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PETITIONER: G.   GILDA TEXTILE AGENCY

       Vs.

RESPONDENT: STATE OF ANDHRA PRADESH

DATE OF JUDGMENT: 19/04/1962

BENCH: HIDAYATULLAH, M. BENCH: HIDAYATULLAH, M. DAS, S.K. SHAH, J.C.

CITATION:  1966 AIR 1402            1963 SCR  (2) 248

ACT: Sales  Tax-Agent of nonresident  principal-Liability  Madras General Sales Tax Act, 1939 (Mad. 9 of 1939), s. 14A.

HEADNOTE: The appellant was an agent in Andhra Pradesh of certain non- resident  principals  who were dealers  in  cloth.  received commission in some cases on the orders booked and in  others on  all the sales effected by the principals in  the  terri- tory.   One kind of transactions it carried on in course  of its  business  related  to goods sold by  its  principal  to buyers  in the State.  The appellant in these  transactions, besides  booking orders, received the railway receipts  from the outside principals, handed them order to the buyers  and some  times  collected  and transmitted the  amount  to  the outside principals.  The appellant was assessed to sales tax on  its  turnover for the years 1954-55  and  1955-56.   The question  was whether in carrying on such  transactions  the appellant  was a dealer within s. 14A of the Madras  General Sales  Tax Act, 1939.  The Tribunal held that the  appellant was  such  a  dealer and the High Court  in  affirming  that decision  held that the non-resident principals  were  doing the  business  of  selling in the State  and  the  sales  in question  were  by  the  appellant  either  on  behalf   the principal or on its own behalf and that the-appellant was in either cass liable. Held,  that  the  High Court had taken the  right  view  the matter. Section 14A of the Act made the agent fictionally liable  as a  dealer in the circumstances as specified by it,  and  the agent  was liable irrespective of whether the  turn-over  of its business was more or less than the minimum prescribed by the Act. Mahadayal  Premchandra v. Commercial Tax  Officer  Calcutta, [1959] S. C. R. 551, distinguished.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 397 and 398 of 1961.

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Appeals  by special leave from the judgment and order  dated September 19, 1958, of the Andhra 249 Pradesh  High Court in Tax Revision Cases Nos. 62 and 63  of 1956. B.   Sen and B. P. Maheshwari, for the appellants. K. N. Rajagopal Sastri and D. Gupta for the  respondents. 1962.  April 19.  The Judgment of the Court was delivered by HIDAYATULLAH,  J.-These two appeals with special leave  have been filed by Messrs.  G. Gilda Textile Agency,  Vijayawada, against  the  State of Andhra Pradesh.   They  are  directed against  a common order of the High Court of Andhra  Pradesh in  two  revisions  filed under s.  12-B(1)  of  the  Madras General Sales Tax Act, 1939 (9 of 1939). The  matter  relates  to  the levy of  sales  tax  from  the appellant on its turn-over for ,the years,   1954-55.    and 1955-56.  The appellant was an agent of several non-resident principals, on whose behalf it booked orders and dealt  with the indents.  There were agreements between the non-resident principals  and  the appellant, and  three  such  agreements contained  in letters have been produced as  instances,  and are marked Exs.  A-3, A-3(a) and A-3(b).  Under these agree- ments,  the  appellant was appointed as indenting  agent  in Andhra Pradesh for cloth merchants, who, admittedly, resided and  carried  on business outside Andhra  Pradesh.   It  was required  to  book  orders  and  to  forward  them  to   the principals, receiving commission on sale of goods despatched to Andhra Pradesh.  In some cases, this commission was  only available  on  the  orders booked by the  appellant  and  in others, on all the sales effected by the principals in  this territory.   The appellant did business in  three  different ways, which have been described as three separate categories in the case.  In the first 250 category,  the  appellant took delivery of the  goods  found buyers  and  delivered  the  goods to  the  buyers.  This  a category  of sales was hold to be within the Madras  General Sales  Tax  Act and the appellant, liable to the  tax.   The appellant does not question this part of the decision.  The- second  category  was in which it merely booked  orders  and forwarded  them to Bombay and the principals sent the  goods with the railway receipts through the bank to the purchasers in Andhra Pradesh.  The connection of the appellant was  Dot considered  sufficient to constitute it the  ’,,dealer",  as defined in the Madras General Sales Tax Act, and such  sales were  omitted  from the turnover.   No  dispute,  therefore, arises  about this category.  The third category related  to goods  sold by the outside dealers to buyers in  the  State. The appellant in these transactions, besides booking orders, received  the railway receipts from the  outside  principal, handed  them over to the buyers and sometimes collected  and transmitted  the  amounts  to the  outside  principal.   The period involved is covered by the Sales Tax Validation  Act, 1956  (7  of 1956), and no question under  the  Constitution arises.   The only question is whether the  appellant  comes within  s. 14-A of the Madras General Sales Tax Act, and  it liable to tax Act, as a dealer. It may be pointed out that the appellant did not produce any correspondence between it and the non-resident principals or the  covering letters which must have been sent  along  with the railway receipts.  The Tribunal under the Madras General Sales  Tax Act, therefore, came to the conclusion  that  the railway  receipts  which  had  been  sent,  must  have  been endorsed by the sellers either in favour of the appellant or in  blank, to enable the appellant to claim the  goods  from

