http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 3  

PETITIONER: THE STATE OF BOMBAY

       Vs.

RESPONDENT: M/S.  RATILAL VADILAL AND BROS.

DATE OF JUDGMENT: 15/11/1960

BENCH: HIDAYATULLAH, M. BENCH: HIDAYATULLAH, M. KAPUR, J.L. SHAH, J.C.

CITATION:  1961 AIR 1106            1961 SCR  (2) 367  CITATOR INFO :  D          1962 SC1326  (4)  R          1973 SC 804  (11)

ACT: Sales    Tax--’Dealer’--Meaning   of--Appeal   by    special leave--When available--Bombay Sales Tax Act, 1953 (Bom.  III of   1953),   ss.  27(1),  (b),  (c),   30(1),   34(1)   and (2)--Constitution of India, Art. 136.

HEADNOTE: One Nanalal Karsandas, who was a brick manufacturer, held  a priority certificate for purchasing coal under the  Colliery Control Order and purchased a certain quantity of coal  from M/s.  S. G. Rungta Colliery through the respondents who were commission agents.  The respondents applied to the Collector for determining whether they could be described as "dealers" under  the Bombay Sales Tax Act, 1953.  The  Collector  held that  they  were  dealers but the Sales  Tax  Tribunal  held otherwise.  No step was taken thereafter for a reference  to the High 368 Court  under ss. 34(1) and 30(1) of the Act.  On  appeal  by the State of Bombay by special leave, Held,  that  the  respondents  could  not  be  described  as "dealers"  under the Act as the nature of their business  as disclosed  by them did not show that they were carrying  on the  business  of selling goods in the State of  Bombay  but were  only  commission  agents  arranging  sales  to   other persons. The  proper  course for the appellant was to move  the  High Court  and  exhaust  all his remedies  before  invoking  the jurisdiction   of  this  court  under  Art.   136   of   the Constitution.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 429 of 1959. Appeal  by special leave from the judgment and  order  dated December 6, 1957 of the former Bombay Sales Tax Tribunal  in Appeal No.6 of 1956.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 3  

C.   K.  Daphtary, Solicitor-General of India, H. R.  Khanna and R. H. Dhebar, for the appellant. N.   A. Palkhivala, S. P. Mehta, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the respondents. 1960.  November 15.  The Judgment of the Court was delivered by HIDAYATULLAH,  J.-The State of Bombay has appealed  to  this Court with special leave, against an order of the Sales  Tax Tribunal,  Bombay,  dated  December 6, 1957,  by  which  the Tribunal  allowing the appeal before it, set aside an  order of  the  Collector of Sales Tax passed under s.  27  of  the Bombay Sales Tax Act, 1953. The  respondents,  Ratilal Vadilal & Bros.,  are  commission agents doing business as clearing and transport contractors. On  June  25, 1954, they applied to the Collector  of  Sales Tax,  Bombay,  under  ss.  27(a), (b) and  (c)  of  the  Act describing the nature of their business, citing one instance thereof,  for  determination of the  question  whether  they could be called "dealers " within the Act.  The Collector by his order held that they were dealers, and were required  to register themselves under the Act.  On appeal, the  Tribunal held  otherwise,  and  hence this appeal  by  the  State  of Bombay. 369 It appears that no action was taken to ask for ’a  reference to  the  High Court of Bombay under s. 34(1) read  with  ss. 30(1)  and (2) of the Act.  We have frequently noticed  that all  the  remedies which are open to an  appellant  are  not first exhausted before moving this Court.  Ordinarily,  this Court  will not allow the High Court to be bypassed in  this manner, and the proper course for an appellant is to exhaust all  his remedies before invoking the jurisdiction  of  this Court  under  Art. 136.  In the present case,  however,  the matter is simple, and the learned counsel for the respondent requested  us  to determine the question, stating  that  his client  who was a small trader and who made the  application for  the clarification of the law, would be dragged  through Courts once again, if we were to decide this appeal on  this short point.  In view of this, though we decide this appeal, we  must  not be held to lay down a cursus curiae  for  this Court. The  matter  relates to a time after  the  Colliery  Control Order,  1945, came into force.  Under that Order, no  person could acquire or purchase coal from a colliery except  under authority of the Central Government for which purpose he had to  obtain  a  priority  certificate  from  the  State  Coal Controller.   Under  the scheme of the  Order,  del  credere agents were allowed to act and to charge a commission of one rupee per ton of coal. One Nanalal Karsandas, a brick manufacturer, was allotted  a priority  certificate in respect of 22 tons of coal on  June 17, 1954.  He dealt with M/s.  S.C. Rungta Colliery, Burhar, through the respondents.  The consignment was in the name of Karsandas,  but  the bill was sent by the  Colliery  to  the respondents, and the respondents, in their turn, made out  a bill in which they charged, in addition to the amount of the bill  of the Colliery, a sum of Rs. 22 as their  commission. The   liability  to  pay  the  Colliery  rested   upon   the respondents,   but  they  claimed  to  be  acting  as   mere "middlemen  "  between  the  Colliery  and  Karsandas.   The respondents stated that their business was along these lines with  other  constituents also, and asked the  Collector  to determine  whether  they  could be  described  as  "dealers" within the Act, and required registration. 370

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 3  

"Dealer  " in the Bombay Sales Tax Act, 1953, is defined  as follows: "dealer  " means any person who carries on the  business  of selling   goods  in  the  State  of  Bombay,   whether   for commission,   remuneration  or  otherwise..."   (Explanation omitted). It  would appear that to be a dealer, the person must  carry on  the  business of selling goods in the State  of  Bombay. The short question in this case, therefore, was whether  the respondents  were carrying on such a business in respect  of coal. The  scheme of the Control Order shows that no sale of  coal could  take place except to a person holding a  certificate. A sale otherwise was in contravention of the Control  Order. The certificate which has been produced in the case,  though made out in the name of the respondents, shows the  consumer as  the consignee.  It is thus plain that there was no  sale by the Colliery to the respondents, but directly to  Karsan- das,  though  through the agency of  the  respondents.   The respondents also, when they made out the bill to  Karsandas, mentioned that he was the consignee, and that they were only charging   their  "  middlemen  "  commission.    In   these circumstances,  it  is difficult to hold that  the  Colliery sold  coal to the respondents, and that they, in turn,  sold it  to Karsandas.  There were no two sales  involved;  there was  only  one  sale, and that was by the  Colliery  to  the consumer.   The respondents never became owners by  purchase from the Colliery, because the Colliery would not have  sold coal to them, nor could they have bought it unless they  had obtained a certificate.  The position of the respondents was merely  that  of agents, arranging the sale to  a  disclosed purchaser,  though guaranteeing payment to the  Colliery  on behalf of their principal.  In view of what we have said, no business of selling coal was disclosed in the instance cited before  the  Collector, and the order of  the  Tribunal  was correct on the facts placed before it. In  the result, the appeal fails and will be dismissed  with costs. Appeal dismissed.                             371