1959 (10) TMI 23 - HC - VAT and Sales Tax

Summary

Issues:
1. Liability of the petitioner to be taxed on a turnover of Rs. 11,80,893-7-7, specifically on the turnover of sales of hides and skins belonging to non-resident principals.
2. Validity of rule 16(4) under the Sales Tax Act in light of Article 304 of the Constitution.
3. Tax liability of the petitioner as an agent of non-resident principals under section 14-A(1) of the Act.

Analysis:
The judgment addressed the liability of the petitioner to be taxed on a turnover of Rs. 11,80,893-7-7, which included sales of hides and skins belonging to non-resident principals. The petitioner contended that rule 16(4) was ultra vires and conflicted with Article 304 of the Constitution. However, the Court upheld the validity of rule 16(4) in a previous case and found no contravention of the Constitution. The petitioner, as an agent of unlicensed dealers, argued that since the non-resident principals were not licensed dealers, he could not be taxed. The Court rejected this argument, stating that under section 14-A(1), the agent is deemed to be the dealer for sales conducted on behalf of non-resident principals. The Court emphasized that the agent's liability is based on being a licensed dealer, which the petitioner was. Therefore, the liability of the petitioner was upheld based on the provisions of section 14-A(1) and rule 16(4).

The petitioner also cited a previous case regarding the economic incidence of tax on non-resident principals. However, the Court clarified that section 14-A(3) allows the agent to recover the tax collected from the principal. The Court dismissed the petitioner's argument that the agent could not be taxed if the principal could not be taxed. Ultimately, the Court rejected both contentions raised by the petitioner and upheld the tax liability imposed by the Tribunal. The petition was dismissed with costs, and the counsel's fee was set at Rs. 100.