TMI Blog1972 (10) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... GMENT The judgment of the court was delivered by KHANNA J.--- This appeal by special leave is directed against the judgment of the Calcutta High Court whereby that court answered the following question referred to it under section 66(1) of the Indian Income-tax Act, 1922, in the negative and against the assessee-appellant : " Whether, on the facts and in the circumstances of the case, the sum of Rs. 32,986 had been validly excluded from the assessee's business income for the relevant assessment year. " The matter relates to the assessment year 1960-61 for which the relevant previous year ended on March 31, 1960. The appellant-assessee is a private limited company dealing in furniture. It also acts as an auctioneer. In respect of the sales effected by the appellant as auctioneer, it realised during the year in question, in addition to the commission, Rs. 32,986 as sales tax. This amount was credited separately in the books under the sales tax collection account. The total balance standing to the credit of this account since 1946 up to the end of the relevant previous year stood at Rs. 2,71,698. This sum was neither paid over to the exchequer nor was it refunded to the pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal the decision of the Appellate Assistant Commissioner was affirmed by the Income-tax Appellate Tribunal. The question reproduced above was thereafter referred to the High Court. The High Court, as already stated, answered the question against the assessee-appellant. When the appeal came up for hearing before us on September 21, 1972, Dr. Pal, on behalf of the appellant, assailed the correctness of the answer given by the High Court and in this connection relied upon the dictum laid down in the appellant's case, Chowringhee Sales Bureau P. Ltd. v. State of West Bengal. As against that the learned Additional Solicitor-General on behalf of the respondent questioned the correctness of that decision. As the said decision related to the vires of the provisions of section 2(c) of the Bengal Act we directed that notice be issued to the State of West Bengal as well as its Advocate-General. Arguments have thereafter been addressed before us by Mr. Sen on behalf of the appellant and the Additional Solicitor-General on behalf of the respondent. Mr. Mukhoty, on behalf of the State of West Bengal, has adopted the arguments of the Additional Solicitor-General. Before dealing with other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h a contract of hire purchase. It cannot be disputed that sale by an auction is a sale as contemplated by the Sale of Goods Act, 1930 (3 of 1930). Section 4 of that Act provides, inter alia, that a contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in the goods to the buyer for a price. Where under a contract of sale, the property in the goods is transferred from the seller to the buyer, the contract is called sale. Further, according to section 64 of that Act, in the case of sale by auction where the goods are put up for sale in lots, each lot is, prima facie, deemed to be the subject of a separate contract of sale. The Calcutta High Court in holding the definition of the word " dealer " in Explanation 2 of section 2(c) of the Bengal Act to be ultra vires in the appellant's case, Chowringhee Sales Bureau P. Ltd. v. State of West Bengal, observed : " Entry 48 authorises the imposition of tax either on a seller or a purchaser or both. If, however, the Legislature purports to levy a tax upon a person who is neither a seller nor a purchaser, the legislation must be declared ultra vires, because it treats an operation as a sale o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ras High Court in the case of Zackria Sons (P.) Ltd. v. State of Madras has dissented from the view taken by the Calcutta High Court in the appellant's case against the State of West Bengal. It is apparent from the order of the Appellate Assistant Commissioner and has not been disputed before us in the present case that in the cash memos issued by the appellant to the purchasers in the auction sale it was the appellant who was shown as the seller. The amount realised by the appellant from the purchasers included sales tax. The appellant, however, did not pay the amount of sales tax to the actual owner of the goods auctioned because the statutory liability for the payment of that sales tax was that of the appellant. The appellant company did not also deposit the amount realised by it as sales tax in the State exchequer because it took the position that the statutory provision creating that liability upon it was not valid. As the amount of sales tax was received by the appellant in its character as an auctioneer, the amount, in our view, should be held to form part of its trading or business receipt. The appellant would, of course, be entitled to claim deduction of the amount as an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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