Paritosh Kumar Mukherjee, J.
1. A 'short point', which falls for determination in the instant writ petition is that whether Royal Calcutta Turf Club (hereinafter referred to as 'the said club') is carrying on business and. is a 'dealer' within the meaning of Section 2(c) of the Bengal Finance (Sales Tax) Act, 1941 and further the transactions involving supply of refreshment and drinks to the members of the said club are really transaction of sale and the sales of old assets of the club are amenable to sales tax.
2. Pran Prashad and 4 others, who are all members and stewards of the said club are petitioners before this Court and the subject-matter of challenge is a revisional order passed by the Member, West Bengal Commercial Taxes Tribunal, whereby the said authority has affirmed the finding of the Assistant Commissioner of Commercial Taxes, whereby the said Assistant Commissioner held that the club is a 'dealer' within the meaning of the Act and the sales of assets made by the dealer were exigible to tax under the provisions of the said Act and that all the supplies of drinks, refreshment and other goods against price were also sales exigible to tax, subject to the restriction that if the dealer can prove that a part of such supply was made to club members (not stand members) but qua members then the part of the supply would not be deemed to be exigible to tax.
3. By order dated September 21, 1981, the learned Assistant Commissioner, Commercial Taxes, Calcutta (South) Circle, on such 'limited question', remanded the matter back to the Commercial Tax Officer, which finding has been affirmed by the Member of the said Tribunal in the penultimate paragraph of the judgment and which has been impugned in the present writ petition.
4. In conclusion, the Member of the said Tribunal, by his order dated February 1, 1984 arrived at the conclusion that the learned appellate authority had correctly concluded that so far as the sales to the persons other than the club members are concerned, those should be charged to tax, after necessary enquiry into its extent.
5. The facts of the case are as follows :
The petitioners are all members and stewards of the said club. The affairs of the said club are managed by five stewards who are elected annually by and from the members. At a meeting held on February 22, 1847, at the Race Stands, certain gentlemen resolved to form a permanent association to regulate all matters concerned with racing and to protect the interests of the Turf and resolved to form themselves into the Calcutta Turf Club under such rules as should thereafter from time to time be agreed upon. After that date election to the said club was to be by ballot. In 1913, the club acquired the title 'Royal' on the occasion of the visit of King George V and Queen Mary. At a meeting held on March 2, 1849, it was decided that one body of five stewards should run both the club and the racing. In 1907, a more extended form of membership was found to be necessary and the system of stand membership which has been in force since then was introduced. Both club members and stand members are equally entitled to all entertainments, amenities and facilities offered by the club at the race course. On payment of their respective entrance fees and annual membership subscriptions both club members and stand members are entitled to free admission at the race course on Calcutta race days. There are two members' bar at the race course, one for club members and the other for stand members. In addition, there is also a club members' bar at the club house.
6. In the objects of the, club it has been specifically claimed that in order to maintain a club house in Russel Street and a race course on the maidan, where racing is carried on under its auspices, members of the public are permitted to attend the races upon payment of a fee. The club regulates the betting at such races and licenses the bookmakers and operates a totalisator machine. The club has been appointed the agent of the Government of West Bengal for the collection of the tax which the said Government imposes on racing.
7. In order to promote racing and encourage its members and other owners to buy horses and run them at the Calcutta races, the club has, from time to time, introduced various schemes. The main auctions of race horses are held at Bombay and Madras. One such scheme provided for substantial discounts to members on the price of horses purchased by them at such auctions, a one-way railway fare for such horse from the auction to Calcutta to be paid by the club. The club also introduced various schemes through which horses sold at such auctions could be purchased by its members and other intending owners on fairly easy terms. During the year, which ended on March 31, 1974, the club had two such schemes, namely, a discount scheme known as 'purchase scheme 1973-74' and a loan scheme known as 'alternate purchase scheme 1973-74'. In the subsequent year which ended on March, 1975, the club continued its said discount scheme but replaced the aforesaid loan scheme with a lease scheme known as 'lease scheme 1974-75'. Horses bought under any of the above schemes were required to race in Calcutta for at least three seasons. Participation in the aforementioned auction sales and the bidding of tenders for the lease of horses under the club's said lease scheme for 1974-75 were restricted to its club members, stand members and bidders, who after having applied were registered as approved bidders by the stewards of the club. The sale of horses by way of such auction constituted only a part of the club's effort to stimulate racing in Calcutta, in furtherance of and ancillary to its main activity, namely, racing. Receipts from such auction sales are insignificant compared with its turnover from racing.
