TMI Blog1960 (11) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... the contention of the petitioner that it was not liable to sales tax as an auctioneer and assessed the petitioner to sales tax at Rs. 30,892-1-0 for the four quarters ending March, 1950, and Rs. 7,920-1-0 for the four quarters ending last day of March, 1951. Against the said orders of assessment, the petitioner preferred appeals before the Assistant Commissioner of Commercial Taxes, South Circle, Calcutta, which are still pending. The Commercial Tax Officer, however, without waiting for the decision of the said appeals, sent a requisition to the Certificate Officer, Alipore, under section 5 of the Public Demands Recovery Act, 1930. Certificates were thereupon issued and served on the petitioner. The petitioner preferred objection, contending inter alia that the petitioner was not a "dealer" within the meaning of the said Act, and that the major portion of the assessment related to a period when the Amending Act XLVIII of 1950 had not come into force, which Act had no retrospective operation. On 28th June, 1955, the Certificate Officer rejected the contention of the petitioner and relied on a decision of this High Court, of Bose, J., Staynor and Co. v. Commercial Tax Officer[1951] 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent No. 9. Thereafter, the amendment has been effected and the matter has again come up before me for hearing. Upon the facts there is very little dispute. It is not disputed that the petitioner company carries on business as an auctioneer in the city of Calcutta and holds periodical auctions of specified goods and chattels belonging to third parties, at their place of business, in the usual way. People come and bid at these periodical auctions and it is not disputed that every one is aware that the goods do not belong to the auctioneer, but have been collected together by them for the purpose of receiving bids and selling them on behalf of the owners, upon payment of a commission, as remuneration. The point for determination is as to whether upon these facts, an auctioneer can be made liable for sales tax upon sales which are the subject-matter of these auctions. As has already been mentioned, the authorities below have all relied on a decision of Bose, J., in Staynor Co. v. Commercial Tax Officer[1951] 2 S.T.C. 111; 55 C.W.N. 583. That decision is dated 27th February, 1951, but the subject-matter of the application (Matter No. 80 of 1950) related to a point of time earli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, the Commercial Tax Officer was wrong in reading the word "auctioneer" into the definition of "dealer", prior to the amendment of the definition itself. Ordinarily, there would seem to be no answer to this argument. It is, however, pointed out on behalf of the respondents that the decision of Bose, J., was given at a point of time when the Amending Act had already come into operation and the learned Judge did not deal with this question, but independently of the amendment came to the conclusion that an auctioneer was a "dealer" as originally defined. As against this, it is pointed out that although the learned Judge did not deal with the amendment, he did so advisedly, because although the application was heard and judgment delivered after the amendment had come into operation, the period to be considered and the application itself was before the amendment. In any event, it is true that in the reported judgment there is no mention of the amendment of the term "dealer" by the Amending Act XLVIII of 1950. It must, therefore, be presumed that in the opinion of the learned judge the original definition of the word "dealer" included an auctioneer. Before Bose, J., it was cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion must be in accordance with the previous decision. This decision is binding on me, but I think that on the facts of the present case, a distinction may be made. The principles which govern the interpretation of the term "dealer" in the said Act have been the subject-matter of subsequent decisions of the Supreme Court, which decisions were not before the learned Judge when he delivered judgment in Staynor's case[1951] 2 S.T.C. 111; 55 C.W.N. 583. The enunciation of these principles by the Supreme Court has, in my opinion, given a different orientation to the problem, and I have no doubt that if these decisions were available to the learned judge, he might have come to a different conclusion. After all, in the interpretation of the term "dealer" I must be guided by the law as declared by the Supreme Court, and to that extent I cannot follow the judgment of Bose, J. Further, the point seems to have been dealt with rather summarily by the learned judge and none of the cases which have been cited before me by Mr. Das appear to have been cited or considered by the learned Judge. For these reasons, although the decision of Bose, J., is entitled to great respect, I feel compelled to dea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s ultra vires the powers of the Provincial Legislature. The High Court upheld this contention, and thereupon an appeal was preferred to the Supreme Court. Before the Supreme Court, it was argued that under the Government of India Act, 1935, the Provincial Legislature derived its power to impose a tax on the sale of goods under Entry 48 in List II of the 7th Schedule to the Government of India Act, 1935, and the Uttar Pradesh Sales Tax Act (Act XV of 1948) was enacted in exercise of this power. Section 2(h) of the said Act defines sale as including forward contracts. It was pointed out that under the statute law of India, which is based on the English law on the subject, a sale of goods and an agreement for the sale of goods are treated as two distinct and separate matters