9911796707
TMI Blog1956 (3) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioners on behalf of non-resident principals for 1950-51 were of the value of Rs. 1,00,708-2-9 and the transactions on behalf of principals resident within the State amounted to Rs. 3,34,865-0-3. The petitioners were registered dealers but they did not obtain a licence under section 8 of the Act. In respect of all their purchasing agency transactions, the petitioners billed for and collected "russum" at the rate of Rs. 1-9-0 per cent. from their principals on the purchases made for them in addition to an agreed commission of 2% and incidental charges and expenses. The Deputy Commercial Tax Officer assessed the petitioners to tax on all the purchasing agency transactions aggregating to Rs. 43,557-13-0, on the grounds that they had co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e under section 8 of the Act, were evidently apprehensive of a demand for tax being made on them and took the precaution of providing themselves against that contingency. The interpretation of the Act and the Rules framed thereunder is some- times beset with difficulty as pointed out by the Courts and perhaps the petitioners were not sure of the correct legal position as regards their liability to tax. The majority of the Tribunal observed that as the petitioners earned an extra amount over and above the pure agency commission, they were "liable to tax as dealers purchasing at lower and selling at higher rates" and concluded their order as follows: "In view of the collection of extra sums under the head 'russums' which is neither customary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of another that an obligation to repay that money arises. The question is not to be concluded by nice considerations of what may be fair and proper according to the highest morality. To support such a claim there must be an obligation, (1) L.R. 2 I.A. 131. express or implied, to repay." If this is the position with regard to the immediate parties on whose behalf or for whose benefit money was paid it is an a fortiori case, where a stranger, like the State, seeks to recover the money. Unless the levy is justified by the express terms of the Act and the Rules the petitioners are not bound to pay the tax merely because they had collected it from their principals. Under section 8-B(1) of the Act a registered dealer is authorised to collect amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is only if the levy of tax in the circumstances was authorised by the Act, the petitioners would come under a liability to pay over the collections to the State. There is no obligation on the petitioners as registered dealers to pay over to the Government amounts not lawfully collected by them as tax. The petitioners might be liable to refund the russums collected by them to their purchaser-principals but unless it is shown that the levy of tax was authorised by the Act and the Rules, the petitioners are not liable to pay over the collections to the State. In Tata Iron and Steel Co. Ltd. v. State of Madras(1), the learned judges interpreted the words "by way of tax" in section 8-B(2) as meaning "taxes under the Act", that is to say, taxe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceipt together with a copy of the patti or invoice and a hundi for the aggregate amount of the price of the goods, freight, commission, incidental charges and russum was sent to local bankers who delivered these documents to the purchaser-principals against payment. No separate bank accounts were kept by the petitioners for each of the purchaser-principals. In a few cases a small initial advance was made to the petitioners by their constituents. The petitioners purchased goods from all and sundry, stocked them for a while with- out differentiating between the different purchases and sent such quantities of goods out of the entire stock as might be required by their various customers. In truth and in substance the goods were sold by the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioners are not liable to pay tax on their purchase turnover though they are dealers. The fact that they have not taken out a licence under section 8 of the Act would not matter so far as the purchases are concerned for they relate to goods which are taxable only on sales or on the sales turnover. Though the matter is not so clearly brought out as it might have been, the view of the majority of the Appellate Tribunal appears to be that the petitioners are liable to tax as "dealers" because they sold the goods to their so-called principals resident within the State and that they are liable to tax as dealers on their sales turnover in the absence of a licence under section 8 and compliance with the terms of the sec- tion and the condi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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