1. In this case the petitioner has been convicted for non-payment of sales tax in accordance with the demand notice served on him.
2. The main contention of the Petitioner is that he is a commission agent not liable to pay sales tax. It is on the other hand contended that under Section 22 of the Sales Tax Act, no order passed under the Act or the rules made thereunder by any assessing authority shall be called in question except in the manner provided by the Act itself. While it can be said that if the assessment is one made under the provisions of the Sales Tax Act, the correctness of the order cannot be questioned in any civil or criminal Court, it is clear that if the assessment is found to be not one made under the Act, there is no bar in Section 22 of the Act prohibiting civil or criminal courts from considering the correctness of the order as that section refers only to an assessment made under the Act.
3. The first point that arises for consideration in this case is whether the assessment made in respect of the dealings of a commission agent can be said to be one made under the Act. It will be noticed that under Section 2 of the Sales Tax Act 'assesses' means a person by whom sales tax is payable, a 'dealer' means any person who carries on business of buying or selling goods and 'sales' means every transfer of property in goods between one person to another in the course of trade or business for cash or deferred payment or other valuable consideration. Subject to the provisions of the Act every dealer shall pay tax on his total turnover.
If a commission agent can be said to be a dealer there is hardly any doubt that he is liable to pay tax on his total turnover for each financial year subject to the provisions of the Act. As already noticed before a person can be said to be a dealer, he must be carrying on business of buying and selling goods and by sales transfer of property in goods by one person to another is contemplated. The contention that a commission agent helps the owner of the goods in transferring his right in those goods to another person, that he having no property in the goods cannot transfer any such right to any one else and that he cannot therefore be held to be a dealer deserves consideration.
4. The point whether a commission agent is a dealer within the meaning of the word as used in the Sales Tax Act came up for consideration in three cases before the High Court of Madras. There was a conflict of opinion on the point between the Division Benches of that Court, in the case reported in -- 'Province of Madras v. Sivalaksbminarayana', ILR (1950) Mad 421 and -- 'Provincial Government of Madras v. Veerabhadrappa', ILR (1951) Mad. 257. The same point arose for consideration in subsequent cases and they were posted before a Full Bench and the question was decided in the case reported in -- 'Kandula Radhakrishna Rao v. Province of Madras', 1952 Com T C 67. As observed in the Full Bench case:
'On the facts found in -- 'The Public Prosecutor v. Narasimha Reddy', AIR 1943 Mad 102 (1) and -- 'the Provincial Government of Madras v. Veerabhadrappa', there can be no doubt whatever that the merchants in those cases do not fall within the definition of 'dealer'. They themselves neither sold nor bought the goods. They simply brought the seller and the buyer together and received a brokerage or commission by way of remuneration for their trouble.'
The comment made by the learned Chief Justice of the Madras High Court in the Full Bench case referred to above with respect to the decision in -- 'Provincial Govt. of Madras v. Veerabhadrappa', ILR (1951) Mad 257 is as follows:
'In -- 'Provincial Government of Madras v. Veerabhadrappa', on the facts found by the District Munsiff from whose judgment an extract is to be found in the judgment of Satyanarayana Rao J., it is clear that the question which has come up before us for decision could not have arisen. In that case there was obviously no sale by the plaintiffs because all that the plaintiffs did was to bring the seller and the purchaser together and to earn a commission for themselves. They would not obviously be 'dealers' within the meaning of the definition because they never transferred the property in the goods to the buyer. But the learned Judges did go into the question in a general way whether a commission agent would be a 'dealer' --within the meaning of the definition in the Act. In so far as the learned Judges held that the plaintiffs in the case before them were not dealers within the meaning of the Act, no possible exception could be taken. But if they meant to lay down that a commission agent would never fall within the definition of a 'dealer' with due deference to them, I cannot agree.'
5. The Full Bench decision confirms the view taken by Satyanarayana Rao J. to the extent that such of the commission agents that get articles brought to them sold by bringing to the vendor persons desirous of buying the articles and realise commission, are not dealers within the meaning of Sales Tax Act. This would be the case of most of the commission agents who sell by auction, articles brought to them for sale from villages and pay the amount realised, after deducting the commission due to them. There may be other commission agents who sell articles entrusted to them for sale, long after the entrustment as if they belong to them and without disclosing to the buyer that he is not the owner. The point for consideration is whether persons of that kind could be said to be dealers.
6. The learned Chief Justice proceeds to examine the views of Satyanarayana Rao J. that no commission agent could be said to be a dealer as defined in the Sales Tax Act and observes as follows:
'Satyanarayana Rao J. prefaces the discussion of the point with the assumption that when a 'dealer' is defined as a person who carries on the business of buying or selling goods, that means that he buys or sells the goods on his own account. That, in his opinion, is the primary meaning of the definition. While I agree that ordinarily buying and selling by a person may be on his own account, there is nothing in the language of the definition to exclude from its ambit persons buying and selling goods on account of others. When a person buys or sells goods on behalf of some one else, even then it will not be inaccurate to say that he buys and sells goods. The learned Judge seeks to receive support for his view from Explanation (2) which includes within the definition the agent of a person resident outside the Province who carries on the business of buying and selling goods in the Province.