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the  railway  or to negotiate them.  The  Tribunal,  before, hold that the appellant 251 must be deemed to be a "dealer" under s.14-A and thus liable to tax under that section.               Section 14-A of the Act reads as follows               "In  the  case of any person carrying  on  the               business  of buying and selling goods  in  the               State but residing outside it (hereinafter  in               this section referred to as a ’non-resident’),               the provisions of this Act shall apply subject               to the following modifications and  additions,               namely:               (i)   In  respect of the business of the  non-               resident,  his  agent residing  in  the  State               shall be deemed to be  the dealer.               (ii)  The  agent  of a non-resident  shall  be               assessed to tax or taxes under this Act at the               rate  or rates leviable thereunder in  respect               of the business of such non-resident in  which               the  agent is concerned, irrespective  of  the               amount of the turn-over of such business being               less than the minimum specified in Section  3,               sub-section (3).               (iii) Without  prejudice to his  other  rights               any  agent of a non-resident who  is  assessed               under  this Act in respect of the business  of               such non-resident may retain out of any moneys               payable  to the non-resident by the  agent,  a               sum  equal to the amount of the tax  or  taxes               assessed on or paid by the agent.               (iv)  Where no tax would have been payable  by               the  non-resident in-respect of this  business               in  the State by reason of the turnover  there               of being less               252               than the minimum specified in Section 3,  sub-               section (3), he shall be entitled to have  the               amount  of the tax or taxes paid by his  agent               refunded  to  him or application made  to  the               assessing  authority concerned, or where  more               than one such authority is concerned, to  such               one of the authorities as may be authorised in               this behalf by the State Government by general               or special order.               (v)  Such  application shall be made  with  in               twelve  months  from the end of  the  year  in               which payment was made by or on behalf of  the               non-resident  of the tax or taxes or any  part               thereof." The  section makes the agent liable fictionally as a  dealer in the circumstances laid down in the section, viz., that be is  acting on behalf of a nonresident person doing  business of  buying  or  selling goods in the State.   The  agent  is assessed to tax under the Act in respect of the business  of such   non-resident  in  which  the  a  cut  is   concerned, irrespective  of  whether the turnover of such  business  is more or less than the minimum prescribed in the Act.  It  is contended that the first thing to decide is whether the non- resident  could  be said to be carrying on the  business  of selling in Andhra Pradesh in the circumstances of this case, and  reliance  is  placed  upon a  decision  of  this  Court reported in Mahadayal Premchandra v. Commercial Tax Officer, Calcutta  (1)  In that case, this Court was called  upon  to consider  the  Bengal Finance (Sales Tax) Act,  1941  (6  of

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1941).   There also, the agent was sought to be made  liable in respect of the sale of goods belonging to non-resident (1)  (1959) S. C. R, 551, 253 principal  under a section which may be taken to be in  pari materia  with the section, we are considering.   This  Court held that the Kanpur Mille, whose agent the appellant in the case was, were not carrying on any business of selling goods in  West  Bengal  and  were  selling  goods  in  Kanpur  and despatching them to West Bengal for consumption.  This  part of  the  judgment is called in aid to show  that  the  first condition of the liability of the agent in the present  case under  the  Madras General Sales Tax Act is  not  fulfilled. Unfortunately  for  the appellant, in this case there  is  a clear  finding  by  the High  Court  that  the  non-resident principals  were  carrying  on the business  of  selling  in Andhra Pradesh. The High Court has observed that if the non- resident  principals took out railway receipts in their  own Dames,  thereby  manifesting their intention to  remain  the owners and to retain. the control over the goods, the  sales must be taken to have been completed or to have taken  place in  the State of Andhra Pradesh.  From this, the High  Court came to the conclusion that the non-resident principals were doing business of selling in Andhra Pradesh.  The High Court pointed  out that inasmuch as the appellant  after  securing the  orders received the railway receipts from  the  sellers and  banded them over to the buyers and sometimes  collected the  consideration and transmitted the same to the  sellers, the sales thus resulting must be hold to have taken place in the State either on behalf of the appellant or on behalf  of the non resident principals, and whichever view be  correct, the  appellant  as agent was liable as a dealer  within  the Act.   Either it was a dealer itself, or it became a  dealer by  the fiction created by s. 14-A, since  the  non-resident principals  had done business in each case in the  State  of Andhra  Pradesh.  The case of this Court on  which  reliance has been placed, turned on its own facts, and a 254 finding there cannot be used in the present case, because no finding on the facts of one case can be applied to the facts of another. Sub-section (2) of s. 14-A was said to be connected with the opening part, and it was argued that the tax was leviable on the  turnover  relating to the business  of  a  nonresident, which  was  carried on by the non-resident  in  the  taxable territory.   In our opinion, once the finding is given  that the  non-resident  principal  carried  on  the  business  of selling in Andhra Pradesh and the appellant was the admitted agent  through whom this business was carried on,  the  rest follows  without  any difficulty.  The High  Court,  in  our opinion, was, therefore, right in upholding the levy of  the tax  from  the appellant, in view of our decision  that  the appellant  came  within  the  four corners  of  s.  14-A  in relation to the transactions disclosed in the last category. The appeals fail, and are dismissed with costs, one  hearing fee. Appeals dismissed. 255