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The Madras Advocates' Co-operative Society Ltd. Vs. the Joint Commercial Tax Officer (11.02.1971 - MADHC) - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtChennai High Court
Decided On
Case NumberWrit Petition No. 901 of 1963
Judge
Reported in(1971)IIMLJ77; [1971]28STC224(Mad)
AppellantThe Madras Advocates' Co-operative Society Ltd.
RespondentThe Joint Commercial Tax Officer
Appellant AdvocateS. Narayanaswamy and ;T.V. Ramanathan, Advs.
Respondent AdvocateGovernment Pleader assisted by ;D. Raju, Adv.
DispositionPetition dismissed
Cases ReferredIn Joint Commercial Tax Officer v. Young Men
Excerpt:
- .....ltd. [1968] 21 s.t.c. 317 the supreme court has held the view that in. the case of an incorporated society, club or firm or an association, ordinarily the supply and distribution by such society, club etc., 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 etc., 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. in joint commercial tax officer v. young men's indian association [1970] 26 s.t.c. 241 the supreme court considering such situations in relation to the cosmopolitan club, young men's indian association and the lawley institute found.....
Judgment:
ORDER

Ramaprasada Rao, J.

1. The petitioner is a co-operative society registered under the Madras Co-operative Societies Act. The membership of the society is restricted to Advocates practising in the city of Madras. One of the objects of the society is the running of a restaurant for the benefit of the members on a non-profit basis. It is claimed that the society was subject to sales tax on the value of the refreshments supplied to its members till 30th September, 1962. But, thereafter, the petitioner did not file the usual returns and claimed exemption on such sales of eatables to its members both on the basis of non-liability to pay tax under the Madras General Sales Tax Act and also on the ground that it was entitled to exemption. The Government did not exempt and finally what happened was that the Joint Commercial Tax Officer, Esplanade Division, by his notice dated 20th July, 1963, called upon the petitioner to file the returns in form A-2 for the months of April and May, 1963. The petitioner, through its secretary, submitted its returns for April, 1962, to September, 1962, but, thereafter, once again, defaulted in submitting the returns from October, 1962, to March, 1963. It appears however that certain accounts were produced by the clerk of the society and on a prima facie scrutiny of the same, the Joint Commercial Tax Officer, Esplanade Division, entertained the view that the petitioner was assessable to sales tax and, therefore, issued the impugned notice on 7th August, 1963, stating that he proposed to finally assess the society for 1962-63 on a stated figure and at a noted rate mentioned therein. The petitioner was asked to show cause as to why it should not be finally assessed. On receipt of this notice, the petitioner has come up to this Court for the issue of a writ of mandamus.

2. The respondent in his counter-affidavit emphatically denies the factual statements made by the petitioner and states that the members do not have complete title to the property of the society and as such the transactions by which the club makes over its property to its members for a price should be regarded as a sale liable to sales tax under the Act.

3. In the view that I intend taking, it is not necessary for me to scrutinise the law on this point, which is rather difficult to assimilate due to certain variations thereto found in the statements of law as propounded by the Supreme Court itself. In Deputy Commercial Tax Officer v. Enfield India Ltd. Co-operative Canteen Ltd. [1968] 21 S.T.C. 317 the Supreme Court has held the view that in. the case of an incorporated society, club or firm or an association, ordinarily the supply and distribution by such society, club etc., 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 etc., 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. In Joint Commercial Tax Officer v. Young Men's Indian Association [1970] 26 S.T.C. 241 the Supreme Court considering such situations in relation to the Cosmopolitan Club, Young Men's Indian Association and the Lawley Institute found that no transaction of sale was involved in the supply of refreshments and preparations by each one of them to its members and no tax could be levied under the Act.

4. To go back to the Enfield case [1968] 21 S.T.C. 317 it made it conditional for a society to gain exemption that it should prove that the society is acting merely as an agent of its members in providing facilities for making food available to the members. It also expressed the view that from the mere fact that the society supplies 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 its members. It is in this view that I said that there appears to be some possible scope for the contention that the law varies and depends on the proof of facts. But this is a matter which has to be scrutinised when the occasion arises. As the matters stand, one is not sure whether the facts as sworn to in the affidavit in support of the writ petition by the petitioner are true and correct, or whether the emphatic denial made by the department in its counter-affidavit has to be accepted. This is a case in which cogent material is not available to adjudicate thereon by applying the law as it stands. In the Y.M.I.A. case1 and the Enfield case [1968] 21 S.T.C. 317, referred to above, there were final assessments by the department and therefore all the necessary materials were available before the court to opine thereon. But, in the instant case, due to lack of material and due to the fact that there is no final assessment either, it is not possible to speculate as to which of the ratio referred to by the Supreme Court in the decisions has to be applied.

5. The petitioner has come up to this Court for the issuance of a writ of mandamus on a proposal mooted by the department. The petitioner has not yet fully placed its material for the department to appreciate and apply the correct law on it. In these circumstances, I am unable to interfere by issuing a writ of mandamus which presupposes that the department has no jurisdiction to assess the petitioner and that there is indeed a public duty on the part of the respondent to avoid undertaking any such assessment proceedings against the petitioner. As the main limbs which are necessary for the issue of a writ of mandamus are absent and even otherwise as there are no facts or material on which the correct law could be applied, I, in my discretion, am unable to make the rule absolute. The rule nisi is discharged. The writ petition is dismissed. No costs.

6. The petitioner, however, is at liberty to place all the material to substantiate its contention that it would come under the rule of exemption in one of the cases cited above, and the department would afford such opportunity to the petitioner, and thereafter proceed in accordance with law.


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