I do not think that the Explanation throws any light on the point in issue. The reference in the Explanation is presumably to an agent of a person who carries on business 'qua' agent of that person who however is residing outside the Province. Now it is well known and it was admitted by counsel before us that the plaintiffs in the cases before us though they describe themselves as commission agents, do not purport to be agents of any particular person or persons. Some of them admittedly get goods from as many as 100 principals. It wilt be opposed to facts to say that they are carrying on business as the agent of these persons. In the case of an agent who carries on business professedly as an agent of another then it is really the principal who can be deemed to be carrying on the business and the Explanation (2) refers to such a case. The learned Judge then refers to the definition of turnover and again makes the assumption that to constitute the turnover of the agent he must buy or sell the goods for himself.
Dealing with the definition of 'sale' as a transfer of property in goods the learned Judge draws the implication that the property in the goods at the time of the sale vested in the person who sells and by reason of the sale, the purchaser obtains a transfer of the property in the goods from the seller. If the learned Judge meant 'title' by the terms 'property' then undoubtedly property does not vest in the commission agent; but I think it would be correct to say that a commission agent who has custody and possession of the goods is vested with the property in the goods and he does have the authority to transfer the property in the goods to the buyer. Personally I am inclined to think that section 27 of the Sale of Goods Act to which I have already adverted earlier supports my view. The learned Judge says:
'....except in the limited classes of cases contemplated by Sec. 27 of the Sale of Goods Act it is impossible for an agent to convey or transfer property in goods except under the authority of the principal.' But a Commission agent does sell goods with the authority and consent of the owner of the goods.'
7. It has however to be stated with respect that the contention, that when a commission agent sells goods with the authority and consent of the owner of the goods, the person who in the legal sense sells the articles is the owner of the goods and he sells them through his agent with the result that it is he who could be said to be the dealer and not the commission agent, is not without substance. It may also be stated with respect that persons who 'though they describe themselves as commission agents do not purport to be agents of any particular person or persons' are not commission agents at all or any kind of agents. There may also be cases in which articles are sold by servants of dealers who call themselves agents and call the remuneration they get commission to avoid sales tax. Persons calling themselves commission agents may be selling articles which they have brought. These are no doubt liable to pay sales tax being not really commission agents. When a proper case arises the question may need careful consideration.
In this case, however, the petitioner's case is that vegetables brought to him by owners are sold by him for them as their agent and that he gets only the commission. Such a case is one in which it could be said that the commission agent sells the articles as agent of particular person. He is more or less a broker and he merely brings the vendor and vendee together and helps the sales. There is and can be no difference of opinion that a commission agent of this type is not a dealer within the meaning of the word as defined in the Sales Tax Act as held by the Full Bench decision. The assessment made on such a person cannot be said to be an assessment made under the Sales Tax Act. The liability to pay an assessment made on a commission agent of this type can be questioned in civil or criminal court. In the Full Bench case itself it was made clear that the 'appeals arise out of suits filed for recovery of amounts or sales tax alleged to have been illegally levied.' Some appeals were allowed and the suits decreed.
8. In this case, however, according to the finding of the assessing Officer the petitioner is a dealer in vegetables. In case it had been found by the Sales Tax Officer that the petitioner is a commission agent, it would have been open for the civil or criminal courts to consider whether the assessment made in respect of the dealings of a commission agent can be said to be one under the Sales Tax Act or not. But, as the Sales Tax Officer had every jurisdiction to decide whether the petitioner was a dealer or a commission agent, his decision on the point is final. It is not open to criminal courts to say that the petitioner is a commission agent against the finding of the Sales Tax Officer that he is a dealer in vegetables. To what extent civil and criminal courts can question the correctness of assessment or orders made by Sales Tax Officer has been considered in -- 'K. Kariappa v. Govt. of Mysore', C. R. Petns. Nos. 139 and 140 of 1951-52 (Mys); and -- 'Venkatachala Chatty v. Govt. of Mysore', Crl. Revn. Petn. No. 166 of 1951-52 (Mys.) and in -- 'Rama Iyer v. Government of Mysore', ILR (1951) Mys 399. It is sufficient for the purpose of this case to give the following extract from the commentary on Indian Income Tax Act by A. G. Sampath Iyengar under Section 67 of the Indian Income Tax Act, which contains a provision similar to the one now under consideration.
'The right to challenge in a court of law arises only where the Income-tax authority has no jurisdiction to assess on the undisputed facts, or on the facts as found by it, or as assumed by it to exist. That is to say if on certain facts the authority should hold it has jurisdiction in law and if that 'view of the law' should be erroneous, the civil court would be entitled to interfere and not otherwise. The distinction, in other words is as between a jurisdiction arising on an erroneous decision of fact, as opposed to one usurped on an erroneous view of the law. In the former case, the jurisdiction of the Income-tax Officer cannot be attacked, since he is given jurisdiction to decide it, rightly or wrongly; in the latter case, it can be on the ground that the assessment is not one made under the Act'.
9. The learned Magistrate was not right in allowing the petitioner to adduce evidence that he was merely a commission agent and not a dealer, as it is not open to him to question the finding of the Sales Tax Officer on a question of fact. If the Petitioner who has been held to be a dealer of vegetables by the Assessing Authority under the Sales Tax Act, wanted to challenge that finding, he should have done so either by filing an appeal and a revision petition or taking proceedings under Section 16 of the Act. Having failed to do so, he cannot question the correctness of the order of the assessing authority, that he is a dealer in vegetables. He is liable to pay Sales Tax under the Act. The petitioner was therefore rightly convicted and the sentence is not severe. The revision petition stands therefore dismissed.
10. Petition dismissed.