1. The facts of the case are not many and they are undisputed. The petitioner is a commission agent for resident principals in the State. For the year ended 31st March, 1950, he had obtained a commission agency licence under section 11 of the Mysore Sales Tax Act, 1957 (to be hereinafter referred to as the 'Act'). In that year, he sold cereals on behalf of different principals the price of which aggregated to Rs. 4,39,251. But the turnover relating to no single principal had exceeded Rs. 7,500. The principals on whose behalf the petitioner effected sales did not obtain licence under section 6 of the Act as their turnover did not exceed the limit of Rs. 7,500.
2. For the year in question, the commercial Tax Officer, Davanagere, determined the petitioner's assessable turnover at Rs. 4,39,251 and levied on the petitioner a licence fee of Rs. 660 under section 6 of the Act. The petitioner's appeal in this regard was dismissed by the Deputy Commissioner of Commercial Taxes, Bangalore. His revision petition to the Commissioner of Commercial Taxes, Bangalore, was also not successful. Hence, the has come up to this Court praying that we may be pleased to quash the order of assessment made on him, as according to him, no tax is leviable on him under section 6. We have now to see whether this contention is correct.
3. Admittedly the petitioner is a commission agent. The turnover for which he was assessed represents his dealings on behalf of his principals resident in the State. Section 11 says :
'Every person who for an agreed commission or brokerage buys or sells on behalf of known principals specified in his accounts in respect of each transaction shall obtain a licence from the assessing authority concerned on payment of such fee not exceeding fifty rupees as may be prescribed in that behalf.'
4. There is no dispute that the petitioner has complied with this provision. Now comes the provisos to section 11. Proviso (i) says :
'In the case of an agent who carries on such business in the State of Mysore on behalf of the principal who is a resident of the State of Mysore, the agent shall be assessed to tax or taxes leviable under this Act in respect of the transaction provided that the agent may voluntarily pay the tax or the taxes collected, as and when collected to the State Government pending assessment of the tax payable by him, without prejudice to his other rights to recover from his principal the tax or taxes paid by him on behalf of the principal such agent may retain out of any moneys payable to the principal by the agent, a sum equal to the amount of the tax assessed on or paid by the agent. The principal on whose behalf the agent has paid the tax as aforesaid shall not again be taxed in respect of the same transaction but the burden of proving that the tax in respect of the transaction has been paid by the agent shall be on such principal.'
5. The second proviso is not necessary for our present purpose. From the above proviso, it is clear that when an assessment is made on the agent under the proviso, it is an assessment made for and on behalf of the principal and that in respect of 'the transactions' namely, 'the transactions' referred to in the main part of section 11. This can only happen if the principal is liable to pay tax. Quite clearly, if the principal cannot be taxed in respect of 'the transactions' his agent also cannot be taxed in respect of the same. Therefore, we have to see whether the principals could have been taxed in respect of 'the transactions' in question.
6. The charging section in the Act is section 5. Sub-section (5) of section 5 provides that a dealer whose total turnover in any year is less than Rs. 7,500 shall not be liable to pay tax for that year under section 5. Cereals are exempt from taxation under section 6 of the Act. But instead a dealer in cereals will have to pay licence fee as prescribed in section 6(2). That fee is to be computed on the total turnover of the dealer in respect of each place of his business and such fee should be levied as if it were a tax or an addition thereto. There can be hardly any doubt that the fee levied under section 6(2) is tax. Sec C. S. Nagaraja Setty and Another v. Deputy Commissioner of Commercial Taxes, City Division, Bangalore and Another ( 13 S.T.C. 578). If under section 6(2) the petitioner's principals were liable to pay the so-called licence fee on their turnover in respect of cereals sold, then the petitioner could have been assessed in respect of the same. But the question is whether those principals are liable to pay the licence fee in question, despite the fact their turnover was below the limit prescribed in section 5(5). From the scheme of the Act it is clear that section 6 is ancillary to section 5. In truth it is an exception to section 5. Therefore, the limit provided under section 5(5) ought to govern the licence fee payable under section 6(2). Hence, if a person is not liable to pay tax under section 5 in respect of his transactions, he cannot be held liable to pay the licence fee under section 6(2), which provision merely provides for payment of tax at a lower rate. We are clear in our mind that the principals of the petitioner were not liable to pay tax or licence fee in respect of the transactions with which we are concerned in this case and, therefore, the petitioner is also not liable to pay tax or licence fee in respect of the same. The fact that the petitioner is also a dealer as defined in section 2(1)(m) of the Act is wholly irrelevant. So long as he conforms to the requirements of section 11, his liability is that prescribed by the Act.
7. A licence under section 6 would be necessary only in the case of a dealer whose total turnover exceeds Rs. 7,500 as in our opinion section 6 is subject to section 5(5).
8. If the view taken by the taxing authorities is accepted as correct, then it would result in an anomalous position, namely that if the principals had dealt with the goods in question they would not have been liable to pay licence fee on the turnover in question; but because they had put through the transactions in question through an agent, their agent is liable to pay tax which in effect means that they are liable to pay tax. We do not think that this view of section 6 is correct. Both under the law of agency as well as under the Act, exceptions apart, the liability of the agent is co-extensive with that of his principals. Under section 11, an agent is taxed qua agent and not as a dealer.
9. For the reasons mentioned above, we are of the opinion that the licence fee imposed on the petitioner and impugned in this writ petition is without the authority of law and therefore the same had to be quashed. Hence we issue a writ of certiorari quashing the order of assessment impugned in this petition and detailed earlier.
10. The respondents shall pay the costs of the petitioner. Advocate's fee Rs. 100.
11. Assessment order quashed.