and, therefore, the sale of goods, according to the existing law, could not include an agreement for sale, and that a forward contract was nothing but an agreement to sell. Aiyar, J., said as follows: "Thus, there having existed at the time of the enactment of the Government of India Act, 1935, a well-defined and well-established distinction between a sale and an agreement to sell, it would be proper to interpre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of those goods, and that the provisions introduced in the Madras General Sales Tax Act, 1939, by the Madras General Sales Tax (Amendment) Act, 1947, authorising the imposition of such tax were ultra vires. The High Court of Madras took the view that the expression "sale of goods" had the same meaning in Entry 48 which it has in the Indian Sale of Goods Act, 1930, and that the supply of materials under construction contracts of the respondent did not constitute such a sale and, therefore, was not taxable by the State Government. This view was upheld by the Supreme Court, which held that the expression "sale of goods" was, at the time when the Government of India Act, 1935, was enacted, a term of well-recognised legal import in the general law relating to sale of goods, and in the legislative practice relating to that topic, and must be interpreted in Entry 48 in List II in Schedule VII of the Act as having the same meaning as in the Sale of Goods Act, 1930, and that the Provincial Legislature had no right to impose a tax on the supply of materials used, under a building contract, treating it as a sale. Aiyar, J., referred to a number of English and American decisions and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cular contracts, there may be an intention to pass the ownership in the materials for a price agreed upon between the parties, in which case such contracts might contain an element of sale of goods, but that is not the case here. If the amendments introduced in 1947 by the Provincial Legislature are intended to catch in the net of tax contracts of the nature with which we are concerned, we should hold that to that extent the amendments introduced are ultra vires of the Provincial Legislature as they had no power to tax transactions which are not sales of goods. We, therefore, think that the levy of tax on the assessees on the sum of Rs. 29,31,528-7-4 was not justified in law." Relying on the decisions above mentioned, Mr. Das has formulated his case thus: The constitutional sanction for the said Act is Entry 48 in List II of the 7th Schedule to the Government of India Act, 1935. It conferred power upon the Provincial Government to promulgate a law for imposing tax on the sale of goods. The term "sale of goods" must be interpreted in the sense in which it was used in existing legislation. In this particular case, it indicates the Indian Sale of Goods Act, 1930, which again is base ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idder by public competition. An auctioneer is one who sells goods or other property by auction (Article 136). An auctioneer may sell property of his own as principal in which case he is the seller. When selling goods belonging to a third party he is the agent of the vendor only (Article 139). The implied authority of the auctioneer is a general authority to sell, in the way usual and customary amongst auctioneers, but it is subject to express instructions of the owner enlarging or limiting it. He has no implied authority to sell by private contract. Where a reserve has been fixed by the vendor, there is no implied authority to sell without reserve. He has no authority unless expressly instructed by the vendor to give a warranty at the auction. As soon as the property has been knocked down, the auctioneer's authority is at an end. He cannot rescind the contract nor introduce into it any stipulations as to title (Articles 141142-144-145). Up to the time of the conclusion of the sale, and until the property is finally knocked down, the auctioneer's authority is revocable by the vendor, that is to say the owner. This authority can be withdrawn, even though the auctioneer has advertis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich he may sue); but his contract with the buyer is independent of the contract of sale, which he makes on behalf of the seller and to which he is not a party. In the present case, as I have already mentioned, the sale is of specific chattel, and it was known to the purchaser that the goods did not belong to the auctioneer. In such a case, all the text-book writers agree that the auctioneer is not even a party to the sale and has no personal liability whatsoever. The leading case on the subject is Benton v. Campbell, Parker and Co. Ltd.[1925] 2 K.B. 410. The facts of that case were as follows: The defendants-appellants were auctioneers at Birmingham and carried on a business in the sale of motor cars by public auction. A Ford car was delivered to the defendants by the Sexton Rubber Co. with instruction to sell it by public auction. Pursuant to the instruction, the car was put up for auction with a condition contained in the catalogue printed for the occasion, that the auctioneers would not hold themselves responsible for any action that may arise and that they were acting solely as agents between buyer and seller. The car was sold at the auction to the plaintiff who took delivery f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the buyer knows is not the property of the agent, it seems to me impossible to presume that the buyer, who contracts to buy that chattel from the principal would stipulate that the agent, if called on, shall himself sell the chattel to the buyer and shall himself warrant his own title to a thing which the buyer knows is not his. It is impossible to presume that the agent would