JUDGMENT The judgment of the Court was delivered by A. P. RAVANI, J. - This is a reference under section 69 of the Gujarat Sales Tax Act, 1969. The opponent dealer is a co-operative society registered under the provisions of the Gujarat Co-operative Societies Act, 1961. It has been formed with an object to promote the interest of farmers of Anand Taluka in Kaira District, who may become the members of the society. It is also the object of the society to serve the interests of all other member co-operative societies of the same taluka. In order to achieve this object the society used to pool the unginned cotton produced by the farmer members and by the farmer members of other member co-operative societies. After ginning the cotton, the cotton and cotton-seeds are sold. Sometimes oil is extracted from the cotton-seeds and thereafter the oil is sold. The society carries on this activity for and on behalf of the members of the society. The society passed appropriate resolution for carrying on such activity on behalf of other member societies also located outside the Anand Taluka. In this connection, the society passed resolution and suitably amended bye-laws. Societies located outside Anand taluka are called "nominal members". While registering the society, a condition has been imposed to the effect that it shall not carry on any activity of purchase and sale on its own account, i.e., at its own risk and costs. This condition is imposed with a view to ensure that the society shall act only for and on behalf of its members including the nominal members. 2. While making assessment for the period commencing from November 1, 1974 to October 31, 1975, the Sales Tax Officer, Anand, held that the unginned cotton supplied by the members and nominal members to the society was a transaction of sale and purchase by the members of the society. He passed this order on May 31, 1978 and directed that the society should be taxed accordingly. An appeal against the same was preferred by the society before the Assistant Commissioner of Sales Tax, Ahmedabad. The appeal was dismissed. The society, thereafter, preferred second appeal before the Tribunal. 3. He passed this order on May 31, 1978 and directed that the society should be taxed accordingly. An appeal against the same was preferred by the society before the Assistant Commissioner of Sales Tax, Ahmedabad. The appeal was dismissed. The society, thereafter, preferred second appeal before the Tribunal. 3. On overall consideration of the facts and circumstances of the case and after hearing the parties the Tribunal held that the transactions between the society on the one hand and its members on the other hand, were not that of sale and purchase. In short, the Tribunal allowed the second appeal and reversed the order passed by the Sales Tax Officer and confirmed by the Assistant Commissioner of Sales Tax in appeal. 4. The Revenue filed application for making reference to the Court. The Tribunal after hearing the parties drew the statements of the case and referred the following question to this Court for its opinion. The question and our answer are as follows : Question Answer Whether, on the facts and in the circumstances In affirmative, of the case, the Tribunal was correct in law in in favour of holding that the transactions of supplying the the dealer relevant goods to Anand Taluka Co-operative opponent-society Cottonseeds Ginning and Pressing Society Ltd., and by its members, including "nominal members", against the which co-operative society thereafter carried Revenue. out ginning of the unginned cotton, the crushing of cotton-seeds and the sale of the resultant oil, did not constitute transactions of sale and purchase between the co-operative society and those members, including "nominal members" ? 5. The Tribunal has followed the decision of the Supreme Court in the case of Khedut Sahakari Ginning and Pressing Society Ltd. v. State of Gujarat reported in [1972] 29 STC 105; AIR 1972 SC 1786 . In this case the Supreme Court, inter alia, observed that the question whether a particular agreement is an agreement of sale or agreement of agency has to be decided on the basis of the terms of that agreement. This is so because the nature of the agreement has to be decided on its own terms as no two agreements are likely to be similar. The Supreme Court also made certain observations as regards an agreement between the members of the co-operative society on the one hand and the co-operative society on the other mind. This is so because the nature of the agreement has to be decided on its own terms as no two agreements are likely to be similar. The Supreme Court also made certain observations as regards an agreement between the members of the co-operative society on the one hand and the co-operative society on the other mind. The relevant part of the observations made by the Supreme Court reads as follows : "It must be remembered that by and large the farmers are illiterates. They do not know the ways of business. The general belief is that taking advantage of the ignorance and illiteracy of the farmers, businessmen exploit them. To avoid such exploitation, the Act authorised the formation of co-operative societies of the farmers through which they can sell their goods. Those societies merely function as agents for the farmers who are their members. By becoming members of those societies and subscribing to their bye-laws, they had given large powers to their agents so that their produce may be sold in the best possible manner. None of the bye-laws of the society goes to show that the society had purchased the goods entrusted to it by its members." 6. In the instant case, the Tribunal has followed the spirit underlying the aforesaid observations. The Tribunal has compared the bye-laws of the dealer-opponent society, with the bye-laws of M/s. Khedut Sahakari Ginning and Pressing Society Ltd. which were under consideration before the Supreme Court. We ourselves have also examined the relevant bye-laws. The bye-laws in general and particularly with regard to the following important subjects are almost similar. The important subjects may be specifically referred to : 1. To gin and get gin cotton for members. 2. To make advances of money against goods. 3. To advance amounts to members for raising agricultural produce. 4. For distribution of profits. 5. For fixing rates for ginning, pressing and for selling other goods. 6. For lending money against security of goods which may come in possession. 