STATE OF GUJARAT Vs. VIJAPUR TALUKA RETI-KANKRE UDYOG KAMDAR SAHAKARI MANDALI LTD

JUDGEMENT

(1.) AT the instance of the State Government, the following two questions have been referred to us for our opinion under section 61 of the Bombay Sales Tax Act, 1959 (hereinafter referred to as "the Bombay Act") : " (1) Whether, on the facts and in the circumstances of the case, the opponent-society is a dealer within the meaning of section 2 (11) of the Bombay Sales Tax Act, 1959, and is liable to registration and payment of tax ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal is justified in holding that the period of limitation under section 35 of the Bombay Sales Tax Act, 1959, should be of five years and not eight years prior to the issue of assessment notice and further that the period of limitation under section 35 should be considered on the basis of the subsequent notices in form 28 dated 6th March, 1973, instead of the earlier notice in form 28 dated 11th March, 1971, for the combined period ?"

(2.) BRIEFLY stated, the facts giving rise to this reference are as under : The opponent-society is a co-operative society registered under the Bombay Co-operative Societies Act. It has 62 members on its register of members. The objects, inter alia, of the society for which it was incorporated are to safeguard the interest of the labourers engaged in the business of winning minor minerals such as sand and kankro from the river bed and for sale thereof to the prospective customers. These labourers are popularly known as vanjaras who are mostly illiterate people, and they are exploited by the selfish business interests on account of their illiteracy and want of business experience. It is with a view to put an end to the exploitation of these labourers and to ensure them payment of reasonable wages for the labour which they put in that the opponent-society was incorporated. The opponent-society (hereinafter referred to as "the assessee") entered into an agreement of lease with the President, Jhilla Panchayat, Mehsana, on 29th January, 1965, and it was agreed by and between the parties that the assessee was to win the aforesaid materials from the river bed on payment of the lease amount of Rs. 16,000 per year. This lease was renewed in subsequent years when the lease amount was increased to Rs. 20,000. The assessee was not entitled to transfer its right or interest in the said lease by way of sub-lease or otherwise, and it was not entitled to collect more than the fixed charges as agreed between the parties for sale of the materials. These charges comprised of royalty of Rs. 5 per brass of sand and maram, Rs. 7 per brass of kankro, the labour charges at the rate of Rs. 8 per brass of sand and maram and Rs. 26 per brass of kankro. The assessee was required to maintain full and complete accounts as directed by the jhilla panchayat. It was also under obligation to issue bills to the purchasers. In these bills, the amounts of royalty and labour charges were shown separately. The amounts recovered by way of royalty charges were credited in the trading books of the assessee-society to the royalty account, and the labour charges to the individual member's accounts responsible for winning the materials. The delivery of the materials is given only on the river bank and no customer was entitled to employ his own labourers to win the materials from the river bank covered by the lease agreement.

(3.) THE 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 :