agree to undertake such a liability. The only way in which he could discharge it would be by acquiring the chattel from his principal, a thing he has no right to demand and a thing inconsistent with the contract he has been instructed to make, by which the principal sells that chattel to the buyer. For this reason I think that the presumption above-mentioned is rebutted in the case of a sale of a specific chattel by an unknown agent for an undisclosed principal. This applies to an auctioneer as to any other selling agent. The auctioneer has a special property in the chattel delivered to him for sale, he has a lien on it and on the price of it, he has rights against the buyer, and liabilities to him, which do not accrue to other selling agents. These rights and liabilities do not arise from the contract of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uctioneer are severely limited, for example, if the owner has fixed a reserve price, he cannot sell it at a lesser price. (See McMannus v. Fortescue[1907] 2 K.B. 1.). I now come to the Indian Sale of Goods Act, 1930. Under section 2 a "seller " has been defined to mean a person who sells or agrees to sell goods, and a "buyer" means a person who buys or agrees to buy goods. The essence of a sale is the transfer of the property in a thing from one person to another for a price. A sale therefore, necessarily involves the existence of two persons, a seller and a buyer. This is indicated in section 4(1) which lays down that the contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. The expression "seller" has been given an extended meaning for purposes of Chapter V of the Sale of Goods Act and sub-section (2) of section 45 states that the term "seller" in the said Chapter includes any person who is in the position of a seller. The particular section however which deals with auction sales is section 64, which is contained in Chapter VII. This section lays down the procedure by which auction sales are to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the point to be considered is as to whether in the facts and circumstances of this case, an auctioneer can be said to be the "seller" and as to whether he is a party to the contract of sale between the owner and the purchaser. As we have seen above, the present case is a case of a sale of specific chattels belonging to an unknown principal by an auctioneer whose position in the matter is known to the buyer. In such a case, the law is that the auctioneer is not the seller and he is not even a party to the contract of sale between the owner and the purchaser. He may have his own contract with the buyer, and he has his own rights and liabilities as an auctioneer. Strange as it may seem, he can, in enforcement of his lien, even file a suit for the price of goods sold at an auction. But even so, this is only in the enforcement of his own lien on the goods as an auctioneer, for his remuneration, and not as a seller. Thus in such an operation, the auctioneer is not the seller of the goods and cannot be made liable for sales tax and to that extent the amendment in the said Act including the word "auctioneer" within the meaning of the definition of the word "dealer" is ultra vires. The le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agents operate and to the fact that the defendants were themselves grain and seed merchants actually running a shop, I am clear that the understanding between the parties was that the defendants were to sell the grain and cotton seed in their own right and be responsible to the plaintiffs as debtors for the sale proceeds less their agency charges." It was held by the Full Bench that the position of a commission agent is different from that of an ordinary broker, and a commission agent doing the kind of business mentioned above is a "dealer" as defined in section 2(b) of the Madras Sales Tax Act. The same view has been expressed by the Andhra High Court in P. Sambamurthi v. State of Andhra[1956] 7 S.T.C. 652. In my opinion, it is not at all a good argument to say that the position of an auctioneer is the same as that of a commission agent and, therefore, the position of the two should be equated. Mr. Das has pointed out the following points of difference. A commission agent is generally authorised to sell in his own name. Indeed, as pointed out by Vivian Bose, J., (supra) the purchaser dealing with a commission agent as the seller does not care who the principals are. That, however ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In such a case, the auctioneer is not even a party to the sale. Therefore, in such a transaction the auctioneer cannot be made liable to payment of sales tax and the extension of the definition of the word "dealer" in Explanation 2 of section 2(c) of the Bengal Finance (Sales Tax) Act, so as to include an auctioneer is ultra vires and must be declared as void. In this view of the matter, it is not necessary to deal with the other points raised. This rule is accordingly made absolute and there will be issued a writ in the nature of certiorari quashing the assessment orders mentioned in paragraph 4 of the petition dated 20th October, 1954, and 19th November, 1954, as also the certificate mentioned in paragraph 6 of the petition and all proceedings had by reason thereof, including the order of the Certificate Officer dated 28th June, 1955, and the orders of the Additional Collector in Appeals Nos. 93 and 94 of 1955 mentioned in paragraph 9 of the petition, and the orders in revision of the Commissioner, Presidency Division, mentioned in paragraph 10 of the petition are quashed and/or set aside. The respondents are restrained by a writ in the nature of mandamus from giving effect to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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