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TMI Blog1972 (10) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... dran, R.N. Sachthey and B.D. Sharma, Advocates, with him), for the respondent. JUDGMENT 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income. The Appellate Assistant Commissioner referred to a decision of a single judge of the Calcutta High Court in a writ petition filed by the appellant against the State of West Bengal. The decision in that case is reported in [1961] 12 S.T.C. 5351. It was held by the High Court that where an auctioneer is selling specific chattel or goods for an unknown or a disclosed principal and where the buyer knows that the auctioneer is not the owner, the auctioneer cannot be considered as the seller and there is no contract of sale between him and the buyer. In such a case the auctioneer, according to the High Court is not even a party to the sale and cannot be made liable for payment of sales tax. The definition of the word " dealer " in Explana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rected 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 matters, it would be convenient to examine the correctness of the view taken by the Calcutta High Court that the definition of the word "dealer " in Explanation 2 of section 2(c) of the Bengal Act was ultra vires in so far as it included an auctioneer. The Bengal Act was enacted by the Bengal Legislature in 1941 in pursuance of the powers conferred by entry 48 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of the Provincial Legislature under entry 48 to impose a tax on the supply of the material used in such a contract by treating it as a sale. The view taken by this court in the Gannon Dunkerley's case that the word " sale " in entry 48 of List II of Schedule VII of the Government of India Act and entry 54 of List II of the Seventh Schedule of the Constitution has the same meaning as that given in the Sale of Goods Act, 1930 was reiterated by this court in K. L. Johar and Co. v. Deputy Commercial Tax Officer while dealing with 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... half they are sold or the purchaser only. Where transaction is one of sale of goods as known to law, the power of the legislature to impose a tax there on, in our view, is plenary and unrestricted subject only to any limitation which might have been imposed by the Government of India Act or the Constitution (see J. K. Jute Mills Co. Ltd. v. State of Uttar Pradesh ). In view of the wide amplitude of the power of the State or Provincial Legislature to impose tax on transactions of sale of goods, it would, in our opinion, be impermissible to read a restriction in entry 48 on the power of the State Legislature as would prevent the said legislature from imposing tax on an auctioneer who carries on the business of selling goods and who has in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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