M.C. Desai, C.J.
1. The Judge (Revisions) has submitted to this Court, at the instance of an assessee, a statement of the case raising the following questions:-
(1) Whether there was any evidence on which the Judge (Revisions) could hold that the assessee was carrying on business in his own right as a dealer and not as a commission agent ?
(2) Whether the fact (effect) of the applicant having obtained a licence under Section 6 on the 26th November, 1949, was to exempt him from liability to sales tax for the entire assessment year 1949-50 ?
(3) Whether on the facts of the case and having regard to the provisions of Section 21 as it stood on the date of assessment, the applicant was liable to pay a licence fee only or sales tax on his turnover as assessee ?
2. The assessee is a commission agent-kachcha arhatia-and arranges sale or purchase of foodgrains, oil seeds etc. It arranges sale on behalf of sellers (and purchase on behalf of purchasers) ; itself does not do any act of selling. For its labour in arranging sale it charges commission from the seller and the buyer both. It also sells goods on its own account as a dealer. It obtained a licence as a commission agent on 26th November, 1949. It maintains accounts only of the business carried on by it as a dealer, according to which it sold oil seeds of the turnover of Rs. 2,903-4-6 and foodgrains etc. of the turnover of Rs. 9,038-6-3. It did not maintain any accounts of the transactions carried on by it as a commission agent, but only noted the commission charges received by it. The total amount of commission received by it during the assessment year was Rs. 3,850. The rate of its commission was 1% and, therefore, the turnover worked out at Rs. 3,85,000. The Sales Tax Officer estimated that Rs. 96,000, approximately one-fourth of the total turnover, was the turnover of oil seeds and split up this amount into two amounts, one of Rs. 20,000 as representing the turnover for the period 1st April, 1949, to 25th November, 1949, and the balance as representing the turnover for the remaining period 26th November, 1949 (the date on which it obtained a licence as a commission agent) to 31st March, 1950. He then assessed it on the total of Rs. 20,000 and Rs. 2,903-4-6 its admitted turnover as a dealer. The assessee filed an appeal contesting its liability to pay sales tax on the amount of Rs. 20,000 on the ground that it did not buy and sell goods, but only arranged transactions between sellers and buyers and that for the period up to 25th November, 1949, it could not be taxed but could only be charged licence fee. The Judge (Appeals) dismissed the appeal holding that the applicant was a pakka arhatia and not a kachcha arhatia. It then filed an application in revision raising the same contentions and the contention that even if it was a pakka arhatia it was not a dealer within the definition in the Act. The Judge (Revisions) dismissed the revision application. He held that the assessee received goods from sellers on payment of price and subsequently sold them to buyers, who made payment to it, that buyers paid the same price as was paid by it to sellers, that the date on which it sold to buyers was generally different from the date on which it received from sellers, that it charged commission from sellers as well as buyers and that there were no direct transactions between sellers and buyers. So he confirmed the Sales Tax Officer's finding that it was a pakka arhatia buying goods and then selling them. He further held that when the assessee failed to obtain a licence it was liable to pay tax on the turnover as a dealer and that even as a commission agent it came within the definition of 'dealer', because it actually sold goods in the course of its business. In the result he dismissed the revision application. The assessee applied under Section 11(1) for stating a case to this Court, but the application was rejected. Then this Court, at its instance, directed him to state the case. While stating the case he called for a report from the Sales Tax Officer on certain matters ; he had no jurisdiction to do so. He had to state the case on the basis of whatever was found, or accepted as true, by him when disposing of the revision application and could not make any further enquiry or re-decide the revision application. Consequently what he incorporated in the statement of the case on the basis of the report submitted to him by the Sales Tax Officer will be completely left out of consideration. The questions formulated by him in the statement of the case are reproduced above.
3. The assessee admittedly is a commission agent and the question is whether it is a kachcha arhatia or a pakka arhatia. It cLalmed to be a kachcha arhatia, whereas it has been assessed as a pakka arhatia, and the first question is whether there was any evidence in support of the finding that it is a pakka arhatia. It has been found that it records transactions carried on by it as a commission agent as if it purchased goods from sellers and then sold them as its own goods to buyers. It pays sellers the price of the goods and receives from buyers their price. Selling goods is not simultaneous with receiving them. These facts can legally support the finding that it buys and then sells goods and does not merely bring buyers into contact with sellers and arrange transactions between them. It may be that it receives from buyers what it pays to sellers and that it receives commission from buyers and sellers both ; these facts might show that it acts only as an agent bringing buyers and sellers into contact with each other and promoting direct transactions between them, but question No. (1) is whether there is any material to support the finding that it acts as a pakka arhatia and not whether there is any material to show that it acts as a kachcha arhatia. The question whether there is any material to support a finding does not include the question whether there is any material to support the contrary finding. If there is material to support a finding, the finding can be given even though there is rebutting material, or material indicating the contrary. If a finding is given on the basis of material that would sustain it, even though there is contradictory or rebutting material, no question of law arises. My answer to the first question is 'Yes'.
4. As regards question No. (2), Section 6 reads as follows :
The Provincial Government may, on application and on payment of...fees...grant a licence to any person who for an agreed commission or brokerage, buys or sells as agent on behalf of a person whose name is specified in his accounts in respect of each transaction and may exempt from the tax under Section 3 such transactions as appear to have been carried out in accordance with the terms and conditions of the licence.
5. This provision is subject to three provisos, (1) that no exemption should be granted unless the amounts for which the goods are sold are included in the turnover of the principal, (2) that no exemption will be granted if an agent sells goods at a price different from the price at which it purchased them and (3) that no licence will be given in respect of transactions carried on by an agent on behalf of a person carrying on business outside Uttar Pradesh. A dealer is liable to pay sales tax unless he is exempted under Section 6, and exemption follows the grant of a licence. There is no exemption so long as no licence has been granted. A licence is granted only when the application is made and the prescribed fee is paid. No licence can be forced upon any one, and it follows that nobody can be compelled to pay a licence fee and to get exemption. A licence coupled with exemption can be granted at any time during the assessment year and when it is granted only those transactions as appear to have been carried out in accordance with the terms and conditions of the licence are to be exempted. A transaction carried out prior to the date of the grant of a licence cannot possibly be said to have been carried out in accordance with the terms and conditions of the licence and obviously the exemption can be in respect of only those transactions that have been carried out after the grant of a licence, provided they have been carried out in accordance with its terms and conditions. All transactions carried out by the assessee since 26th November, 1949, have been exempted and none of the transactions carried out in the prior period could be exempted at all, because they could not be said to have been carried out in accordance with the terms and conditions of the licence, when it did not exist then.
6. Section 21 provides that 'if the licence fee has escaped levy or has been assessed at too low a rate in any year, the assessing authority may...levy the correct amount of licence fee.' Rules made by the State Government in respect of licence fees are Rules 28 to 38, their substance is that a dealer desiring to avail himself of the concession provided in Section 6 should submit an application for a licence, that a licence issued takes effect from the date of the presentation of the application, that the licence is valid only for the year ending on 31st March of the assessment year, that the dealer will remain liable to assessment for the period for which no licence has been granted, that he will have to pay a certain fee for the licence and that if the fee paid is less than what should be paid and the deficiency is not made good within the time allowed by the Sales Tax Officer, the application will be rejected. The rules contemplate that the prescribed licence fee is paid by an applicant before a licence is issued to him ; still Section 21 lays down the procedure to be followed when it is discovered that the licence fee has escaped levy. Rule 35, which deals with recovery of the deficiency in the licence fee, is applicable only when the deficiency is discovered before the licence is granted. The deficiency may also be discovered after the licence has been granted. The fee to be paid for a licence depends upon the net turnover. What is estimated to be the net turnover at the time when application for a licence is made and the fee for licence is calculated may be materially different from the actual net turnover of the assessment year, in which case there will arise a deficiency and Section 21 seems, to have been enacted to prescribe the procedure for recovery of the deficit. No licence fee is payable if the net turnover is less than Rs. 25,000 ; an applicant may estimate his net turnover at less than Rs. 25,000 and may be granted a licence gratis. If at the end of the assessment year the Sales Tax Officer finds that the net turnover was of more than Rs. 25,000, say of Rs. 30,000, he will have to recover Rs. 25 as the licence fee. Rule 35 will not be available because the licence has already been granted and Section 21 is the only provision empowering him to realise the deficit. The contention that gives rise to the second question was that on the turnover for the period up to 25th November, 1949, the assessee could not be assessed and that the only remedy of the Sales Tax Officer was to realise under Section 21 the licence fee for that period. The assessee relied upon Rule 32, which Lald down that a dealer would be liable to assessment under the Act in respect of the period for which no licence had been granted, but this rule has been deleted. There is no force in the contention, which arises from a complete misunderstanding of the law regarding licensees and licence fees. Though a licence takes effect from the date of the presentation of the application, the licence fee to be paid is dependent only upon the net turnover of the whole assessment year; it is to be paid not for any particular period but on the net turnover, i.e., the net turnover of the whole year. The amount of the licence fee is fixed according to the net turnover, and as the latter does not depend on the date of the licence, the amount does not