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TMI Blog1958 (9) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... The petitioners contended that they were mere indenting agents and their business consisted merely in showing samples of cloth for intending buyers in Andhra State, in booking orders for them on an indent form Exhibit A-1 and sending the same to the Bombay sellers. Thus they merely established privity of contract between the Bombay sellers on one side and Andhra dealers on the other. Approval of these indents was discretionary with the Bombay sellers who in case of acceptance would send the goods by train to the buyers with railway receipts in their own name and signed by them on the reverse. They would send the invoices either through bank or directly to the buyers. The buyers would accordingly make payments before delivery. This, according to the petitioners, was the established mode of dealings between the sellers and the buyers. There were of course a few cases where the buyers on arrival would refuse to take delivery of the goods. In that case the petitioners would take delivery of the same from the railway on behalf of the Bombay sellers, stock them in one of the godowns of the Bombay sellers at Vijayawada and after arranging for fresh buyers and obtaining permission of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Sales Tax Extra" and condition No. 7 of the offer form executed between the petitioners and the buyers he was not prepared to believe that the petitioners were merely the indenting agents connecting the local buyers and the sellers. The Sales Tax Appellate Tribunal after taking additional evidence classified the transactions in question into three categories. The first category related to transactions in which the petitioners took delivery of the goods from the railway, stocked them in the godown, found fresh buyers and ultimately delivered the same to the fresh buyers. And these goods formed part of the general mass of the property. As regards these transactions the Tribunal was of the view that they were clearly sales within the State and the petitioners were liable to tax under section 14-A. The second category of cases related to the goods sold directly by the Bombay dealers to buyers in the State. The part played by the petitioners in these transactions is that besides taking indents they received the railway receipts from the sellers, handed them over to the buyers and sometimes collected the consideration and transmitted the same to the sellers. As regards this, the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contends has been wrongly relied on for enlarging the operation of section 14-A. Before we deal with the legal points raised we would like to remove first the misapprehension in relation to G.O. No. 1398. That G.O. provides for exemption and not for levy of a tax not sanctioned by the Act. It in terms exempts all kinds of agents, except the mercantile agents, agents who handle goods or documents of title relating to goods or agents for collection or payment of sale price of goods. Thus the word "agent" used in section 14-A in a broader sense has been narrowed down to those three forms or categories of agents. The Tribunal in its order has in fact considered whether the present case falls within the three categories enumerated in the G.O. as all other cases of agency are now irrelevant for purposes of section 14-A, and it gave its finding thereon. Thus the plea raised as to G.O. is without substance. The main arguments advanced by the learned counsel, however, centre round the true interpretation of section 14-A which reads thus: In the case of any person carrying on the business of buying or selling goods in the State but residing outside it (hereinafter in this section referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n (5) however prescribes time limit for such applications. Thus according to the scheme of section 14-A it is clear a person living outside but carrying on business of buying or selling in the State cannot escape the liability of payment of tax by reason of his non-residence. In respect of his transaction or transactions in the State his agent concerned residing in the State shall be assessed to tax and he shall pay the same and shall have a right inter alia to retain a sum equal to that amount out of the moneys payable to the principal. The principal, however, is entitled to the benefit of section 3(3) of the Act and can take advantage of the same only if he adopts the procedure prescribed. It is important to note that though the term "dealer " in section 2(b) of Act IX of 1939 means "any person who carries on the business of buying, selling, supplying or distribution of goods, directly or otherwise, whether for cash or for deferred payment, or for other valuable consideration and includes amongst others any commission agent, a broker, a del credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of buying, selling, supply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at as the sales were not in fact effected or completed in the State it cannot be said that the non-resident had carried on business here. This argument fails to take into account that the petitioners in cases where the buyers refused to take delivery of the goods themselves took delivery of the same from the railway, stocked them in the godown, later on sold them to fresh buyers and ultimately delivered them to such buyers. All these operations were indeed under the authority or with the consent of the non-resident person for whom the petitioners had acted as his agents in the State. It admits of little controversy that the sales as a result of which the goods were handed over to the fresh buyers had taken place in the State and further there can be hardly any doubt as to the fact that non-resident person carried on the business of sale through his agent in the State. In this way the conclusion of the Tribunal as regards this category of transactions is unimpeachable. The petitioners in relation to these transactions as the agents of the non-resident person are therefore liable to be taxed under section 14-A as though they themselves are dealers. Even as regards the second category ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ignment to deal with it according as the buyers had expressed their assent or dissent to the delivery of the goods. This is a natural and logical inference from the nature and conduct of business between the parties as detailed above. The learned counsel however argued that delivery of railway receipts through an agent or bank does not postpone the transfer of ownership in the property till the actual delivery of the goods when the goods have been in pursuance of the contract of sale, selected and delivered to the common carrier for transport. We do not think there is much force in this argument. As held in The Bank of Morvi v. Barlein Brothers', in order to determine whether the property in the goods passed from the seller to the buyers the real point for consideration would be whether the seller has parted with the control over the disposal of the goods. If he endorses the bill of lading in blank and hands it over to the agent for delivery with instructions that he shall not hand it over until the goods are paid for, that will indicate. that the seller had expressed his intention to retain the disposal of the goods under control. In The State of Madras by the Collector, Visakhapa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Sales Tax Laws Validation Act (VII of 1956) which received the assent of the President on 21st March, 1956. The learned counsel relying on Mahadayal Premchandra v. Commercial Tax Officer[1958] 9 S.T.C. 428. has raised a number of pleas to take the case out of the purview of section 14-A. It was argued that having regard to the decision in that case the agent is not liable as he himself did not carry on business of selling goods in the Andhra State. He further argued that as the sale price was not received by the petitioners even though they may he agents it could not be included in the gross turnover of the petitioners. These arguments are in our judgment untenable. The case cited is not on all fours with the case on hand. The facts of that case were altogether different. To show how it is distinguishable it would be sufficient if we refer to some of the passages in that judgment. At page 437 their Lordships observed: "The business was, if at all, one of selling goods in Kanpur and despatching them to West Bengal for the purpose of consumption therein. These transactions were, therefore, not covered by the Explanation 3 to section 2 (c) of the Act and the appellants could no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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