8. According to the petitioners, the aforesaid auction sales were regarded as social events. As such, as an integral part thereof, the club also arranged to make available to its members and those permitted to attend these auction sales as approved bidders, refreshments in the form of beverages and snacks. The said refreshments and/or other services and amenities provided by the club were meant for consumption and/or enjoyment, exclusively within the club premises.
9. In order to organise and encourage horse racing as a sport, the club is required to have its own,accommodation and maintain its own establishment. For the purpose of such accommodation and/or establishment from time to time the club has also to buy various assets like furniture, air-conditioners, radios, motor cars, etc. When such assets become unserviceable the club disposes of them either directly or through auction and buys new ones. Such sales are of casual nature and are not made on a commercial scale or with any motive of making profit.
10. It is further case of the petitioners that although the club has never been and is still not a 'dealer' within the meaning of the Bengal Finance (Sales Tax) Act, 1941, it had registered itself as a 'dealer' under the provisions of the said Act on a mistaken notion of its position under the law and was granted a registration certificate. The club has since been correctly advised as to the law and has surrendered the said registration certificate on September 15, 1980 and the said registration certificate now stands cancelled.
11. By orders of assessment dated June 14, 1977 and November 21, 1978, the Commercial Tax Officer, respondent No. 1, had assessed the club and disallowed its claim with regard to receipts against the supply of wine to members and the sale of old machines and brought to tax a sum of Rs. 53,120 as price received against sale of old machines and a sum of Rs. 1,37,137 as representing the sale of wine by the club to its members and also a sum of Rs. 800 as representing the sale by the club of one of its old air-conditioners.
12. An appeal was preferred against the said order to the Assistant Commissioner, Commercial Taxes, Calcutta (South) Circle, being the respondent No. 2 and it was contended that the club, which did not carry on the business of selling goods, was not a dealer and, therefore, not liable to tax and that in any event, the supply of refreshments to its members by the club could not amount to a sale, but was merely a release to the consuming member of their rights in the thing consumed by the other members.
13. It appears from the order of the Assistant Commissioner of Commercial Taxes, however, that the said authority after referring to the several decisions of the Supreme Court as well as our High Court held that the appellant-club supplied refreshments, etc., to its members only as a matter of course. But the crucial test was mainly relevant to the point whether the appellant was a 'dealer' or not. The appellate authority has observed that the club was engaged in the sale of goods as a regular business and, therefore, there was no reason why it should not be a 'dealer'.
14. In revision, the Member, West Bengal Commercial Taxes Tribunal, had merely endorsed the view of the appellate authority whereby the appellate authority held, as far as the sales to persons other than the club members were concerned, that those should be charged to tax after necessary enquiry into its extent.
15. The order of the Member, West Bengal Commercial Taxes Tribunal, has been impugned in the instant writ petition.
16. Mr. Arijit Chowdhury, learned Advocate appearing in support of the petitioners, has placed the history of setting up of the club and the main objects from paragraphs 6 and 6 of the instant writ petition, that the auction sales were regarded, as social events and as an integral part thereof, the club also arranged to make available to its members and those permitted to attend these auction sales as approved bidders, refreshments in the form of beverages and snacks and these activities are 'merely ancillary' to the main purpose and there is no commercial activity behind the same.
17. According to Mr. Chowdhury, the main activities of the club were and are not selling of goods and as such, the petitioner-club cannot be treated as a 'dealer' within the meaning of Section 2(c) of the Bengal Finance (Sales Tax) Act. In this regard, he has placed reliance of a judgment of this Court in the case of Chief Commercial Superintendent v. Member, Board of Revenue, reported in [1973] 32 STC 171, decided by the Bench consisting of Sabyasachi Mukharji (as His Lordship then was) and S.K. Hazra, JJ. It has been held in the said case that if no trade, commerce or manufacture or adventure or concern in the nature of trade, commerce or manufacture is carried on in respect of selling goods, then any transaction which is incidental or ancillary to such trade, commerce or manufacture or concern cannot come within the ambit of the definition of 'dealer' in Section 2(c) of the Bengal Finance (Sales Tax) Act, 1941, as amended by the West Bengal Taxation Laws (Amendment) Act, 1969. It has been further held therein that when a 'person' carries on composite operations the true character of the essential operation has to be found out. If the essential operation is the business of selling goods, any incidental or ancillary transaction arising as an incident of such sale, would also be included in the definition of 'business', but not beyond it.
