1959 (9) TMI 46 - HC - VAT and Sales Tax

Issues Involved:
1. Whether the plaintiffs, described as dallali merchants or commission agents, are "dealers" under the Madras General Sales Tax Act, 1939.
2. Whether the suits filed by the plaintiffs are maintainable under the law.
3. Whether the suits are barred by limitation under Section 18 of the Madras General Sales Tax Act.
4. Whether Section 18-A of the Madras General Sales Tax Act, introduced by the amending Act VI of 1951, bars the suits filed by the plaintiffs.
5. Whether the plaintiffs are entitled to the refund of taxes and license fees collected from them.

Detailed Analysis:

1. Whether the plaintiffs are "dealers" under the Madras General Sales Tax Act, 1939:
The primary issue is whether the plaintiffs, who are described as dallali merchants or commission agents, can be classified as "dealers" under the Madras General Sales Tax Act, 1939. The plaintiffs argued that they were mere brokers and not dealers, relying on the ruling in Provincial Government of Madras v. Neeli Veerabhadrappa. However, the Full Bench in Kandula Radhakrishna Rao v. Province of Madras clarified that whether a commission agent is a dealer depends on the nature of the business. If the commission agent merely acts as a broker, he is not a dealer. However, if he sells goods under the authority or with the consent of the owner, he is considered a dealer. The learned District Judge found that the plaintiffs were dealers based on the evidence that they had authority to sell the goods and were responsible for the payment of the price to the sellers.

2. Whether the suits filed by the plaintiffs are maintainable under the law:
The maintainability of the suits was challenged by the State on the grounds that the plaintiffs should have exhausted the remedies provided under the Act before approaching the civil court. The learned District Judge rejected the technical plea of non-maintainability, but the High Court emphasized the need to consider the effect of Section 18-A, which bars suits to set aside or modify any assessment made under the Act. The High Court held that the suits filed after the introduction of Section 18-A were not maintainable.

3. Whether the suits are barred by limitation under Section 18 of the Madras General Sales Tax Act:
The State argued that the suits were barred by limitation, as they were filed beyond the six-month period prescribed under Section 18. The learned District Judge followed the ruling in State of Madras v. Abdul Khader and held that the suits were governed by Article 62 of the Limitation Act, which provides a three-year period for suits for money had and received. The High Court agreed with this view for suits filed before the introduction of Section 18-A but held that suits filed after its introduction were barred.

4. Whether Section 18-A of the Madras General Sales Tax Act, introduced by the amending Act VI of 1951, bars the suits filed by the plaintiffs:
Section 18-A explicitly bars suits to set aside or modify any assessment made under the Act. The High Court held that this section applied to all suits filed after its introduction, regardless of when the assessment orders were passed. The court rejected the argument that Section 18-A should not have retrospective effect, stating that the section clearly barred suits filed after its introduction.

5. Whether the plaintiffs are entitled to the refund of taxes and license fees collected from them:
The plaintiffs sought refunds of taxes and license fees collected from them, claiming they were not liable to pay these amounts. The High Court held that the suits seeking refunds were essentially attempts to set aside or modify the assessment orders, which were barred by Section 18-A. Therefore, the plaintiffs were not entitled to the refunds.

Conclusion:
The High Court dismissed all the Regular Appeals, holding that the suits were not maintainable due to the bar under Section 18-A. The Second Appeals were treated differently based on the timing of the suits. The suit in Second Appeal No. 531 of 1954 was allowed, with the court finding that the plaintiff was a mere broker and not a dealer. However, the suit in Second Appeal No. 532 of 1954 was dismissed due to insufficient evidence to prove that the plaintiff was only a broker. Each party was directed to bear its own costs in the Regular Appeals, while costs were awarded to the successful appellant in Second Appeal No. 531 of 1954.

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