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TMI Blog1967 (4) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... General Sales Tax Rules (hereinafter called "the Rules") in Form A-2. Under rule 17(2) of the Rules the petitioner has to pay the taxes if any due as per the return. It is also the case of the petitioner that as none of the principals on whose behalf he was selling the jaggery has a taxable turnover of over Rs. 10,000, in his returns he was showing that no tax was payable for such of those principals whose turnover is below Rs. 10,000. For the year 1965-66, the assessing authority, ignoring the returns, made provisional assessments for some months; whereupon the petitioner filed W. P. No. 281 of 1966 for a writ of prohibition, which was admitted on 28th February, 1966. A stay of all further proceedings was also granted in that petition. It is stated that the assessing officer again issued a notice on 31st January, 1967, proposing to make provisional assessment for the months of April to December, 1966. In the show cause notice the assessing officer while admitting that the petitioner filed a statement giving all the particulars of the principals, he stated that the petitioner should file proper stamped affidavits to show that the principals had no other turnover. It is contended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... very rupee of his turnover. Every casual trader shall pay a tax at the rate of two naye paise on every rupee of his turnover: Provided that if and to the extent to which such turnover relates to articles of food or drink............................................. (2) and (3) * * * (4) The taxes under this section shall be assessed, levied and collected in such manner as may be prescribed Provided that- (i) in respect of the same transaction, the buyer or the seller, but not both, as determined by such rules as may be prescribed, shall be taxed; (ii) where a dealer has been taxed in respect of the purchase of any goods, in accordance with the rules referred to in clause (i) of this proviso, he shall not be taxed again in respect of any sale of such goods effected by him." Section 11: "The tax or penalty due under this Act, in respect of a transaction of sale or purchase effected by an agent on behalf of a principal who is a resident of the State shall be assessed or levied and collected from the agent, in every case where such principal would be otherwise liable to pay such tax or penalty in respect of that transaction. Where the agent has paid the tax or penalty in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the turnover. A perusal of the above provisions leaves no doubt that a commission agent of either a resident or a non-resident principal is also, like the principal, a dealer. In the case of an agent of a non-resident principal, he is deemed to be a dealer and is liable for the tax on whatever the turnover may be, Irrespective of the fact that it is less than Rs. 10,000. It is apparent from the definition of "dealer" that a commission agent who is transacting business on behalf of several principals will be considered to be a "dealer" for each of the principals. The words "on behalf of any principal" occurring in the definition "carries on the business of buying, selling, supplying or distributing goods on behalf of any principal" would clearly indicate that he is a dealer in respect each of the principals; that is, he is deemed to be as many dealers as there are principals. Section 5, which is the taxing section, if read with this definition, would show that every agent of a principal or dealer whose total turnover per year is not less than Rs. 10,000 is liable to be taxed. It should not be forgotten that the principal also is equally liable like his agent and we should think tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shes a key to the intention underlying that section, because under it the assessing authority could recover from the principal a tax or penalty assessed or levied on or due from the agent, instead of from the agent; and if the agent is liable to be assessed and taxed on the sum total of the transactions of the several principals, then what is the tax that is recoverable from each of the principals? Under the proviso, if the contention of the Government Pleader is valid, surely the legislative intent could not have been to permit the assessing authority to recover tax on the total turnover of the several principals levied on the agent from any one of the principals or each of the principals; nor does it envisage the agent making separate apportionment of the tax between the principals. The very fact that it empowers the assessing authority to recover the tax due from the agent from the principal instead of from the agent, would again show that it is a tax due from the agent on account of the principal. The explanation further lends support to this interpretation, when the word "agent" has not been defined but has been assigned the same meaning as that assigned to the expression "dea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee, the person whose tax liability is really sought to be reached is the non-resident principal and that is the entire ratio of the right to refund granted by sub-section (iv). This aspect is emphasised by the provision in sub-section (iii) by which the resident agent is entitled statutorily to retain out of the moneys of his principal the amount which he paid by way of tax. These features, in our opinion, ought to be taken into account in construing the scope of the fiction created by sub-section (i) by which the resident agent is treated as a dealer. 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 turnover of the agent dealer is the aggregate of the prices realised by the sales of the commodities belonging to the principal. This agent might be acting for several principals. He is deemed to be 'as many dealers' as there are 'non-resident principals' for w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e minimum specified in section 3(3) or not. In the case the turnover happens to be less than the minimum specified in section 3(3) the principal is given a right to obtain a refund under section 14-A(iv). The reason for the rule excluding the provisions of exemption under section 3(3) while assessing the agent appears to be that it might happen that the non-resident principal would be employing more than one agent and if the agents were allowed to take advantage of the provision as to minimum turnover in section 3(3) the principal would be able to evade taxation by entrusting his sales to several agents each to the limit of a minimum turnover." It will be observed from the above passage that the reason why an agent is being assessed In the case of an agent is that he is only a convenient representative for assessment, levy and collection of the tax of a non-resident principal who is not within the jurisdiction. It is, therefore, evident that the underlying basis for attaching liability to an agent under the scheme of taxation, whether he is agent of a resident or non-resident principal, is that it is a convenient mode of collection of tax. When we enquired as to the practice prev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principles adumbrated above and certainly the Andhra Pradesh Legislature did not want to leave the matter in doubt. It immediately brought out an amending Bill on 16th November, 1966, the Statement of Objects and Reasons of which specifically refers to the above case. It stated: "Basing on the judgment of the Madras High Court in the State of Madras v. Tiruchengode Co-operative Marketing Society Limited[1965] 16 S.T.C. 760., the assessing authorities of the Commercial Taxes Department are levying tax on the commission agents of the agriculturist principals under section 5 of the Andhra Pradesh General Sales Tax Act, 1957. Representations have been received by the Government against the levy of Sales Tax on Commission Agents of Agriculturist principals, as such levy is causing hardship to the agriculturists. The Sales Tax Advisory Committee has recommended that the relevant provision of the Andhra Pradesh General Sales Tax Act may be amended suitably. In order to obviate the difficulty caused to the agriculturists, it is decided to accept the Committee's recommendation and to amend the proviso to section 2(1)(a) of the Andhra Pradesh General Sales Tax Act so as to extend the exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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