18. In the said case, after interpreting Section 56 of the Indian Railways Act, 1890, it has been further held that under Section 56 of the Indian Railways Act, 1890, if goods or animals coming into the possession of a railway for carriage or otherwise was not claimed by the owner, the railway administration should serve a notice requiring him to remove the animals or goods and, upon his failure, should dispose of the goods or animals and hand over the surplus, if any, of the sale proceeds to the person entitled to the same. Therefore, the question was whether the petitioner, the South Eastern Railway, could be considered as 'a dealer', within the meaning of Section 2(c) of the Act, for the purpose of its liability to sales tax in respect of the sales conducted by it under the provisions of Section 56 of the Indian Railways Act, 1890.
19. By applying the aforesaid tests, the Division Bench held in that case that the essential function of the petitioner was to carry passengers for fare and carry goods for freight and incidental and ancillary powers or authority had been given to it under the Railways Act to discharge those essential functions and one of such incidental powers was disposal of unclaimed goods. The main function of the petitioner was not carrying on the business of selling goods and, therefore, when the petitioner effected sales of unclaimed and unconnected goods, it was not a 'dealer', within the meaning of Section 2(c) of the Act.
20. Mr. Chowdhury had also placed strong reliance on the decision in the case of Royal Calcutta Turf Club v. Secretary of State for India reported in AIR 1921 Cal 633.
21. Mr. Chowdhury has referred to the aforesaid decision for the purpose of placing the object of the club, as set forth at length, which is as follows :
The present large operations of the club are the result of a gradual development. The proprietors of the club are the present members, none of whom derive or ever have derived any pecuniary profit from the operations of the club.
The objects of the club are the control and encouragement of racing, the conduct of the Calcutta races, the encouragement of countrybred horse breeding, the comfort and convenience of the members of the clubs and the general public attending the races in Calcutta and subsidizing of up-country meetings.
22. In the said case dealing with the provisions of the Excess Profits Duty Act, 1919, Sanderson, C.J., observed, as follows :
The fact that the members of the club do not receive any profit out of the transactions which are carried on by the club and that the admitted surplus is used for the purpose of subscribing to charities, is not material. The test is whether the moneys are received by the club and in exchange for something which is given by the club and in respect of which profit is made.
23. It appears that in the facts of the said case, it has been held that the provisions of the Excess Profits Duty Act, 1919, had been made applicable.
24. The above two decisions were cited both before the appellate authority as well as before the Member, West Bengal Commercial Taxes Tribunal and it appears from the revisional order that both the appellate authority and the Tribunal has considered the said cases and in page 9 of the order the Tribunal came to 'the conclusion' that the appellate authority had rightly held that the petitioner was 'a dealer', as referred to in sec-tion 2(c) of the Act. The petitioner's contention that promotion of racing is the main object of the club and that other activities of the club were only incidental or ancillary to, is difficult to accept at face value, as per observations made by the taxing authorities.
25. According to the Tribunal, both sales by auction made by the petitioner regularly and systematically and promotion of racing related to horses no doubt but it is too far-fetched to argue that the former are only ancillary or incidental to the latter.
26. Referring to the case of Chief Commercial Superintendent, South Eastern Railway [1973] 32 STC 171 (Cal), the Tribunal held that the sole activity of the assessee was transportation of freight and passengers by rail. Accordingly, the sales of surplus and discarded materials were only incidental to the activity of transportation and the main activity of the assessee in other cases cited was far from sale of goods.
27. Mr. Samarendra Nath Bose, appearing for the sales tax authorities, admitted that the writ petition at this stage is premature and is not maintainable, as there is no assessment standing against the petitioner-club, as the Assistant Commissioner of Commercial Taxes had set aside the order passed by the Commercial Tax Officer and remanded the matter back to the Commercial Tax Officer, being the assessing authority for further adjudication and there is no liability pending.
28. Next, Mr. Bose submitted that the petitioner is entitled to agitate this point in reference under Section 21 of the Bengal Finance (Sales Tax) Act, 1941, for determination of pure question of law, as to whether the petitioner is a dealer or not, but the petitioner not having done so, is not entitled to move the writ petition by-passing that alternative remedy.
