An indenting agent of non-resident cloth merchants was assessed to sales tax on turnover for 1954-55 and 1955-56 under section 14A of the Madras General Sales Tax Act, 1939. The Supreme Court held the agent fell within the fictional dealer liability and dismissed the appeals with costs.
Appeals dismissed with costs and one hearing fee; levy of sales tax upheld.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
248 SUPREME COURT REPORTS [1963)
]f62
G. GILDA TEXTILE AGENCY
Abril 19.
v.
STATE OF ANDHRA PR,\ DRSH
(S. K. DAS, i\I. HIVAYATULLAH and J. C. SH.Au, JJ.)
tla/,. Tar-Agent of non-r'8ident pnncip<1l-f,iabilityMadrM General Salts Tar Act, /.9.W (.~fad. fl of t.9.19), <. 14A.
The appellant was an a!jCnt in Andhra Pradesh of cer- tain non-resident princip:-ils \"ho \'Cre dealers in cloth. It received commission in so:nc cases nn the order~ bnoked and in others on all the sales effctl:'cl by the principals in the territory. One kind of transactinns it carried on in course of its bwiness rlatetl to goods sold by ito; principal to buyers in the State. The appellant in these transactions, l>rsides booking orders, received the railway receipts from the outside principals, handed them order to the buyers and sJme times collected and transmitted the amount to the outside principal.c;. The appellant was assessed to sales tax on its turnover for the years 1954-55 and 1955-56. The question wa• whether in carrying on such transactions the appellant was a d1·aler within s. l 4A 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 sell in~ 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.
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Held, that the High Court ha'.! taken the right view of 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 w~c_ther the tum--0vor of its business was more or less than the m1n1mum prescribed by the Act.
M ahadayal Premchandra v. Oommercial 1'a:r: O!fiur OalctUla, [1959] S. C.R. 551, distinguished.
Crvn. APPELLATE JURISDICTION: Civil Appeals Nos. 397 and 398 of 1961.
Appeals by special kavo from the judgment and order dated Eepttmber 19, 191i8, of the Andhra
2 S.C.R. SUPREME COURT REPORTS 2411
Pradesh High Court in Tax Revision Cases Nos. 62 and 63of1956.
~
B. Sen and B. P. Mahe,shwari, for the appellants.
IU6S
G. Gilda Tutile Agency v. Sia11 of Andhra Pradesh
K. N. Rajagopal Sa&tri and D. Gupta for the respondenta.
HIDAYATULLAH, J.-These two appeals with special leave have been filed hy Messrs. G. Gilda Textile Agency, Vijayawada, against the State of Andhra Pradesh. 'l'hey are directed against a common order of the High Court of Andhra Pradesh in two revisions filed under s. 12-B(l l of the Madras General Sales Tax Act, 1939 (9 of 19:39).
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 prin· cipals, on whose behalf it booked orders and dealt with the indents. There were agreements between the non-rtisident 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 agreementa, 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 availabfo on the orders booked by the appellant, and in others, on all the sales effected by the princi~ pals in this territory. The appellant did business in three aifferent ways, which have been described aa three separate categories in the case. In the first
H idayc,tullah J •
2&0 SUPREME OOUR'I' BBPoRTB [1963]
1HJ G,GaM Tutit. il1111CJ v. si.11 •f fnl'fMri PP••slt
category, the appellant took delivery of the goods from the railway, stocked them in it.a own godowne, fonnd buyers and delivered the goods to the buyers. Thie category of eales was held to be within the ,1Jadras General Sa.Jes Tax Act and the appellant, liable to the tax. The appellant does not qulllltion this part of the decision. The seoond category was in which it merely booked orders and forwarded theII\ to Bombay and the principals sent the goods with the railway receipts through the bank to the purohasers in Andhra Pradesh. The connection of the appellant was not considered Auffioient to constitute it the "dealer", as defined in the Madras General Salee Tax Aot, and suoh 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 St&te. The appellant in these transactions, besides booking orders, received the railway receipts from the outside principal, handed them over to the buyers and sometimes oolleoted and tr&DSmitted the amounts to the out.side principal. The period involved is oovered by the Sales Tr.x Validation Act, 1956 (7 of 1956), and no ques· tion 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 t&x Act, a.a a dealer.
