STATE OF TAMIL NADU Vs. INDIAN OFFICERS ASSOCIATION

JUDGEMENT

(1.) THESE revisions have been filed by the State of Tamil Nadu to revise the order of the Sales Tax Appellate Tribunal, Madras, made in T.A. Nos. 380 and 381 of 1974 dated 3rd September, 1974. The assessee is an association of the officers of the State and Central Governments and also quasi-Government employees. It came into existence in 1907 and was registered under the Societies Registration Act of 1860 in 1909. The objects of the association are to promote sympathy and friendly intercourse amongst its members to grant allowance to the widows or children of members who might have bee left destitute and who, in the opinion of the committee, are deserving help to grant scholarship to deserving Indians for competing for any of the Government services or for acquiring proficiency in any Science, Art or Industry and to grant advances of money to members visiting foreign countries for professional studies. The association is running a hostel in the name of "Indian Officers' Association Hostel" at Mohana Vilas, Royapettah, Madras.

(2.) THE hostel has its separate rules and has separate accounts. In the years 1966-67 and 1971-72, the sales tax authorities took action in levying sales tax on the turnover of the mess in the hostel. THE assessee claimed that it was not a dealer under the Sales Tax Act, and also claimed exemption on the basis of the Supreme Court's decision in the case of Young Men's Indian Association, Madras, Cosmopolitan Club, Madras, and Lawley Institute, Ootacamund THE assessing authorities rejected this claim for exemption on the ground that the inmates of the hostel were not members of the association.With effect from 1st January, 1973, a new class of membership know as the "Associate Members" was introduced and the inmates would be associate members. In spite of these amendments, the sales tax authorities held that these amendments taking effect only from 1st January, 1973, would not affect the years with which we are now concerned. THE assessment so made was confirmed by the Appellate Assistant Commissioner in appeal. When the matter came before the Sales Tax Appellate Tribunal, the Tribunal after elaborately considering the facts as well as the other decisions cited before it, came to the conclusion that the inmates of the hostel were following a dividing system, that they had formed themselves to be a separate group which did not have a separate existence from its members and that there was no sale within the meaning of the Tamil Nadu General Sales Tax Act. It is this order which is now questioned in this revision.

(3.) THE case would fall within the principles of the decision of this Court in State of Tamil Nadu v. Madras Advocates' Co-operative Society Ltd. In that case, the Advocates of this Court were running a co-operative society, which was registered for the purpose of running a restaurant for the benefit of its members on a non-profit basis to the members, being the Advocates practising in this Court. THE co-operative society was assessed to sales tax on the ground that it was effecting sales of food and refreshments. THE contention of the assessee was that it was not taxable, as it was neither a dealer nor doing any business and was its transactions did not amount to sales. This contention was negatived by the assessing authority and the Appellate Assistant Commissioner. THE Tribunal found that the assessee was supplying tiffin and refreshments only to its bona fide members and that it was not effecting any sales and it was not a dealer under the Act. When the matter came before this Court, it was held that there was no sale of any refreshments by the assessee and that, therefore, the assessee was not liable to sales tax. It was further held that in the case of a members' club, even though it is a distinct legal entity, it is acting only as an agent for the members in the matter of supply of various preparations and articles to them, that there was no element of transfer in such supplies, and that, therefore, it was held that there was no sale involved. It may also be mentioned here that this decision was sought to be challenged by filling an appeal to the Supreme Court and the Supreme Court did not grant special leave for the purpose, the leave petition filed in this Court having failed earlier.THE only difference between that case and the present one in that, in the quoted case, the sale was only to the members. Here the service of food is to the children belonging to the family of the members. THE family, as mentioned already, is being treated as a unit for the purpose of this association. THErefore, when the food article were provided to the inmates of the hostel drawn from the families, there was no transfer or sale in favour of the inmates of the hostel.