TMI Blog1997 (3) TMI 505X X X X Extracts X X X X X X X X Extracts X X X X ..... section 6B on an agent who is a dealer will become meaningless. Thus Taxation Tribunal clearly fell into error in holding that the aggregate of the turnover of the principals cannot be computed for assessing the agent for turnover tax under section 6B. The judgment and order dated September 20, 1989 of the Tribunal is set aside. - Civil Appeal No. 1374 of 1990, & 4414, 4414-A of 1990, - - - Dated:- 31-3-1997 - SUHAS CHANDRA SEN AND SUJATA V. MANOHAR JJ. K.V. Mohan and Ajay Kumar Yadav, Advocates, for P.R. Seetharaman, Advocate, for the respondents in C.A. Nos. 4414 and 4414-A of 1990. Badar Durrez Ahmed, Advocate, for Lawyers' Associated, Advocates for the respondents in C.A. No. 1374 of 1990. Rathin Das, Advocate, for the intervener. S.N. Hegde, Senior Advocate (Dilip Sinha and J.R. Das, Advocates for Sinha Das, Advocates, with him), for the appellants in all the appeals. -------------------------------------------------- The judgment of the Court was delivered by SUHAS C. SEN, J. Civil Appeal No. 1374 of 1990: O.P. Lodha and others (hereinafter described as "the firm") carry on business under the trade name M/s. Prakash Tradin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt could not be made liable for any amount of tax for which the principal was not liable. Aggregation of sales effected by a dealer on behalf of as many as 24 principals led to imposition of a higher rate of duty. If the principals were separately assessed, they would have paid a much lower rate of duty. The liability of the agent was co-extensive with that of the principal. If a dealer sells any goods on behalf of the disclosed principal, the Sales Tax Officer has an option to tax the principal or levy tax on the dealer on behalf of the principal. The liability of the dealer, however, will be the same as that of the principal. There is nothing in the Act which permits the Sales Tax Officer to add together the sales made on behalf of as many as 24 principals so that the turnover becomes larger and the rate of tax becomes higher. There was no way the dealer could recover this larger tax from its principals. We are unable to uphold this contention for a number of reasons. 4.. Agents of all types have been included in the definition of "dealer". The clear intention of the Legislature is to levy tax on an agent even when such agent is selling goods on behalf of disclosed princi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for a specified period) for cash, deferred payment or other valuable consideration, or (iii) any supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service is for cash, deferred payment or other valuable consideration, or (iv) any supply of goods by any unincorporated association or body of persons to members thereof for cash, deferred payment or other valuable consideration, and such delivery, transfer or supply of any goods shall be deemed to be a sale of those goods by the person making the delivery, transfer or supply and a purchase of those goods by the person to whom such delivery, transfer or supply is made, but does not include a mortgage, hypothecation, charge or pledge." "Turnover" has been defined by section 2(i) as under: "'turnover' used in relation to any period means the aggregate of the sale prices or parts of sale prices receivable, or if a dealer so elects actually received by the dealer during such period after deducting the amounts, if any,- (i) refunded by the dealer in respect of any goods return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s later, a turnover tax at the rate specified in sub-section (3) of such part of his turnover as specified in sub- section (2);............" 5.. It will appear from the wide definition of "dealer" that a person who sells goods on behalf of disclosed or undisclosed principals has been treated as "dealer". The extended definition given to a dealer which includes, inter alia, a commission agent, del credere agent and auctioneer goes to show that the agents who sell goods for and on behalf of others for a commission will have to be treated as dealers and are liable to be assessed as such under section 6B of the Bengal Finance (Sales Tax) Act, 1941. The charge of turnover tax has been imposed upon "every dealer" whose gross turnover is in excess of a specified amount specified in section 6B. "Sale price" has been defined as valuable consideration for the sale of any goods including any sum charged for anything done by the dealer in respect of the goods at the time of or before delivery thereof. The incidence of taxation under section 4 of the Bengal Finance (Sales Tax) Act, 1941 is on the gross turnover in excess of the taxable quantum of all sales effected by a dealer in a given peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of the principal. In fact, there is no sense in treating the agent on the one hand as a dealer for the purpose of levying sales tax on its taxable turnover and exclude from his turnover the sales made for and on behalf of others on the other hand. The mere fact that the agent is being treated as a dealer for imposition of sales tax precludes the argument that the real liability to pay the tax is on the principal for and on whose account the goods are sold by the agent. The Act has made the agent directly liable to pay sales tax on his taxable turnover. There is no provision in the Act which permits the Commercial Tax Officer to look beyond the sales effected by the agent and find out for and on whose behalf the sales have been effected. Section 6B merely provides for a levy of an additional amount of tax on "dealers" whose aggregate of the gross turnover under the Bengal Finance (Sales Tax) Act, 1941 and the West Bengal Sales Tax Act, 1954 taking together exceed Rs. 25 lakhs. If the dealer happens to be an agent, he will have to pay this tax on his gross turnover because the statute treats him as dealer in respect of the sales effected by him. In fact, the argument that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the agent to pay sales tax on the sales made by him has to be found out from the Sales Tax Act itself and not on any general principle of agency. The agent has been made liable to pay turnover tax by the provisions of section 6B read with section 2(c) of the Bengal Finance (Sales Tax) Act, 1941. This liability to pay tax is his own. So far as the Act is concerned, the agent is the assessee. He may have his claims against the principals arising out of the agency agreement. But it is something between him and his principals. So far as the Sales Tax Act is concerned, tax has been levied directly on the agent on his turnover. It is not possible to uphold the argument that agent's liability is limited only to the extent that his principal was liable and that in order to find out the liability of the agent, it has to be found out what exactly is the liability of each of his principals. This argument has been specifically negatived by this Court in the case of Cardamom Planters' Association v. Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam [1989] 75 STC 118 (SC); [1989] 3 SCR 719. That was a case of a society of which the members were cardamom growers in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that separate assessment must be made on the sales effected on behalf of each of the principals, is accepted, it will make the Act unworkable. A commission agent will be dealing on behalf of hundreds of constituents and each of his constituents may be dealing not only through him but also through several other agents. The transactions may not be confined to the territories of one State and may be spread over the entire Indian sub-continent. The sales through different agents may be of different goods attracting liability to tax at different rates. It may be that a principal whose sales through one commission agent may not come up to the limits of turnover for levy of tax or surcharge may have been dealing through other agents and, if assessed directly, may have a turnover exceeding those limits. In this state of affairs, it will be absolutely impracticable, if not impossible, for a sales tax officer having jurisdiction over one particular commission agent to make his sales tax assessment on the basis suggested by the assessee. That would require the collection of data, in the assessment of every commission agent, regarding the entire sales turnover of each of his constituents wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
