The Madras Bakery Association vs The Deputy Commercial Tax Officer, Ayanavaram Division and Another

Kailasam, J.—This petition is filed by the Madras Bakery Association represented by its president for the issue of a writ of certiorari to call

for the records and to quash the order of the Deputy Commercial Tax Officer dated 5th October, 1966, and that of the Deputy Commissioner of

Commercial Taxes, dated 3rd December, 1966, confirming the order of the Deputy Commercial Tax Officer and to quash the same.

The petitioner is the Madras Bakery Association which is registered under Act 21 of 1860. The objects of the association, among others, is to

make necessary arrangements to obtain maida, sugar and other requirements of its members, the bakeries of Madras, for the manufacture of

bread, buns, cakes, biscuits and other confectionaries by the members. The Deputy Director (Rationing), Madras, by his proceedings dated 11th

February, 1966, permitted the petitioner-association to draw the quota of their members from three flour mills, viz., Century, Flour Mills, South

India Flour Mills and Taj Roller and Flour Mills. The association was directed to pay the value of the allotment of their members per month in the

form of demand drafts drawn in favour of Deputy Director (Civil Supplies) and obtain necessary delivery orders on any of these flour mills. The

association was also permitted to draw the commodities sanctioned to their members at wholesale issue price.

The Deputy Commercial Tax Officer directed the petitioner-association to submit a monthly turnover about the distribution of maida for the

month of August, 1966. On 23rd September, 1966, the petitioner wrote to the Deputy Commercial Tax Officer stating that he is not liable to pay

any sales tax on the distribution of maida to its members ; but still he was submitting a monthly turnover as required on the distribution of maida for

the month of August, 1966. In the monthly return, the petitioner submitted that his turnover was Rs. 3,55,277.84 nP. but he was entitled to

exemption on a turnover of Rs. 3,55,277.84 nP. On receipt of this return, the Deputy Commercial Tax Officer issued a notice on 26th September,

1966, that it was proposed to assess the petitioner provisionally on a taxable turnover of Rs. 3,55,277.84 nP. Objections were invited before 4th

October, 1966. As no objection was received on or before 4th October, 1966, the Deputy Commercial Tax Officer proceeded to assess the

petitioner provisionally for the month of August on the taxable turnover of Rs. 3,55,277,84 nP. The petitioner preferred a revision to the Deputy

Commissioner of Commercial Taxes, Madras. The Deputy Commissioner of Commercial Taxes confirmed the provisional assessment made by the

Deputy Commercial Tax Officer.

Mr. Louis, the learned counsel for the petitioner, challenged the validity of the provisional assessment on the ground that the petitioner-

association is not a dealer and that it is not liable to be assessed to any sales tax. The word ""dealer"" is defined in Section 2(g) of the Madras

General Sales Tax Act, 1959 (Madras Act 1 of 1959), as meaning any person who carries on the business of buying, selling, supplying or

distributing goods, directly or otherwise, whether for cash, or for deferred payment, or for commission, remuneration or other valuable

consideration. ""Business"" is defined as including any trade, commerce or manufacture or any adventure or concern in the nature of trade,

commerce or manufacture whether or not such trade, commerce, manufacture, adventure or concern is carried on with a motive to make gain or

profit and whether or not any profit accrues from such trade, commerce, manufacture, adventure or concern; and any transaction in connection

with or incidental or ancillary to, such trade, commerce, manufacture, adventure or concern.

The activity in which the association is engaged cannot be said to be ""business"" and the association cannot be included within the term of

dealer"" under the Act. According to the objects of the association as given in the memorandum and articles of association, it is the duty of the

association to make necessary arrangements to obtain maida, sugar and other requirements of the bakeries of Madras for the manufacture of

bread, buns, cakes, biscuits and other confectionaries by the members. The activity of this association is, therefore, to obtain maida and sugar for

the bakeries who are the members of the association. This is not disputed as the Deputy Director (Rationing), Madras, in his communication dated

11th February, 1966, permitted the association to draw the quota of their members from the three flour mills. The association was directed to pay

the value of the allotment of their members per month by demand drafts and obtain necessary delivery orders on the mills. They were also

permitted to draw the commodities sanctioned to their members. This communication will indicate that what the association was doing was to

collect the quota of its various members, pay on their behalf, obtain delivery and to deliver the quotas to its members. This activity will not amount

to a business and the petitioner cannot be said to be a dealer. The petitioner-association is not engaged in buying or selling any commodity. All that

it is doing is collecting and distributing the maida to its members. The contention of the learned counsel that the petitioner-association is not liable to

tax has to be upheld. It was submitted on behalf of the department that the provisional assessment was made because the petitioner did not prefer

any objections to the provisional assessment. It may be that the petitioner did not specifically prefer any objections to the notice dated 26th

September, 1966. But in submitting his return, he had made it amply clear by his communication dated 23rd September, 1966, that he was not

liable to pay any tax. The plea that the assessment was made because the petitioner did not object cannot, therefore, be accepted.

This writ petition is allowed. No order as to costs.