MEHTA, J. -
(1.)AT the instance of the State Government, the following two questions have been referred to us for our opinion under section 61 of the Bombay Sales Tax Act, 1959 (hereinafter referred to as "the Bombay Act") : " (1) Whether, on the facts and in the circumstances of the case, the opponent-society is a dealer within the meaning of section 2 (11) of the Bombay Sales Tax Act, 1959, and is liable to registration and payment of tax ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal is justified in holding that the period of limitation under section 35 of the Bombay Sales Tax Act, 1959, should be of five years and not eight years prior to the issue of assessment notice and further that the period of limitation under section 35 should be considered on the basis of the subsequent notices in form 28 dated 6th March, 1973, instead of the earlier notice in form 28 dated 11th March, 1971, for the combined period ?"
(2.)BRIEFLY stated, the facts giving rise to this reference are as under : The opponent-society is a co-operative society registered under the Bombay Co-operative Societies Act. It has 62 members on its register of members. The objects, inter alia, of the society for which it was incorporated are to safeguard the interest of the labourers engaged in the business of winning minor minerals such as sand and kankro from the river bed and for sale thereof to the prospective customers. These labourers are popularly known as vanjaras who are mostly illiterate people, and they are exploited by the selfish business interests on account of their illiteracy and want of business experience. It is with a view to put an end to the exploitation of these labourers and to ensure them payment of reasonable wages for the labour which they put in that the opponent-society was incorporated. The opponent-society (hereinafter referred to as "the assessee") entered into an agreement of lease with the President, Jhilla Panchayat, Mehsana, on 29th January, 1965, and it was agreed by and between the parties that the assessee was to win the aforesaid materials from the river bed on payment of the lease amount of Rs. 16,000 per year. This lease was renewed in subsequent years when the lease amount was increased to Rs. 20,000. The assessee was not entitled to transfer its right or interest in the said lease by way of sub-lease or otherwise, and it was not entitled to collect more than the fixed charges as agreed between the parties for sale of the materials. These charges comprised of royalty of Rs. 5 per brass of sand and maram, Rs. 7 per brass of kankro, the labour charges at the rate of Rs. 8 per brass of sand and maram and Rs. 26 per brass of kankro. The assessee was required to maintain full and complete accounts as directed by the jhilla panchayat. It was also under obligation to issue bills to the purchasers. In these bills, the amounts of royalty and labour charges were shown separately. The amounts recovered by way of royalty charges were credited in the trading books of the assessee-society to the royalty account, and the labour charges to the individual member's accounts responsible for winning the materials. The delivery of the materials is given only on the river bank and no customer was entitled to employ his own labourers to win the materials from the river bank covered by the lease agreement.
The Sales Tax Officer, having come to know about the dealings of the opponent-society, made an inquiry and found that the assessee should have obtained registration under the Bombay Sales Tax Act, 1959, from 1st April, 1962. He, however, directed that the society should be held liable from 1st April, 1964, for payment of tax on all its turnover of sales of the materials extracted by it having regard to the nature of the members. The assessee contended that it was not a dealer since it was not engaged in carrying on any business in the commercial sense, and it was formed only for the purposes of providing employment to its members who are illiterate. This contention did not find favour with the Sales Tax Officer. The Sales Tax Officer, therefore, assessed the assessee for 4 periods, namely, (i) 1964-65, (ii) 1965-66, (iii) 1966-67 and (iv) 1967-68. The assessments were set aside since the Sales Tax Tribunal, held that the assessments were bad because a consolidated notice was issued for a combined period of four years on 11th March, 1971. On remand, fresh notices were issued on 6th March, 1973, for each of the assessment periods and the assessment was made under section 35 of the Bombay Act.
The assessee, therefore, carried the matter in appeal before the Assistant Commissioner by filing four appeals who dismissed the same.
(3.)THE assessee, therefore, carried the matter in appeal before the Tribunal by filing four appeals. THE Tribunal held that if the assessee was held to be a dealer, the Sales Tax Officer could have assessed it within a period of five years prior to the date of the issue of notice, that is, 6th March, 1973, and, therefore, all the assessments were time-barred. THE Tribunal further held that the assessee was not a dealer since its objects, inter alia, were to safeguard the interest of the labourers and to provide them with gainful employment, and that it was not carrying on any business in a commercial sense with a view to earn profits. Consequently therefore the Tribunal held that the assessee-society was not liable to registration and pay tax under the Bombay Act :
Four contentions were raised before the Tribunal on behalf of the assessee-society. The first contention urged on behalf of the assessee-society before the Tribunal was that since there was no concealment on the part of the assessee, the period of limitation for purposes of assessment should be five years immediately preceding the date of issuance of the notice after remand, that is, 6th March, 1973 and not the original notice of 11th March, 1971, the assessments in pursuance of which were set aside. The second contention was that the assessee acted as an agent for jhilla panchayat, and therefore, could not be held liable for payment of tax under the Bombay Act. The third contention was pertaining to the quantum of sale price which, according to the assessee-society, should be exclusive of the labour charges which are collected on behalf of the individual members, credited as labour charges in the individual member's account and paid to them directly by the society. The fourth contention was that the assessee-society was not a dealer.