It may be pointed out that the appellant did !>«>* produce any correspondence between it and the JICD.lreBident principals Qr the covering letters whioh mmt have been sent along with the railway receipts. The Tribunal under the Madras General Sales Tax Aot, therefore, oame to the conclusion that the railway receipts whioh 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 the railway or to negotiate them. The Tribunal, before, held that the appellant
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2 S.C.R. SUPREME COURT REPORTS 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 carryinl? on the business of buying and sellinl? goods in the State but residing outside it (hereiuafter in this section referred to as a 'non-resident'), the provisions of this Act shall apply subject to the following modifications and additions, namely:.
1912
IJ. GiJU Talilt Ag111q •• Stol<o/AProd.A -
H i4q)!alallall J ,
•-!' I
....... ......
252 SUPREME COURT REPORTS [1963]
1962
G. Gilda Ttxlilt Ageney v. St•t1 rj Andhra Pr•dtsh
H i<ltJ,atuUch J.
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 suoh authority is concerned, to such one of the authorities a8 may be authorised in this behalf by the State Government by general or special order.
Tho section makes the agent liable fictionally as a dealer in the circumstances laid down in the section, viz., that he is acting on bt"half of a non· residont person doing business of buying or selling goods in the State. Tho agent is assessed to tax under tho Act in rcspent of tho business of such non-resident in whi<'h the agent is concerned, irrespective of whether the turnover uf such business is more or lcAs than the minimum prescribed in the Act. It is contended that tho first thing to deoide - is whether the non-resident could be said to be carrying on the business of selling in And.bra. 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 Benge.I Fina.nee (Sllles Tax) Act, 1941 (6 of 1941). There also, the agent waa sought to be made liable in respect of tho sSle of goods belonging to a. pop-residept
'- v
(1) (1959) S. C. R. 551.
2 S.C.R.
253
SUPREME COURT REPORTS
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 busineBB 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 Iiabi. lity of the agent, in the present case under the Madras General Sales 'Pax Act is not fulfilled. Unfortunately for the appellant, in this case there is & clear finding by the High Court that the non-resident principals were carrying on the busineBB of selling in Andhra Pradesh. The High Court has observed that if the non-resident principals took out railway receipts in their own names, 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 handed them over to the buyers and sometimes collected the consideration and trans· mitted the same to the sellers, the sales thus resulting must be held to have taken place in the State either on behalf of the appellant or on behalf of the non resident principals, and whichever view Ire 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, ~ince the non-resident principals had done business in each case in the State of Andhra .._, Pradesh. The case of this Court on which reliance ha.s been placed, turned on its own facts. and a
1962
G. Gilda T i!Xliit •• 81411 of Andhta Prade•h
Ridayalullol, J.
254 SUPREME OOURT REPORTS [1983]
196t
finding there cannot be used in the present case, because no finding on the facts of one case can be one case can be applied to the facts of another. to the facts of another. the facts of another. of another. another.
G. <Jill• r lldil• because no finding on the facts of one case can be one case can be Ag.liq Y. applied to the facts of another. to the facts of another. the facts of another. of another. another. Sid• of An/Mo Prwm Sub-section (2) of s. 14-A was said to be connected with the opening part, and it H id4J•tullah J. was i;.rgued 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 Andhre. Pradesh and the appellant was the admitted a.gent through whom this business was carried on, the rest follows without any difficulty. .The High Court, in our opinion, was, therefore, right i~ upholding the leV"! of the tax from the e.ppelle.nt, m view of our de01sion that the appellant ·~me within the four corners of s. 14-A in relation to the transactions disclosed in the last category.
The appeals fa.ii, and a.re dismissed with coat.a, ·one hearing fee.
Appeal.s dismissed.
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1 issue framed by the court
Whether an agent of non-resident cloth dealers, who booked orders and handled railway receipts in Andhra Pradesh, was a 'dealer' under s. 14-A of the Madras General Sales Tax Act, 1939.
Colour shows how this judgement treated each authority
Mahadayal Premchandra v. Commercial Tax Officer, CalcuttaDistinguished
(1959) S. C. R. 551 · Who else cites this
3 provisions across 2 enactments
G. Gilda Textile Agency
State of Andhra Pradesh
S. K. Das
M. Hidayatullah
J. C. Shah
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
