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TMI Blog1980 (8) TMI 167X X X X Extracts X X X X X X X X Extracts X X X X ..... he explanation of the assessee with regard to the aforesaid deficiencies, but it may as well be that there are various other deficiencies which the assessee will have still to explain. - Civil Appeal No. 717 of 1973, S.T.R. No. 857 of 1971 - - - Dated:- 26-8-1980 - BHAGWATI P.N., SEN A.P. AND VENKATARAMIAH E.S. JJ. S. Markendeya, Advocate, for the appellant. O.P. Verma, Advocate, for the respondent. -------------------------------------------------- The judgment of the Court was delivered by SEN, J.- This is an appeal from a judgment of the Allahabad High Court dated October 27, 1972, which was given upon a reference of certain questions of law made to the High Court by the Additional judge (Revisions), Sales Tax, Meerut, in compliance with its directions under sub-section (4) of section 11 of the U.P. Sales Tax Act, 1948, calling for a statement of the case. The two questions referred were as follows: "(1) Whether there is no material in support of best judgment assessment. (2) Whether, on the facts and in the circumstances of this case, the assessee acted in respect of the estimated purchase turnover of Rs. 3,80,000 as a dealer so as to be l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nge in the definition of the word 'dealer' in 1961 upon which the judge (Revisions) has relied does not change the situation. A person can be liable to tax as a dealer only if he acts as an agent having the authority to pass title in the goods sold. A kutcha arhatiya merely brings together the seller and the purchaser and helps in settling the price and weighing the goods, etc. The fact that he sometimes advances money to cultivators who bring their produce for sale or sometimes pays the entire sale price to the cultivator from his own pocket is not inconsistent with his being a kutcha arhatiya." It was rightly contended on behalf of the Commissioner that the High Court was wrong in holding that the assessee was not a dealer within section 2(c) of the Act and that the Sales Tax Officer was not justified in making an assessment to the best of his judgment under section 7(3). It is pointed out that the High Court has completely overlooked the explanation to section 2(c) of the Act, which was inserted by the U.P. Sales Tax (Amendment) Act, 1959, particularly the words "through whom the goods are sold or purchased" appearing therein. With regard to the applicability of section 7(3), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion between a kutcha and a pucca arhatiya is that a kutcha arhatiya acts as an agent on behalf of his constituent and never acts as a principal to him. The person with whom he enters into a transaction on behalf of his constituent is either brought into contact with the constituent or at least the constituent is informed of the fact that the transaction has been entered into on his behalf with a particular person. But in the case of a pucca arhatiya, the agent makes himself liable upon the contract not only to third parties but also to his constituent. He does not inform his constituent as to the third party with whom he has entered into a contract on his behalf. Thus, a pucca arhatiya acts as a principal as regards his constituent and not as a disinterested middleman who brings about two principals together, there being no privity of contract between the constituent and the third party, and may substitute his own goods towards the contract made for the principal and buy the principal's goods on his personal account. On the other hand a kutcha arhatiya usually denotes a person who merely "brings together the buyer and the seller" charging his commission, who has no dominion or co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e material time, from the definition of "dealer" in section 2(c) that even a selling or purchasing agent is within that definition. A person to be a "dealer" in that definition must be engaged in the business of buying and selling goods in Uttar Pradesh whether for commission, remuneration or otherwise. The explanation to section 2(c) brought within the definition of "dealer" not only a commission agent, a factor, a del credere agent or any other mercantile agent by whatever name called, and whether of such description or not, but also a broker, an auctioneer as well as an arhatiya. The use of the words "through whom the goods are sold or purchased" in the explanation is significant, and they must be given their due meaning. Thus, the definition of "dealer" in section 2(c) is wide enough to include a selling or purchasing agent of whatever name or description. The term "arhatiya" is wide enough to include a kutcha arhatiya. If the explanation to section 2(c) of the Act were not there, perhaps it could be said that a kutcha arhatiya is merely an agent who helps cultivators who bring their produce to the market for sale, to find buyers, assist them in weighment and secure to them p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act was not, in terms, referred to the High Court under section 11(4), the Additional Judge (Revisions) in stating the case mentioned that the assessee had contended before him that his account books had been wrongly rejected. The statement of the case sets out the details of the various surveys made and the nature of the deficiencies found. The High Court treating the question referred to be a composite one, embarked upon an enquiry as to whether the sales tax authorities were justified in rejecting the account books and in making the best judgment assessment under section 7(3). It has referred to the four surveys carried out on August 11, 1967, December 13, 1967, January 7, 1968, and March 8, 1968. In the first survey held on August 11, 1967, it was found that the naqal bahi had not been written for eleven days. The High Court observes that "no adverse inference could be drawn on this account because the assessee's explanation was that there were no cash transactions for this period and, therefore, the naqal bahi had not been written". With regard to the second survey carried out on December 13, 1967, it was discovered that there was a loose Parcha containing several entries ..... X X X X Extracts X X X X X X X X Extracts X X X X
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