinion must therefore be answered in the negative as proposed by Mehta, J.

94. So far as the second question is concerned, it relates to the applicability of section 22, sub-section (5-A). I fail to see how that sub-section can have any application to the facts of the present case. The conditions requisite for the applicability of that sub-section are that it must be found by some authority under the Act that the person who has been registered as a dealer on his own application ought not to have been so registered and when that condition is satisfied, the sub-section declares that he shall be liable to pay tax on his sales or purchases made during the period commencing on the date on which his certificate took effect and ending with its cancellation, notwithstanding that he may not be liable to pay tax under section 3. The sub-section is intended to provide for a case where a person was not liable to pay tax under section 3 either by reason of the fact that he was not a dealer or his turnover did not exceed the relevant limit and was therefore not liable to be registered and yet was registered at his own instance on an application made by him. In such a case, when it is found that he was not liable to pay tax and ought not therefore to have been registered, he cannot contend that he was not liable to pay tax. Since the registration certificate was issued to him on his own application, he must be held liable to pay tax during the period that the registration certificate was operative. No such situation obtains in the present case. No authority has found that the assessee ought not to have been registered or that his registration should be cancelled. Here the question is entirely different. The assessee is admittedly a dealer in respect of other transactions carried on by it and it is properly registered as a dealer in respect of those transactions. The only question is in regard to sales effected by the assessee to its members in the canteen and so far as this activity is concerned, the assessee contends that it is not carrying on business and therefore those sales are not liable to tax. That contention is not met by anything in section 22, sub-section (5-A) and, for reasons which I have given above, it must be accepted as correct. The answer to the second question must also therefore be in the negative as proposed by Mehta, J.

95. The Commissioner will pay the costs of the reference to the assessee.

96. Reference answered accordingly.


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