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TMI Blog1964 (8) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... same turnover on the ground that it was entitled to exemption under the proviso to section 2(r). In the grounds of appeal to the Appellate Tribunal, the assessee-Society contended: "We are only acting on behalf of the agriculturist who forms part of the institution and market his produce to his best advantage through the merchants and as such we are not directly undertaking any purchases or sales. We are neither sellers nor purchasers so far as these transactions are concerned. The agriculturist is paid on the spot, while the merchant is allowed credit accommodation, for payment of sale proceeds to the Society at a later date. As we are paying in advance the agriculturist on the spot and collect his sale proceeds from the merchants at a later date, the sale turnover effected by the agriculturist member finds a place in our accounts. They will not in law amount to purchases or sales by us. Thus, the sale proceeds represent actually the amount of sales effected by the agriculturist member and not by us, since we are neither purchasers nor sellers in the above transactions." The Tribunal also, in its judgment, referred to the above grounds of appeal and has given an extract from a ty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that this Court should give a proper lead to the assessing authorities in the matter of making assessment in these cases after granting exemption under the proviso to section 2(r). Section 2(r) reads: "'Turnover' means the aggregate amount for which goods are bought or sold, or supplied or distributed, by a dealer, either directly or through another, on his own account or on account of others whether for cash or for deferred payment or other valuable consideration, provided that the proceeds of the sale by a person of agricultural or horticultural produce, other than tea, grown within the State by himself or on any land in which he has an interest whether as owner, usufructuary mortgagee, tenant or otherwise, shall be excluded from his turnover." Prima facie, the language of the proviso implies that the person who is entitled to get exemption should be a dealer selling the concerned agricultural produce and that the agricultural produce in question should have been grown within the State by the aforesaid dealer or grown on any land in which the aforesaid dealer has an interest, whether as owner, etc. This aspect of the proviso has been stressed in the Bench decision of this Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the question, whether the sales were by a dealer as defined by the Act. A sale even of agricultural or horticultural produce but with nothing more is not enough to establish that the seller is a 'dealer'." This decision, no doubt, lays down a further test to the application of the proviso that the sale by a person of agricultural or horticultural produce would be exempt only if the sale was by a dealer; not every sale by an agriculturist of his produce would be a sale by a dealer. Such a sale must be, for the purpose of the Sales Tax Act, a sale in the course of business, and where an agriculturist is merely selling produce surplus to his personal requirement that transaction by itself would not be a sale in the course of business. This additional point was stressed by this Court in the above decision. The learned Government Pleader, appearing for the State, points out that under the definition in section 2(g)(iii) of the 1959 Act, a commission agent, a broker or a del credere agent, or an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of buying, selling, supplying or distributing goods on behalf of any principal, will be a dealer. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent principal for whom the assessee acted as agent. In respect of the sales of tea grown by the non-resident principal, the assessee was assessed under section 14-A of 1939 Act. Section 14-A read thus: "In the case of any person carrying on the business of buying or selling goods in the State but residing outside it (hereinafter in this section referred to as a 'non-resident'), the provisions of this Act shall apply subject to the following modifications and additions, namely: (i) In respect of the business of the non-resident, his agent residing in the State shall be deemed to be the dealer. (ii) The agent of a non-resident shall be assessed to tax or taxes under this Act at the rate or rates leviable thereunder in respect of the business of such non-resident in which the agent is concerned, irrespective of the amount of the turnover of such business being less than the minimum specified in section 3, sub-section (3). (iii) Without prejudice to his other rights, any agent of a nonresident who is assessed under this Act in respect of the business of such non-resident may retain out of any moneys payable to the nonresident by the agent, a sum equal to the amount of the tax or t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d decision in T.R.C. Nos. 38 to 40 of 1955, which again referred to the significant points for distinguishing agency transactions under section 14-A from other agencies, and observed: "If it is really a vicarious liability that is fastened on the resident agent, the person who really and ultimately has to pay the tax being the non-resident principal, it would be clear that the turnover in the hands of the agent, who is by statutory fiction deemed to be the dealer, cannot be held to include what is statutorily exempted from the computation of that turnover." The Tribunal in the instant case was of the opinion that these observations in T.R.C. Nos. 38 to 40 of 1955 would also apply to the present case, even though it did not deal with the agent of a nonresident principal selling the principal's goods and which sales are brought to assessment under the special provisions of section 14A. In fact the present case falls under the 1959 Act, which does not reproduce section 14A at all. On the other hand, it has amplified the definition of "dealer" in the manner already referred to. Therefore, an agent with dominion over the goods of the principal and with authority to transfer the proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce in the 1959 Act, and we are not called upon, therefore, to consider the meaning or effect of section 8 in the present case. We have already referred to the fact that neither the Sales Tax Appellate Tribunal nor the lower assessing authorities have considered the real nature of the transactions between the members of the Society and the Society and whether the Society has functioned in the present case actually as a dealer of the goods of the constituent members, or whether the Society has only played the part of an intermediary bringing the agriculturist and the prospective buyer together at an auction which is held in the presence of the agriculturist and who approves the sale effected to the buyer. The Society in its grounds of appeal has strenuously contended that its part is not that of a selling agent but only of an intermediary between the grower and the buyer merchant. This question has to be decided after a careful analysis is made of the bargain between the members of the Society on the one hand and the Society on the other in regard to the disputed turnover. The relevant by-laws of the Society also may have to be looked into for a correct appreciation of the position. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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