Liability of the association to pay sales tax on the turnover of the mess.

SETHURAMAN, J.

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. 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.

As considered by the Appellate Tribunal itself, the matter will have to be approached from two standpoints. One is to see what would be the legal position if the association itself was running the hostel. The second is to examine the matter in the light of the students themselves running the hostel for themselves by adopting the dividing system.

Even assuming that the association itself was running the hostel, the point to be considered is whether there was any sale by the association as a dealer at the time when the food items were taken by the students. The objects of the association have been set out earlier. From the objects themselves it is clear that the idea is to promote a kind of camaraderie among the families of the members, who were Government servants of the State or of the Centre. There is also a provision for the grant of allowances to the widows or children of members who might have been left destitute. This object also shows that the idea was to take the family as a unit and the aim of the association was to be of assistance to the families.The hostel has been running for a long time in order to accommodate the children of the Government servants, who are working elsewhere and whose children are educated in Madras. The qualification for joining the hostel is that the child or the student must belong to the family of the officer, who is a member. If such an instituti