7. For management of goods in the society. 8. For selling agricultural produce other than cotton and cotton-seeds of the members and produce of village industries and for purchasing goods for members on request. 9. For making advance up to 75 per cent of the estimated market rate of the goods entrusted to the society and rate of interest of advance. 10. 8. For selling agricultural produce other than cotton and cotton-seeds of the members and produce of village industries and for purchasing goods for members on request. 9. For making advance up to 75 per cent of the estimated market rate of the goods entrusted to the society and rate of interest of advance. 10. Provision regarding authority to borrow money against goods by placing the same with banks. 11. Grading of cotton-seeds to be sold and taking insurance. 12. Payment at the end of the season to the members according to its average rates after deducting the dues of the society and charges for ginning and pressing and expenses incurred for sale. 13. To sell goods in outside market through agent by taking receipt for getting possession of goods sent for sale. 14. In relation to gross profit and deduction for working out from gross profit. 15. Distribution of net profit. On examination and comparison of bye-laws of the dealer-opponent society and that of M/s. Khedut Sahakari Ginning and Pressing Society Ltd. in respect of the aforesaid subjects, the Tribunal has rightly come to the conclusion that the bye-laws of the dealer-opponent society were in pari materia with the bye-laws of M/s. Khedut Sahakari Ginning and Pressing Society Ltd. In this view of the matter, the natural corollary of the Supreme Court decision would be that the activity carried on by the dealer-opponent society is like that of M/s. Khedut Sahakari Ginning and Pressing Society Ltd. which has been examined and considered by the Supreme Court. Be it noted that it is not the case of the Revenue that the dealer-opponent society is not carrying on its activities in accordance with its bye-laws. Therefore, it has got to be inferred that the transactions between the dealer-opponent society and its members including the nominal members are in accordance with the bye-laws. Hence the terms of the agreement between the members and the society have to be inferred as provided in the bye-laws. In view of this position, when the Tribunal has followed the decision of the Supreme Court in the case of Khedut Sahakari Ginning and Pressing Society Ltd. [1972] 29 STC 105; AIR 1972 SC 1786 , we do not find that any error has been committed by the Tribunal. 7. In view of this position, when the Tribunal has followed the decision of the Supreme Court in the case of Khedut Sahakari Ginning and Pressing Society Ltd. [1972] 29 STC 105; AIR 1972 SC 1786 , we do not find that any error has been committed by the Tribunal. 7. It may also be observed that a per bye-law 59 of the dealer-opponent society, provision as regards loss has been made. It is provided that in case the overall transactions carried on by the society result in loss, the loss will have to be borne by the respective members proportionately. The society has right to recover this loss from the share and other property of the members. It needs to be noted that this is one of the important factors for determining the relationship between the society and its members. This is indicative of the fact that the relation between the dealer-opponent society and its members is that of agent and principal and that the transactions entered into between them are not that of sale. 8. It has to be borne in mind that the dealer-opponent society has been registered with the object of carrying on business as agent only. This is the condition imposed upon the society when it has been granted registration. It is not the case of the Revenue that the opponent society has carried on its activity by contravening the conditions imposed upon it. Therefore, it has got to be held that the dealer-opponent society has acted as an agent while carrying on its activity. 9. The learned counsel for the Revenue submitted that the Full Bench decision of this High Court in the case of Sahakari Khand Udyog Mandali Ltd. v. State of Gujarat reported in [1981] 47 STC 212, should have been followed by the Tribunal. In that case, the Full Bench of this Court distinguished the decision of the Supreme Court in the case of Khedut Sahakari Ginning and Pressing Society Ltd. [1972] 29 STC 105; AIR 1972 SC 1786 . After examining the bye-laws of the respective sugar co-operative societies and after referring to the decision of the Supreme Court in the case of Rohtas Industries Ltd. v. State of Bihar reported in [1961] 12 STC 615, the Full Bench of this Court laid down the following principles for determining as to whether a particular transaction is sale or not. "1. "1. The test to determine whether the transaction is that of sale or that of agency is to determine whether the property in the goods has passed to the so-called agent and secondly, whether there was payment of price by the so-called agent to the so-called principal; 2. On an examination of the agreement between the parties, the question to be asked is whether any goods which were to be sold by the so-called principal were sold as the goods of the so-called principal and whether the goods were sold by the so-called agent for itself or on behalf of the so-called principal." 10. After laying down the aforesaid principles, the Full Bench observed that the test is as to who has to bear the loss in case the overall transactions result in loss at the hands of the so-called agent. If the aforesaid principles are applied to the facts of the case, it becomes evident that the property in the goods does not pass in favour of the dealer-opponent society at any stage. The loss in case there be any, is required to be borne by the members in proportion to the goods supplied by them. The society merely acts as a conduit pipe between the members and the purchaser. Applying these very tests to the facts and circumstances in this case, the Tribunal has rightly distinguished the decision of the Full Bench of this Court and it has committed no error in following the decision of the Supreme Court in the case of Khedut Sahakari Ginning and Pressing Society Ltd. [1972] 29 STC 105; AIR 1972 SC 1786 . 11. For the aforesaid reasons, the reference is answered as indicated in para 4 of this judgment. Reference is answered accordingly with no order as to costs. Reference answered in the affirmative.