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TMI Blog1965 (2) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... d deposited the requisite fee in the sum of Rs. 500 pursuant to a notification No. F. 21(7) SR/55 dated 14th April, 1955. The question which this Court formulated for answer is as follows: "Whether sales tax in respect of sales amounting to Rs. 96,992 of hydrogenated vegetable edible oils belonging to the assessee effected during the year 1955 by his commission agent Messrs Peerdan Premchand, who had been granted a valid exemption certificate in form S. T. in respect of such sales under sub-section (2) of section 4 of the Rajasthan Sales Tax Act, 1954, is leviable on the assessee on the ground that the aforesaid sales made by the commission agent can be treated as made by the assessee for purposes of assessment and levy of sales tax under the Rajasthan Sales Tax Act?" The question when analysed postulates that the hydrogenated vegetable edible oils, the sale whereof was effected by the agent, belonged to the assessee. For the purposes of determining as to who is liable for the payment of sales tax we shall have to examine the relevant provisions of the Act as applicable to the circumstances of this case. Under section 3 when the turnover of a dealer in a previous year in respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e allowed the transfer through his agent or servant. It is not necessary that the owner must himself perform the act constituting the transfer. It would not be correct to say that the transfers of the property in goods must necessarily be performed by the owner himself. When it is done by the agent or the servant of the owner it is the extended hand of the principal or the master which transfers the property in the goods to the purchaser. It is nobody's case that the assessee had transferred the ownership in the goods to the agent. What the agent did was merely the performance of the physical acts for and on behalf of the principal when he transferred the property to the purchasers. Learned counsel for the assessee argued, relying on Kandula Radhakrishna Rao and Others v. The Province of Madras', that a commission agent, according to the accepted mercantile practice, has control over or possession of the goods and has the authority from the owner of the goods to pass the property in and title to the goods. When a commission agent sells goods belonging to his principal with his authority and consent and without disclosing to the buyer the name of the owner, there is certainly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration payable to the agent, apart from legitimate incidental charges actually incurred by him and specified in the accounts in respect of insurance, transport, loading and unloading, godown rent, interest, correspondence, telegrams, telephone charges and the like." The agent paid a sum of Rs. 500, being the maximum fee payable under this notification, and claimed exemption from liability to sales tax. The essential conditions under which this exemption is to be granted inter alia emphasise that the goods must be sold or supplied on behalf of known principals specified in his accounts. Another condition, namely, No. 3, is that the amounts for which the goods concerned in the transaction in respect of which exemption is claimed, are sold and are included in the turnover of the principal. The condition No. 4 also limits the totality of benefits which the commission agent earns in these transactions. He gets only the commission or brokerage agreed upon and specified in the accounts. This represents the entire remuneration payable to him. It is on the fulfilment of these conditions that the exemption is available. In the Madras case[1952] 3 S.T.C. 121. the learned judges considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of his transactions, subject to two conditions which alone are material to the present case, first, that they were carried out in accordance with the terms and conditions of the licence, and second, that the requirements of the first proviso to section 9 were fulfilled." The requirements of the first proviso to section 9 are similar to those which are contained in condition No. 4 of the Notification under section 4(2) of the Rajasthan Sales Tax Act. The learned judges have further observed: "An agent, who does business by buying or selling, and whose right may be no more than to his commission or brokerage, being himself a dealer, is assessable as such and but for section 9, has to work out his right of reimbursement against his principal, if need be, by resort to the civil court. The object of section 9 is to avoid this as far as possible, by exempting the agent from the tax burden, wherever and whatever extent it can be readily and indisputably laid on the principal, to whom the turnover, which is the base of the tax, really belongs; but where this is not possible, the agent is denied the exemption and is left to his remedy under the general law." This is one of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6, that the assessee in the quarterly returns in form ST/5 disclosed that his "taxable turnover amounts to sales by Messrs. Peerdan Premchand, Bikaner". The clear implication of this is that while the assessee included in his turnover the sales conducted by his agent, the agent claimed an exemption under section 4(2) of the Act. The condition No. 3 of the Notification read with section 4(2) to our mind clearly indicates the scheme of the Act. Where a commission agent merely works on commission and effects sales of goods of a disclosed principal and principal includes in his turnover the sale price of the goods sold by the agent, it is the principal who is the dealer for the purposes of sales tax. The learned counsel for the assessee vehemently argued that in this case the agent could not collect the tax because of the exemption certificate and because he ran the risk of being prosecuted and the assessee could not collect the tax because they had not effected any sale and had no opportunity to do so and the sales tax being an indirect tax on the consumers is in result being exacted from the seller. The seller could not pass it on to the consumers and collect it from them. In the fir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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