JOINT COMMERCIAL TAX OFFICER HARBOUR DIVISION II MADRAS Vs. YOUNG MENS INDIAN ASSOCIATION REGD MADRAS

JUDGEMENT

(1.) THESE appeals by certificate are directed against a common judgment of the Madras High Court in petitions filed under Article 226 of the Constitution by the Cosmopolitan Club, Madras, the Young Men's Indian Association, Madras and the Lawley Institute. Ootacamund challenging the proceedings relating to their assessment to sales tax under the Madras General Sales Tax Act, 1959, hereinafter called the "Act", for supplying food, snacks, beverages and other articles to their members or their guests. It was held by the High Court that each of these clubs could not be regarded as a "dealer" within the meaning of S. 2 (g) read with Explanation I of the Act nor was any 'sale' involved in the aforesaid activity of the club within the meaning of S. 2 (n) read with Explanation I of the Act.

(2.) THE Cosmopolitan Club, Madras, is a social recreation club which was started originally in the year 1873 as an unincorporated association. In 1934 it was registered under S. 26 of the Indian Companies Act 1913 as a non-profit earning institution. Its objects, as disclosed in the memorandum of association, are mainly to promote and facilitate social intercourse, discussion amongst its members etc. THE articles of association provide that the members for the time being only constitute the club. It maintains an establishment for preparing and supplying refreshments to its members. It has been found by the High Court and has not been disputed that the articles necessary for the aforesaid purpose are purchased by the club in the market and the preparations are made within its premises at the direction of a committee. THE preparations are supplied to the members at such prices as are fixed by the committee. A member is allowed to bring guests with him but if any article of food is consumed by the guest it is the member who has to pay for the same.

(3.) IT appears that in the State of Madras levy of sales tax was first made in 1939. The statute as it stood then contained the definition of "dealer" in S. 2 (b). A dealer was defined as "any person who carried on any business of buying, or selling goods" with the following Explanation: