1977 (4) TMI 154 - HC - VAT and Sales Tax

Summary

Issues:
Whether the assessee could be considered a dealer liable to tax in respect of the transaction in dispute.

Analysis:
The judgment of the Court, delivered by Justice Sahai, addressed the question of whether the assessee could be deemed a dealer liable to tax based on the transactions in question. The assessee was engaged in business both on his own account and for commission, with the account books being accepted. Despite claiming to act solely as a broker for commission sales, after examination of one of the partners, all three authorities concluded that the assessee was indeed a dealer.

The counsel for the assessee argued that the authorities did not properly consider the evidence and contended that based on the facts found, the assessee should not be classified as a dealer. Reference was made to a previous case law to support the argument that a broker who merely brings buyers and sellers together without engaging in buying and selling goods on behalf of principals should not be deemed a dealer. However, as the assessee did not challenge the findings of the authorities on how he conducted his business, the Court could not disregard such factual findings. The focus was on determining the correctness of the legal inference drawn from the established facts.

The definition of "dealer" under section 2(c) of the U.P. Sales Tax Act was crucial in this case, which includes any person carrying on the business of buying or selling goods, whether for commission or otherwise. The judgment emphasized that what is subject to tax is the sale, which occurs only when there is a transfer of property in the goods. For a mercantile agent to be considered a dealer, they must have the authority not just to negotiate but also to conclude the sale and transfer the property in the goods to the buyer.

The Court highlighted that whether an agent has the authority to transfer the title in goods depends on the specific circumstances of each case. In this instance, the sales tax authorities relied on the partner's statement from the firm the assessee represented as a commission agent. The partner's admission that certain transactions were conducted by the assessee even in the absence of cultivators was crucial. The Court noted that the preparation of cash memos without buyer names, passing of title in goods without cultivators present, responsibility for shortages, and providing advances to buyers indicated that the assessee was indeed a dealer operating on his own account.

Ultimately, the Court ruled in favor of the department, stating that the assessee was a dealer liable to pay tax for the transactions in question. The reference was answered in the affirmative against the assessee, with each party directed to bear their own costs.