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TMI Blog1955 (9) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... before the Board of Revenue and this was allowed on the ground that the technique of transaction on the basis of which the Sales Tax Officer had made the assessee liable to the tax showed that the part played by the assessee was that of a broker only and that he was not a dealer acting as a "commission agent" within the meaning of section 2(c) of the C. P. and Berar Sales Tax Act, 1947 (copy of the order attached). 2.. The State has applied for a reference to be made to the High Court on certain questions of law arising out of the order passed by the Board. The assessee also has joined himself with this request and in addition prayed that the constitutional question on which a decision was not given by the Board may also be stated to be heard and decided if the High Court did not endorse the view taken by the Board. The question of the vires of certain provisions of the Act raised on behalf of the assessee was not decided by the Board in view of the conclusion reached in his favour that he merely acted as a broker. (Copies of the applications of both the parties are annexed). 3.. The facts of the case were not in dispute at the revisional stage before the Board. The description ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w application referred to in the preceding paragraph reasons have been given why the principles laid down in these two cases did not apply to the facts in issue in the case under reference. 6.. In order to have a clear understanding of the nature of the transactions an analysis was made of the technique of the transaction as accepted by the Sales Tax Department and contained in the order of the Deputy Commissioner, Sales Tax. For ready reference this analysis is reproduced below: "(1) The weaver puts the sarees at the counter of the-applicant (asses- see) for examination by the applicant (assessee) and the prospective buyers. (2) The price is negotiated between the buyer and the seller through the applicant (assessee), the seller being present throughout the negotiations. (3) If the price is settled a chit is placed in the saree and the transaction is closed. If the Bepari changes his mind on account of any defect in the saree it cannot be returned to the seller after this chit has been placed in the saree. (4) If the seller does not agree to sell the saree at the price offered by the buyer even after the higgling done by the applicant (assessee) to bring about a settlement of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd had described the technique of the transaction on the basis of the material that became available from the statements of the witnesses examined by himself and other Sales Tax Officers subordinate to him. If he was of the opinion that the form of the bill indicated that the transaction was of such a nature as would bring the assessee under the category of a dealer he should have examined the Beparis and the weavers in respect of the transactions of these bills and should also have given an opportunity to the assessee to explain the points on which an adverse presumption was to be drawn against him. There does not seem to be any justification for not doing this when after all additional evidence was brought on record by the learned Deputy Commissioner at the stage of second appeal. 9.. The appellant has filed an affidavit jointly with the Secretary, Handloom Suti and Reshmi Cloth Bajaj Association, Nagpur, which amongst other matters states that the case under reference was selected to be contested as a test case with the agreement of the Handloom Suti and Reshmi Cloth Bajaj Association and the Government. Reference has been made in this affidavit to certain documents in support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of stating this question for the decision of the High Court. T. L. Sheode, Advocate-General, for the applicant. R. S. Dabir, V. M. Kulkarni and Kumari Rama Gupta, for the non-applicant. JUDGMENT This is a reference by the Board of Revenue, Madhya Pradesh, under section 23(1) of the Madhya Pradesh Sales Tax Act, 1947, referring six questions for the opinion of the High Court. Those questions are: "(1) Whether on the facts and circumstances of this case the sales are effected through and by the assessee as a commission agent acting as a dealer under section 2(c) of the Act? (2) Whether there is any privity of contract established at any stage between the Bepari and the weaver? (3) Whether the assessee acquired possession and control either actual or constructive over the goods at any stage? (4) Whether on the facts and circumstances of this case, the non- applicant is a 'dealer' within the meaning of section 2(c) of the C. P. and Berar Sales Tax Act, I947, or is a broker not falling within the said section? (5) If the assessee's function as a 'broker' is within the mischief of the Sales Tax Act, are the provisions so making it intra vires? (6) Are the relevant provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assistant Com- missioner of Sales Tax, Nagpur Region, Nagpur (Sales Tax Appeal No. 32/1-A-6 of 1954). The Assistant Commissioner of Sales Tax, by his order dated 15th June, 1954, upheld all the conclusions of the Sales Tax Officer and enhanced the tax to Rs. 5,240-3-0 since he found evi- dence to justify the imposition of this enhanced tax. The assessee then appealed to the Deputy Commissioner of Sales Tax, Madhya Pradesh (Second Sales Tax Appeal No. 240/S.A./1-6-1954). The Deputy Com- missioner by his order dated 10th July, 1954, dismissed the appeal. The assessee then filed an application for revision before the Board of Revenue, Madhya Pradesh, Nagpur (Application No. 56/XXXIII-7 of 1954) and the Board of Revenue by its order dated 23rd November, 1954, reversed the decision of the Taxing Authorities. 4.. Against this decision an application for review was presented by the State of Madhya Pradesh on 29th November, 1954. The application was rejected on 23rd December, 1954, the learned Member holding that the order passed by him did not come in conflict with the principles laid down by the Board in certain previous cases. The State Government then applied for a reference under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the Central or a State Government or any of their departments and includes also a society, club or association selling or supplying goods to its members." It is contended by the State Government that the definition is wide enough to include the assessee who carries on the business of selling sarees to the Beparis after obtaining dominion over them, thereby be- coming either an agent of a principal or a principal himself. 7.. It is clear from entry No. 48 in List II of the Seventh Schedule to the Government of India Act, I935, that tax is to be levied on a "sale of goods" and the authority of the Provincial Legislature extended to the imposition of the tax on any transaction of sale of goods. The tax is laid on a dealer under the Act and for this purpose the person sought to be taxed must carry on the business of selling goods, whether as principal or as an agent. Unless the assessee can be said to have carried on the business of selling the goods, whether as a principal or as an agent, the tax cannot be levied. It is clear that the entry does not entitle the Provincial Legislature to tax brokers who may have assisted at a sale but had not sold the goods either as principal o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is clear from the remaining portion of the analysis made of facts. If the weaver does not agree to sell the saree at the price offered by the buyer, the weaver takes away his goods to another shop where he can show the goods to other Beparis. The saree belongs to the weaver and the assessee has no dominion over it (1) [1952] 3 S.T.C. 109. (3) [1952] 3 S.T.C. 121. (2) [1952] 3 S.T.C. 107. (4) [1953] 4 S.T.C. 331. (5) [1883] 8 App. Cas. 309. till the transaction is over; otherwise the weaver could not take away his goods. Again, if after the weaver goes away the Bepari changes his mind, the weaver is not concerned because the transaction so far as he is concerned is over. This shows that the transaction of sale between the weaver and the Bepari is finally concluded when the broker, guaranteeing payment by the Bepari, puts a chit in the saree, and the weaver is not thereafter concerned with the transaction. In our opinion, the transaction must be viewed as a whole and the fact that the weaver does not take back the saree after the chit is put does not bring the transaction forward to a point later than the putting in of the chit by the assessee. The payment is received by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is borne out by a reference to Stroud's Judicial Dictionary. The meaning of a broker is: " 'Brokers are those that contrive, make, and conclude bargains and contracts between merchants and tradesmen, in matters of money and merchandise, for which they have a fee or reward' (Jacob, cited by Best, C.J., Gibbons v. Rule(1)." The distinction between the two is that a commission agent, having control over the goods sells them to others. Though he may act for a disclosed principal at either end, he negotiates the sale with the pur- chaser on his own. The broker does not sell the goods on his own, but merely brings the vendor and the vendee together and settles the price. Bearing in mind the facts in the present case and considering the making of the bills by the assessee in his name according to the practice of the trade, we are of opinion that the assessee belongs to the category of brokers rather than commission agents who stock goods from sellers for sale on their own behalf to purchasers, charging commission either one way or both ways. 11.. It was argued that in some cases the Bepari is charged for packing, freight, etc., in the bills. That does not show that the goods belon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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