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TMI Blog1983 (11) TMI 328X X X X Extracts X X X X X X X X Extracts X X X X ..... LZAPURKAR V.D., PATHAK R.S. AND SABYASACHI MUKHARJI JJ. -------------------------------------------------- The judgment of the Court was delivered by TULZAPURKAR, J.- This appeal by special leave raises the question whether the appellant-company could be regarded as a "dealer" within the meaning of section 2(5) read with the explanation thereto of the Orissa Taxation (on Goods Carried by Road and Inland Waterways) Act, 1959 (hereinafter referred to as the Orissa Taxation Act and which was validated by Act of 1968), and as such was liable to be assessed under the Act for the quarters covering the period 30th September, 1960, to 31st March, 1962? The question which pertains to the proper interpretation of the aforesaid provisions of the Act arises in the following circumstances. Nellimarla jute Mills Co. Ltd. and Chitavalsah Jute Mills Co. Ltd. are two independent and separate companies having their registered offices at Mcleod House, 3, Netaji Subhas Road, Calcutta, and additional places of business in several parts of the country including one at Kendupatna, P.O. Kendupatna, District Cuttack, in the State of Orissa. These two public limited companies primarily c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titions in the Orissa High Court under article 226 of the Constitution challenging the validity of the original Act of 1959 as also the Validation Act of 1968 and obtained interim stay of proceedings under the said Act but we were informed by the counsel that ultimately the challenge to the validity of the Acts failed; however, we are not concerned with those proceedings in this appeal. In the meanwhile, seven ex parte assessment orders were passed against the appellant-company by the Assistant Tax Officer for the quarters covering the period from 30th September, 1960, to 31st March, 1962, on the business of the said two companies on the basis that appellant-company was a "dealer" (as agent of both the companies) within the meaning of section 2(5) read with the explanation thereto and had carried on the business of stocking or storing jute and carrying the same by motor boats at Kendupatna in District Cuttack, State of Orissa, and the appellant-company received a notice of demand along with the said assessment orders claiming a total amount of Rs. 74,125 inclusive of penalty. Against the said assessment orders the appellant-company preferred appeals under section 12(1) of the Act t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Orissa which was done by the two jute companies at Kendupatna in District Cuttack, the two jute companies (the principals) who had registered themselves as "dealers" under the Act could be assessed by the taxing authorities and not the appellant-company who was not a "dealer" as defined by section 2(5) read with the explanation thereto of the Act. In the first place the counsel urged that though it was true that the appellant-company was acting as the agent of the two jute companies during the relevant quarters it did not have any place of business either at Kendupatna or anywhere else in the State of Orissa and unless it had such place of business in the State of Orissa which could facilitate the assessment, the appellant-company could not be proceeded against or assessed. In other words, the submission was that under the explanation an artificial definition of a "dealer" by means of a deeming clause had been provided with the object of facilitating the assessment proceedings against nonresident principals which could not be achieved if the agent was also a non-resident in the State of Orissa. Secondly, the counsel contended that the jute companies (principals) were not "non-resi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is nothing either in the main definition or in the explanation to suggest that the manager or agent of the dealer (principal) should have his own business within the State of Orissa before he could be proceeded against or assessed under the Act. In our view it would be sufficient if the manager or agent of a non-resident dealer looks after the operation of stocking or storing the jute of that non-resident dealer and carrying the same by motor boats, etc., within the State of Orissa. Apart from this aspect of the matter, the main thrust of the counsel's contention has been that the manager or agent should at least reside or have a place of business within the State of Orissa before he could be proceeded against or assessed under the Act. On a plain reading of the explanation that clearly is not a requirement qua the manager or agent. Under the explanation the manager or agent of a "dealer" who resides outside the State is also deemed to be a "dealer" for the purpose of the Act irrespective of whether he resides inside or outside the State. In other words the place of residence or of business of the manager or the agent is utterly irrelevant. The artificial definition of a "deal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot determine the residence. Counsel pointed out that in law a company may have a dual residence or multiple residences depending upon at how many places it carries on its businesses and this aspect of the company's residence assumes considerable relevance in the context of tax laws and since here the two jute companies (the principals) had also places of business within the State of Orissa, apart from having their registered offices in Calcutta, they could be regarded as having their residences within the State of Orissa and as such could not be regarded as non-resident "dealers". It is true that in respect of an artificial person like a company the test to determine its residence will have to be considered in the context of the law prescribing the criteria in that behalf and would be different from the test that determines its nationality or domicile. In Palmer's Company Law (23rd Edn.), Vol. 1, these three concepts in relation to a company have been dealt with in paragraphs 8.10, 8.11 and 8.12 at pages 101 to 103 thus: "8.10. Nationality, domicile and residence of company. The situation of the registered office determines the nationality and domicile of the company but it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ." From what is stated above it will be clear that so far as law of taxation is concerned-and in the instant case we are concerned with tax law, namely, the Orissa Taxation Act-ordinarily the residence of a company will be at the place where the actual management of the company is carried on and that if this is done at several places it may have a dual residence but in that case at least some part of the superior and directing authority of the company must be present at the place where its residence is sought to be established. In Buckley on the Companies Act (14th Edn.), Vol. 1, at page 299, the following passage occurs: "For the purpose of the Income-tax Acts, the place of registration of a company is not, any more than the birth place of an individual, conclusive as to its 'residence'. A company registered here (in England), with a registered office here (in England), and governed by a board which meets here, is no doubt resident here. But also a company registered abroad, whose head office and directors' meeting are here, is resident here. The test of residence is not registration, but where the company does its real business, where the central management and control abid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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