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TMI Blog1964 (7) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... a sale and regarding the auctioneers as "dealers ". The appeal to the Appellate Assistant Commissioner and the further appeal to the Sales Tax Appellate Tribunal were rejected and they have come to this Court in revision. The main terms of the agreement between the assessee, the firm of auctioneers, and the principal, viz., the authorities of the Women's Christian College, can be spelt out from the conditions of the auction sale, as well as from the correspondence. On 13th October, 1959, the Bursar of the College wrote to Messrs Zackria Sons Private Limited asking them to arrange to hold the auction sale on Sunday, the 1st November, 1959, at 10-30 A.M. at the site. The building was to be kept open for the inspection on the previous Friday between 10 A.M. and 6 P.M. Further instructions relating to the auction sale were to be had from the architects, engaged by the College, Messrs Prynne, Abbott & Davis, Madras. The auction was to be in one lot to the highest bidder and the Bursar agreed to pay the auctioneers 5 per cent. commission and all advertisement expenses in connection with the sale. The auctioneers were requested to commence advertising as soon as possible. On 17th October ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... College. Prynne, Abbott & Davis then requested the auctioneers to send a cheque made out in favour of the Principal, Women's Christian College. The auctioneers then sent to the Principal, Women's Christian College, a statement of account including their commission charges and expenses of advertisement. Without going at great length into the law bearing upon sales by auctioneers in a public auction of goods or chattels, and the liabilities inter se which arise between the vendor and the auctioneer and the purchaser on the one hand and the auctioneer and the purchaser on the other, a subject on which there has been a considerable volume of decisions of Courts in England as well as in India, it may be stated that so far as this particular case is concerned its facts enable a decision to be given without difficulty about the nature of the transaction. The correspondence as well as the terms of the conditions of sale make out the following: (1) Zackria Sons Private Limited were engaged by the Bursar of the Women's Christian College only for the purpose of advertising the sale and securing the most favourable bid; (2) The Bursar of the Women's Christian College constituted the architec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... namely, Prynne, Abbott & Davis, and then the latter by accepting the bid completed the sale. No doubt the auctioneers billed the buyer for the price and received the money. But the correspondence shows that for that purpose they acted only under special instructions from the seller. The circumstances that they received the sale price from the buyer under special instructions from the seller would not show that they became the seller's agent either for accepting the bid or for effecting the transfer of the property in the goods. Both these were done in this case by the seller's agent, Messrs Prynne, Abbott Davis, and not by the auctioneers. So far as effecting delivery is concerned, the correspondence shows that Madar Sahib went to the Principal of the Women's Christian College with an authorisation letter which, in the context, was nothing more than a letter of identification issued by the auctioneers and then he was permitted by the authorities of the Women's Christian College to remove the materials. There is, therefore, no question of the auctioneers effecting delivery of the property. Learned counsel appearing for the petitioner-assessee pointed out that the decision of the Cal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anties. He undertakes to give possession against the price paid into his hands, and he undertakes that such possession will not be disturbed by his principal or himself. There may, of course, be other terms in this contract arising on the facts of the case.....But whatever its terms may be, the contract (between the auctioneer and the buyer) is entirely independent of the contract of sale. To that contract (the contract of sale), the auctioneer who sells a specific chattel as an agent is, in my opinion, no party. He has no right to enforce it and is not bound by it..... He is not the seller, nor had he undertaken to discharge the liabilities of a seller except so far as those liabilities may be included in his own contract with the buyer." After quoting in extenso some of these observations and also observations from other decisions, the learned single Judge of the Calcutta High Court in Chowringhee Sales Bureau Limited v. State of West Bengal [1961] 12 S.T.C. 535. came to the conclusion (at page 553): ".....Where an auctioneer is selling specific chattel and/or goods for an unknown or a disclosed principal and where the buyer knows that the auctioneer is not the owner, the aucti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f persons (which include an auctioneer) referred to in the sub-sections of section 2(g) of the Act can be made liable as dealers. How far this condition exists will be a question of fact in each particular case. We wish to say, with due respect to the Judge of the Calcutta High Court, in the case in Chowringhee Sales Bureau Ltd. v. State of West Bengal[1961] 12 S.T.C. 535. that if this aspect of the matter is borne in mind, it will not be necessary to go so far as to declare Explanation 2 to section 2(g) itself as ultra vires the State Legislature in so far as it includes auctioneers. We have referred in detail to the facts of this case earlier in this judgment. They clearly show that the auctioneers functioned only as an agent to secure the most advantageous bid for the principal in the auction, and thereafter, it was the principal's agent, Messrs Prynne, Abbott & Davis, who accepted the offer of the highest bidder and completed the contract. The subsequent part played by the agent in recovering the money from the highest bidder will not constitute him a dealer for the purpose of sales tax liability. We, therefore, allow the revision case and set aside the assessment on the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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