State Of Gujarat vs Vijapur Taluka Reti-Kankre Udyog ... on 5 March, 1982
22. Our attention has been invited by the learned Government Pleader to a decision of a Division Bench of this Court in Harmadia Vividh Karyakari Sahakari Mandali Ltd. v. Commissioner of Sales Tax [1974] 34 STC 409, where the bye-laws of the assessee-society before it registered under the Bombay Co-operative Societies Act, 1925, enabled it to raise funds to advance loans at cheap rates to its members, especially for the needs of farming, and to purchase agricultural implements, household goods, etc., and sell them to its members, non-members and others working in that area, and which bye-laws authorised the society to sell on commission crops of its members as well of the members of the other co-operative societies functioning in that area and also to sell products of village co-operative societies functioning in that area and also to sell products of village industries. Every member of the said society, to whom loan had been advanced by it, was under an obligation to sell his crop in excess of the needs of his family through the society. The society maintained two sets of accounts one for money lending and another for sales and stores. In the course of assessment period from 1st January, 1960, to 6th June, 1961, the society was assessed to tax on its turnover of sale of groundnuts which were sold in a public auction after pooling the groundnuts of all its members by accepting the highest bid of the purchaser who paid the entire consideration to the society which, after deducting its market yard charges at the rate of one paise and commission at the rate of five paise per maund, credited the net sale proceeds to the individual member's account. The Tribunal found that having regard to the fact that there was only one transaction of turnover of sale, the amount of commission earned was less than the expenses incurred for sale, and therefore, the society had not made any profit out of the sale of groundnuts, and therefore, there was no profit-motive on the part of the society which had only for purposes of recovery of its loans stocked and sold the groundnuts of its loanee-members.