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TMI Blog1991 (10) TMI 278X X X X Extracts X X X X X X X X Extracts X X X X ..... cial Taxes) reversed the order of the Appellate Assistant Commissioner and held with respect to sales of wheat bran and other wheat products during the assessment year 1973-74 that they are liable to tax. 3.. With respect to wheat bran and other wheat produce, the commodity concerned, the assessees' case has been that they had no saleable interest in the goods as per the agreement with the Tamil Nadu Civil Supplies Corporation, hereinafter referred to as "the Corporation", under which agreement, inter alia, they only acted as custodian of the goods, the sale transaction being between the Corporation and the dealers to procure such products on permits issued by the Corporation. It will be useful, however to extract the agreement in full to appreciate whether the appellants acted as a seller and thus were dealers liable to tax under the Act. The agreement reads as follows: "Letter of agreement by flour mills. We agree to function as an agent of the Tamil Nadu Civil Supplies Corporation for the sale of wheat bran subject to the following terms and conditions: 1.. (1) We will hold the stocks taken over by the Tamil Nadu Civil Supplies Corporation on their behalf. We shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry but deputes a representative we shall effect delivery to the representative only on production of an authorisation from the permit holder to deliver stocks to the representative. (5) We shall remit to the Tamil Nadu Civil Supplies Corporation once a week ending Saturday the amount due to the Tamil Nadu Civil Supplies Corporation. III. We agree to receive payment for the stocks taken over by the Tamil Nadu Civil Supplies Corporation by adjustment against the remittance of sale proceeds. IV. We shall abide by any directions that will be issued by the Commissioner of Civil Supplies or the Tamil Nadu Civil Supplies Corporation including modification of the terms and conditions indicated in this letter. The Tamil Nadu Civil Supplies Corporation will be free to modify the terms of the agreement or terminate it with fifteen days' notice." 4.. The assessing officer noticed the case of the appellants in this behalf in these words: "In the same way the dealers produced the copy of the agreement with the Tamil Nadu Civil Supplies Corporation on the proceedings of the Commissioner of Civil Supplies, Chepauk, Madras, in his RC. No. E2/ 777072/72 CS dated May 25, 1973, according to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... int Commercial Tax Officer, Rattan Bazaar Assessment Circle, was not correct in allowing deduction on the turnover of Rs. 17,90,857.20." The Board accordingly issued notice to the assessees and after giving an opportunity of being heard, concluded: "For the purpose of liability under the Tamil Nadu General Sales Tax Act both the principal and the agent are considered as dealer and are liable to tax. According to the definition of the term 'dealer' in section 2(g) of the Act, it includes the agent also. The agent is liable to pay the tax as far as the department is concerned even in respect of the turnover relatable to the principal. Such principal-agent relationship are quite common in respect of a large number of goods where a manufacturer appoints one or two dealers as sole selling agents and such agents effected sales on behalf of the principal and rendered accounts to the principal. In all such cases, the agents are liable to pay tax and the turnover will be eligible for deduction at the hands of the principal. Even commission agents selling goods on behalf of agriculturists are liable to pay tax on the sales of the goods effected on behalf of the agriculturists, even thoug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt on the record except for wheat bran. It, however, has to be presumed that there were similar conditions for other products also otherwise the appellants would have brought evidence on the record to show that they had no such agency as contemplated in the agreement aforequoted with respect to other wheat products. The conditions above lead to only one conclusion that the appellants acted as commission agent of the Corporation. Thus as a dealer the appellants became liable to tax on goods sold to other persons. 8.. This Court, however, while considering as to whether a commission agent would be a dealer liable to tax said in the case of Tiruchengode Co-operative Marketing Society Limited v. State of Tamil Nadu [1978] 41 STC 212 that unless it is found that the assessee had the authority to transfer the property in the goods and which show that he had dominion over the goods, the assessee would not be liable to tax. The above observations, however, were made in a case in which the following facts were established: "The stock was received by the co-operative marketing society from its members and placed for auction. The sale was knocked down in favour of the highest bidder and w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o reason to take any different view than the one expressed by a Division Bench of this Court in the case of Tiruchengode Co-operative Marketing Society Limited [1978] 41 STC 212 or in Karelal Kundanlal Trust case [1980] 46 STC 202 (MP) or in the judgment of the learned single Judge of this Court in Ramasamy Goundar Sons' case [1990] 77 STC 58; but the difference lies in the facts of those cases and the case in hand. Those were cases in which one cannot find such allegations that could show that the assessees could be called commission agents, brokers or del credere agents or auctioneers or any other mercantile agents. They never had the authority to sell the goods. In other words, the principals, that is to say, the agriculturists themselves sold the commodities. They never treated the assessees as their commission agents, or allowed the assessees to act as commission agents. The instant case is one in which it is not at all necessary to examine whether there was any authority to transfer the property in goods with the appellants or not for, this is not in dispute at all. They had the authority to transfer the property in goods to the buyers and that authority had been given to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Corporation and the Corporation failed to pay such taxes collected to the Revenue, the Corporation committed a breach of contract. The appellants shall be, if the facts are not otherwise, entitled to recover the amount of tax remitted in case the Revenue realised such tax from them, from the Corporation. This, however cannot mean that the Board of Revenue has committed any error in holding as above and deciding the exigibility of the goods sold by the appellants and the liability of the appellants to pay the tax upon such turnover. 12.. Having found as above, we have no hesitation in dismissing the appeal. But we have a feeling that the Revenue should have been careful in picking up the principal instead of the commission agent in the instant case for the realisation of the tax. Since upon our judgment the matter shall again be in the hands of the Revenue, we observe that it would find out whether the Corporation has realised the tax from the buyers and if it has realised the tax from the buyers and the appellants do not hold the money, it would realise the tax from the Corporation (principal) instead of the appellants. 13.. With the observation as above, the appeal is dismi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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