TMI Blog1965 (2) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... greed commission payable to the society on the sale price. While so, in October, 1950, the Government of India promulgated the Gur Control Order fixing the maximum price at which Gur could be sold in the different States. The prices fixed varied from State to State. It so happened that the prices fixed for the sale of Gur at Anakapalle (then in the State of Madras) were somewhat lower than those fixed in the other States. This gave occasion for the society to sell jaggery at higher prices than fixed for the simple reason that there was demand for the jaggery from merchants at prices higher than the controlled price. To avoid detection of the contravention of the Gur Control Order in selling Gur at prices higher than the controlled price, the society maintained two sets of accounts-one a regular account and the other a clandestine account. The regular account showed as if the Gur was sold at controlled price and commission charged on the controlled price. But the clandestine account showed the excess in the sale price and the excess commission. On a surprise check, the Commercial Taxes Department discovered the clandestine or the secret accounts which consisted of (1) Auction Sale A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) 1957 A.L.T. 607. reversed in appeal by the Bench in Co-operative Marketing Society, Anakapalle, by Secretary, Atchanaidu v. Pentakota Sriramulu and Another(1), which judgment was confirmed by the Supreme Court in Civil Appeal No. 193 of 1962 by its judgment dated 28th August, 1964(2). The writ petition was filed by Pentakota Sriramulu, the president of the society in the following circumstances: We recall that the Anakapalle Co-operative Marketing Society Ltd. was constituted mainly for the purpose of affording credit facilities to its members and to arrange for the sale of their agricultural produce and that the society had a licence as a commission agent under the Madras General Sales Tax Act and was earning commission on the turnover of its sales. Under its bye-laws, its business extended to the sale of jaggery belonging to members as well as non-members. The society sold jaggery in excess of the control price fixed under the Gur Control Order and earned commission on the said turnover. This state of affairs were revealed by a surprise check by the Sales Tax Department. The matter was brought to the notice of the Co-operative Department wherefore the Registrar directed its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the society. It could not be disputed that the sale of the produce belonging to the members of the society was part of the business of the society and then the charging of commission for those sales and the crediting of the society's accounts with that commission would equally be the business of the society. Apart, therefore, from the question of illegality raised by reason of the sale being at prices in excess of the controlled price, it is not capable of argument that the failure on the part of the appellant to credit to the society the full amount of commission due on the sales effected by him on behalf of the society and the resistance by him of that demand, would not be a dispute touching the business of the society. This objection is clearly without substance and must be rejected." Referring to the question of illegality of the transaction as precluding the claim, the Supreme Court observed: "The last of the points urged by learned counsel was that the transaction of sale which gave rise to the commission alleged to be improperly retained was illegal and that therefore the society could not, in law, make a claim on the basis of such an illegal transaction. We see no substa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urthy relied on certain recitals of facts in the judgment of the Bench in Co-operative Marketing Society, Anakapalle, by Secretary, Atchanaidu v. Pentakota Sriramulu and Another[1960] 1 An. W.R. 57. and argued that the sales were effected not by the society but directly by the owners of the jaggery to the purchasers, and so the society would not be a dealer. The recitals in the judgment relied on are these: After setting out the allegations and making reference to the Gur Control Order and the higher prices offered for jaggery, i.e., prices higher than those fixed by the Gur Control Order, the learned Judges stated: "Finding that this deflected the business to the market and consequently the society could not earn any commission, representations were made to the Government officials to keep the prices down to the level of those fixed in the Gur Control Order. Since no steps were taken by the officials concerned in that behalf, it is said that the members resorted to the following device. When jaggery belonging to a member was sold by the society, the owner would be present and there would be a private arrangement between him and the purchaser whereby a price in excess of what was p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 the following occurs: "It is also well settled that the duty of the High Court is to start with the statement of the case as the final statement of the facts and to answer the question of law with reference to that statement. The provisions of the Indian Income-tax Act are in pari materia with the provisions of the Act [the reference is to the Bihar Sales Tax Act (6 of 1944)] under our consideration, the main scheme of the relevant provisions of the two Acts being similar in nature, though the wording of the provisions is not exactly the same." The contention is open to a further objection that the recitals in a judgment could not be read as evidence in the case. The judgment relied on is certainly not relevant under sections 41 and 42 of the Indian Evidence Act. Section 43 is explicit that judgments, orders or decrees, other than those mentioned in sections 40, 41 and 42, are irrelevant, unless the existence of such judgment, order or decree is a fact in issue, or is relevant under some other provisions of the Act. The only other provision is the admissibility of the judgment as a transaction under section 13(a) of the Indian Evidence Act, in which case the recitals therei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We do not think there is any force in this argument. The expression 'business' is a term of wide connotation. It is only in the course of business that higher commission was earned by the society. That does not have the effect of converting business into something which cannot be described as business." Further comment is therefore unnecessary. Next it was contended that jaggery was agricultural produce which had to be excluded from the turnover under section 2(i) of the Act. This contention cannot possibly be supported as it is opposed to the Division Bench ruling in K.P. Vaidyanatha Iyer v. The State of Madras[1954] 5 S.T.C. 94., wherein it was held that the sale of jaggery was not sale of agricultural produce within the meaning of the definition of "turnover" in section 2(i) of the Act. The last contention was that there was no violation of the conditions of the licence. But this contention was advanced on the pleas that the society was not a dealer, that the transactions were not sales by the society and that the society had not itself carried on the business. As we have found these pleas untenable, the contention that there was no violation of the conditions of the lic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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