INDIAN COFFEE BOARD BATLAGUNDU Vs. STATE OF MADRAS

JUDGEMENT

(1.) THESE two petitions relate to the same assessee. T.R.C. No. 2112 of 1952 relates to the assessment year 1948-49 while T.R.C. No. 2111 of 1952 relates to the assessment year 1949-50. The assessee is the Indian Coffee Board, Batlagundu. It was assessed to sales tax on a turnover of Rs. 1, 97, 30, 968-6-3 during the assessment year 1948-49 and on a turnover of Rs. 3, 89, 275-2-8 during the assessment year 1949-50. The only question which was raised and argued on behalf of the assessee in these two petitions was whether the assessee, the Indian Coffee Board, which derives its existence from the Coffee Market Expansion Act (VII of 1942) is a dealer within the meaning of Section 2(b) of the Madras General Sales Tax Act, 1939. The definition as given in the Act is :- "'Dealer' means any person who carries on the business of buying or selling goods." There is an explanation to the definition which states :- "A co-operative society, a club, a firm, or any association which sells goods to its members is a dealer within the meaning of this clause."

(2.) TO solve the problem raised it is necessary to refer to the provisions of the Coffee Market Expansion Act, 1942, under which the assessee Board was constituted. The Act was passed by the Indian Legislature on 2nd March, 1942, with a view to continue the provisions made under Ordinance XIII of 1940. The object of the Ordinance and the Act is to give assistance to the coffee industry by regulating the export and sale of coffee and by other means. This was done as declared by Section 2 of the Act with the object of the Central Government taking under its control the development of the coffee industry in the interests of the public. The control of marketing of farm produce for the economic benefit of the producers and to bring about collective marketing of the produce is a recognised feature of Governments of several countries, particularly, United States of America, Britain and Australia. The object is to prevent unhealthy competition between producers, to secure the best price for the produce in the local market, to conserve for local consumption as much produce as is needed and make available the surplus for export outside the States and also to foreign markets. The method usually adopted to achieve the object is to establish a marketing board with power to control the prices, to obtain possession of the produce and to pool it with a view to collective marketing. The legislation in this behalf is compendiously described as "pooling legislation" and is based on the fundamental idea that the collectivist economy is superior to individualistic economy. Thus there are different marketing boards for different kinds of produce, such as sugar, dairy produce, wheat, lime fruit, apples, pears and so on. The Indian Coffee Market Expansion Act was modelled somewhat on the lines which obtain in other countries and was intended to control the development of the coffee industry and to regulate the export and sale of coffee.Section 4 of the Act relates to the constitution of the Board, and representation of various interests in the production of coffee and its marketing is secured by this section. Under Section 5 the Board derives its incorporation and it is a body corporate having perpetual succession and a common seal with power to acquire and hold property, movable and immovable, and to enter into contracts it could sue and be sued in the name of the Indian Coffee Board. Section 7 provides for the election of the chairman of the Board and for appointment of committees by the Board for such purposes as it may deem necessary for the efficient discharge of the functions under the Act. Section 8 provides for the appointment by the Central Government of a Chief Coffee Marketing Officer to exercise such powers and perform such duties under the directions of the Board as may be prescribed by the Central Government. Provision is also made for the appointment of Deputy Chief Coffee Marketing Officer. Both of them may be either salaried or unsalaried. If salaried, the Board has to pay such salary as may be fixed by the Central Government. Section 9 empowers the Board to make bye-laws consistent with the Act and the rules make thereunder to provide for the enumerated matters in the said section. Sections 11 and 12 relate to duties of customs and of excise which are not relevant for the present purpose. Section 14 requires that every person owning land planted with coffee plants aggregating not less than ten acres, whether such land is comprised in one estate or in more than one estate, should get himself registered. Under Section 15 the Central Government is empowered after consultation with the Board to fix the price or prices at which the coffee may be sold, wholesale or retail, in the Indian market and a registered owner or licensed curer or dealer is prohibited from selling coffee wholesale or retail in the Indian market at a price or prices higher than the price fixed by the Central Government. A registered owner is prohibited by section 17 from selling or contracting to sell in the Indian market coffee in excess of the internal sale quota. Section 18 provides that a registered owner should not sell coffee unless it has been cured as provided by the section and he is also required to sell it in accordance with the provisions of the licence obtained from the Board under Section 24. An unregistered owner and a registered owner are prohibited from selling or storing in an estate coffee grown on any estate and not grown on his own. Section 20 vests the power of export of coffee in the Board or under an authorisation granted by the Board. Re-import of coffee exported except under the permit granted by the Board is prevented by Section 21. Under Section 22 the Board is empowered to allot to each registered estate an internal sale quota for the year. Section 23 provides for the returns to be made by registered owners. Uncured coffee could be sold by a registered owner only if the complies with the provisions of Section 24. Section 25 is the most important section. All coffee produced by a registered estate in excess of the amount specified in the internal sale quota allotted to an estate, or when no internal sale quotas have been allotted to the estates, all coffee produced by the estate shall be delivered to the Board for inclusion in the surplus pool by the owner of the estate or by the curing establishment receiving the coffee from the estate. Coffee is delivered for inclusion in the surplus pool and after delivery to the Board it remains under the control of the Board which is made responsible for storage, curing and marketing of the produce. The coffee delivered by each owner is classified in value in accordance with the provisions of Section 25(4). The effect of so delivering the coffee to the Board is stated in sub-section (6) of Section 25, which runs as follows :-

(3.) IT was also pointed out that notwithstanding that the powers of the Government were imposed upon it by the statute, that circumstance would not make any difference and would not relieve the Government from all obligation of using ordinary care. The Privy Council held that the Government may be liable for negligence or want of reasonable and proper care, if proved. The position of the Coffee Board under the statute under consideration is entirely different from that of the Government who under the agreement obtained the goods in the case before the Judicial Committee in Welden v. Smith 1924 AC 484).