TMI Blog1958 (4) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... n, the appellants were not liable to sales tax in respect of the disputed transactions, even though, perchance, they could be included within the expanded definition of "dealer" in the Explanation 3 to section 2(c) of the Act-a contention which we have already negatived. In regard to the disputed transactions which were of the total value of ₹ 6,21,369-10-3, the appellants were not at all liable to pay sales tax thereupon and the first respondent was clearly in error in assessing the same to sales tax. The appeal will accordingly be allowed and the assessment order made by the first respondent on January 15, 1955, will be set aside. The sales tax of ₹ 27,816 assessed by the first respondent on the appellants, if paid, will be refunded and the appellants will get from the first respondent the costs of this appeal as also the costs incurred by them in contesting the proceedings before the first respondent. Appeal allowed. - Civil Appeal No. 344 of 1957 - - - Dated:- 15-4-1958 - DAS S.R., AND BHAGWATI N.H., DAS S.K., KAPUR J.L. AND VIVIAN BOSE JJ. N.C. Chatterjee, Senior Advocate, (S.C. Majumdar, Advocate, with him), for the appellant. S.K. Kapur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchase vouchers of M/s Khubiram Dhansiram of Calcutta, an unregistered dealer, it came to the notice of the Assistant Commissioner (C.S.) that the said dealer had purchased woollen goods worth ₹ 59,530-13-0 during the period from November 20, 1952, to December 18, 1952, from M/s. British India Corporation Ltd., Kanpur Woollen Mills Branch. Invoices, copies of which were enclosed there- with, had been drawn by the British India Corporation Ltd. for Kanpur Woollen Mills from Kanpur and the goods in question were reported to have been despatched to M/s. Khubiram Dhansiram from Kanpur. Orders Nos. quoted in the invoices were the Nos. of orders placed to Kanpur Woollen Mills by their sole agents in West Bengal, the appellants herein, and the Assistant Commissioner (C.S.) was of the opinion that under Explanation 2 of section 2(c) of the Act, the sales of Kanpur Woollen Mills from Kanpur as referred to above should be deemed to have taken place in West Bengal and under Explanation 3 of section 2(c) of the Act the appellants should be deemed to be the dealer in West Bengal on account of the sales of Kanpur Woollen Mills and as such were liable to pay the tax at that end. The Assist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion with reference to his memo. No. 385/3R-40/52 dated 21st January, 1953, and soliciting further instructions in the matter. After completing the examination of the books of account produced by the appellants, the first respondent made an entry in the order- sheet dated May 26, 1953, asking that the following further details may be sent to the Assistant Commissioner (C.S.) to elicit his opinion in the matter: The dealer appeared with books of account on January 21, 1953. On examination it was found that the dealer made entries only of com- mission received from Messrs. Kanpur Woollen Mills, Kanpur, for goods supplied to his customers in West Bengal from Kanpur. In this connection I may point out that the dealer is a commission agent of the Kanpur Woollen Mills for the State of West Bengal earning a com- mission on all sales of goods effected by the Mills within the territorial limits assigned to the dealer. In most cases the dealer secures orders from parties and forwards the same to the Kanpur Mills who supply the goods to the respective parties direct, a percentage of commission on the value of the goods so supplied being credited to the dealer. The goods being delivered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and sold them as they liked. The Mills only maintained a personal account of the appellants in which the commission at the end of a year was credited. The Mills never debited the appellants with the value of the goods; neither did the appellants credit the Mills with the value of the goods for debited their goods account. At no stage of these transactions was the property in the goods either transferred to or acquired by the appellants, and nobody could transfer any goods which he did not acquired or possess. Besides, the accounts of the said customers of the Mills did not indicate any transactions at all with the appellants in the State of West Bengal. It was therefore submitted that the appellants could not be deemed or held in law or in fact to be the dealer qua those sales in West Bengal much less liable to pay any sales tax on those sales. It was also pointed out that the appellants had earned the maximum commission of 2.4% which was less than even the sales tax which worked out to about 4.2% and this could never have been intended by the law. On June 19, 1954, the representative of the appellants submitted a further statement to the first respondent. He pointed out that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bengal. The statement of such sales filed by the dealer shows that sales of such nature effected in West Bengal amounts to ₹ 6,21,369-10-3 which were found to have not been entered in books of account. As such, I now include this amount in G.T. and add the same to Balance A. So G.T. is finally assessed at ₹ 13,146,255-8-4. The appellants obtained special leave from this Court under Article 136 of the Constitution to appeal against this order of the first respondent. From the detailed narration of the facts regarding this particular assessment it is quite clear that the first respondent did not exercise his own judgment in the matter of the assessment in question. Even though he was convinced to the contrary, he asked for the instructions of the Assistant Commissioner (C.S.) and followed the same and assessed the appellants to sales tax in respect of the disputed transactions. The order which he ultimately passed on January 15, 1955, further showed that he was merely voicing the opinion of the Assistant Commissioner (C.S.) without any conviction of his own and the only thing he had to say in regard to the various grounds mentioned in the letters dated November ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l with the appeal on merits. The determination of this appeal turns on the construction of the definitions of the terms dealer and turnover given in section 2 of the Act, the relevant portions of which run as under: Section 2: In this Act, unless there is anything repugnant in the subject or context, (c) 'Dealer' means any person who carries on the business of selling goods in the State of West Bengal and includes the Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Explanation 2: A factor, a broker, a commission agent, a delcredere agent, an auctioneer or any other mercantile agent, by whatever name called, and whether of the same description as hereinbefore mentioned or not, who carries on the business of selling goods and who has, in the customary course of business, authority to sell goods belonging to principals is a dealer; Explanation 3: The manager or an agent in West Bengal of a dealer who resides outside West Bengal and carries on the business of selling goods in West Bengal shall, in respect of such business, be deemed to be a dealer...................... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rried on the business of selling goods in West Bengal. The Mills had neither any office in West Bengal nor had they established any business through the appellants or otherwise of selling the goods in question in West Bengal. The only thing which was done in this connection was that the appellants canvassed orders as commission agents of the Mills in West Bengal and forwarded these orders to the Mills, which accepted them and executed the same. The privity of contract was established between the customers on the one hand and the Mills on the other; but, that also could only be on the acceptance of these orders by the Mills in Kanpur. Even though a number of orders placed in this manner by the appellants with the Mills were accepted by the Mills in Kanpur, it could not be said that the Mills were carrying on business of selling goods in West Bengal. The business was, if at all, one of selling goods in Kanpur and despatching them to West Bengal for the purpose of consumption therein. These transactions were, therefore, not covered by the Explanation 3 to section 2(c) of the Act and the appellants could not in respect of such business be deemed to be a dealer within the meaning of t ..... 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