29. Next, Mr. Bose submitted that the court is not expected to decide an academic point as, there has been no prejudice caused as yet, to the writ petitioners.
30. Mr. Bose placed strong reliance on the judgment of the Division Bench of the Madras High Court, in the case of State of Tamil Nadu v. The Hindu, reported in [1978] 41 STC 105. In the said case, the assessee was publishing the newspaper 'The Hindu' and had procured 'glazed newsprint' for use in the publication of 'Sport and Pastime'. When 'Sport and Pastime' was stopped, the assessee disposed of the available stock of glazed newsprint. The assessee also sold old newspapers, print waste and cut waste. The contention of the assessee that the sales of the glazed newsprint and old newspapers and other waste were not taxable, under the Tamil Nadu General Sales Tax Act, 1959. On a revision, it was held, that the assessee's sales of glazed newsprint, old newspapers, print waste and cut waste were liable to be taxed.
31. Mr. Bose has placed reliance on the affidavit-in-opposition affirmed by Debibrata Ray, Commercial Tax Officer, Park Street Charge, on February 17, 1988. In particular dealing with the allegations made in paragraphs 9, 10 and 11 of the writ petition, the said deponent stated that from the assessment records for the year ending March 31, 1974 and March 31, 1975, in respect whereof sums of Rs. 21,225.62 and Rs. 21,390.67 respectively were raised as assessed demands against the petitioners. The deponent further stated that in course of assessment, it was found that the petitioners had considerable volume, frequency, continuity and regularity of transactions of sale in a certain class of goods and, as such, it could not but be concluded that the petitioners were dealers for the purpose of the Act in question and assessable to sales tax, as such. The deponent further stated in the said affidavit that not only there were sales to two types of members, namely, 'club member' and 'stand member', but the petitioners had sales of goods to others, i.e., non-members of any variety. Moreover, it was also found that gross receipts of the petitioners mainly arose out of the sales on livestock, pulses and sundry items, in which the petitioner-club was engaged in sale as a regular business or feature. In this context, the petitioners' contention of not coming within the purview of 'dealer' as defined in Section 2(c) of the Act could not be accepted. Further, it was found that not only there was supply of refreshments to the club members, but also there was substantial sales to the stand members, who did not constitute the club at all. Accordingly, all supplies of goods to the stand members as well as to others who are not club members were held to have amounted to sales thereby becoming exigible to tax under the Act. Inasmuch as, the petitioner-club was held to be a 'dealer' its sales of assets were held to be incidental and ancillary to its activities which attracted sales tax under the law.
32. The appellate authority, however, remanded the matter before the Commercial Tax Officer (original assessing authority) for excluding the amount of supplies of refreshment to only the club members as such transactions did not constitute 'sales' within the meaning of the Act. A fresh calculation of tax liability after such exclusion was directed in the appellate order by the learned Assistant Commissioner of Commercial Taxes, respondent No. 3.
33. After placing the aforesaid statements from paragraph 7 of the affidavit, Mr. Bose, learned Advocate appearing for the taxing authority, submitted that since the entire matter has been 'remanded back', after holding the petitioner as 'a dealer', from the detailed reasons both given in the appellate order as well as in the revisional order, this Court in exercise of constitutional writ jurisdiction may not interfere with such finding of fact and the writ petition should be dismissed, accordingly.
34. After hearing both the parties at length, in my view since the matter has been 'remanded back' to the original assessing authority, for fresh assessment and further the judgment referred to in South Eastern Railway case [1973] 32 STC 171 (Cal) is not applicable in the facts of the present case with full force and the petitioner is not entitled to any relief whatsoever and, as such, the order passed by the Member, West Bengal Commercial Taxes Tribunal, does not call for any interference by this Court, as no finality has been reached and no prejudice has been caused to the writ petitioners.
35. More so, in my view, the decision reported in South Eastern Railway case [1973] 32 STC 171 (Cal) has no manner of application and the decision of the Madras High Court in [1978] 41 STC 105 (State of Tamil Nadu v. The Hindu) is applicable.
36. The writ petition is accordingly dismissed.
37. The rule is discharged.
38. The Commercial Tax Officer will now decide the matter as expedi-tiously as possible.
39. There will be no order as to costs.
40. As prayed for by Mr. Siddhartha Chatterjee, learned Advocate for the writ petitioner,operation of this order is stayed for six weeks.