vary with the date of the licence. It does not matter on what date the licence takes effect; the fee to be paid is the same. The licence granted to the assessee took effect from 26th November, 1949, but this date is relevant only for deciding which transactions should be exempted from the tax under Section 6. All transactions carried out in accordance with the terms and conditions of the licence after 25th November, 1949, were to be exempted from the tax and the transactions of the earlier period were not to be exempted and were to be taxed under Section 3. That the assessee paid the licence fee calculated on the net turnover of the whole assessment year is immaterial and does not mean that the licence was valid for the whole assessment year and that all transactions carried out in accordance with the terms and conditions of the licence during the whole assessment year were to be exempted. The option of applying for a licence or not was of the assessee; it was not bound to apply for a licence, Jf it applied in the middle or even at the end of the assessment year it will have to pay the licence fee calculated on the basis of the net turnover of the whole year even though it would get the benefit of the exemption only in respect of the transactions carried out by it after the date of the presentation of the application. If it thought that not much benefit would result if it applied for a licence very late in the assessment year, it was free to refrain from applying for a licence and paying the licence fee calculated on the net turnover of the whole assessment year. When the licence fee is to be paid on the net turnover there is absolutely no question of the Sales Tax Officer's realising licence fee for a particular part of the year. If a licence is valid from a certain date in the middle of an assessment year all transactions carried out by the assessee prior to that date in the assessment year are liable to be taxed. The full licence fee on the whole net turnover of the assessment year has been paid and there is nothing more to be levied under Section 21, if the net turnover has been correctly assessed. The contention of the assessee that the Sales Tax Officer should under Section 21 realise more fee to cover the transactions carried out by it prior to 26th November, 1949, is meaningless. My answer to question No. (2), therefore, is
no, it was so exempted from the liability to pay tax only in respect of the turnover of transactions carried out by it in accordance with the terms and conditions of the licence since 26th November, 1949.
7. The Judge (Revisions) has found the assessee to be a dealer and I have found that there was material which could justify this finding. We were referred to a number of decisions but none of them helps the assessee. Sri S.S. Verma referred us to the State of Bombay v. The Ahmedabad Education Society  7 S.T.C. 497 and Panna Lal Babu Lal v. Commissioner of Sales Tax, U.P.  7 S.T.C. 722. The former case is wholly irrelevant, what was decided there being that when a society manufactures more bricks than are necessary for its own construction work and disposes of the surplus at cost price, or buys steel under permit but sells it on finding that it does not need it, it cannot be said that it becomes a dealer. The activity that was held in that case not to amount to carrying on the business of buying and selling is quite different from the activity which the assessee did. In the other case it was decided by a Bench of this Court that when an agent buys goods on behalf of his principal and supplies them to him, he does not sell them to him. Obviously when a principal employs an agent to buy goods for him and the latter buys and delivers them to him he does not sell them, because the act of selling is done by the person from whom he bought them and the act of buying is done by his principal through him. He acts only as an agent for the purpose of buying goods on behalf of the principal; it is really the principal who buys them. The delivery of the goods by him to the principal cannot possibly amount to a sale and this was the essence of the decision in that case. What the assessee did in this case is quite different from what the agent did in that case. Merely because both are commission agents it cannot be said that the decision in that case that the agent was not a dealer means that the assessee in the instant case also was not a dealer. There are commission agents and commission agents ; one may be a dealer even though another is not. In Public Prosecutor v. Narasimha Reddy  1 S.T.C. 167., it was held by Chandra-sekhara Aiyar, J., that when the accused acted as a broker or commission agent and simply brought the seller and the buyer together, he cannot be regarded as a dealer and cannot be convicted for failing to pay the sales tax assessed upon him. The fact that was found there is missing in the instant case. Provincial Government of Madras v. Veerabhadrappa  1 S.T.C. 245, is an authority only for the proposition that a commission agent who sells or buys on behalf of a principal is not a dealer. His case is similar to that of the agent dealt with in the case of Panna Lal Babu Lal  7 S.T.C. 722. Viswanatha Sastri, J., distinguished at page 280 a case in which an agent buys goods himself and immediately thereafter sells them to his principal for the cost price plus an agreed commission, or buys goods himself from his principal and sells them to strangers for the cost price plus an additional sum representing his commission and observed that he is in law a buyer or seller of goods and would be a dealer within the definition of Section 2(b) of the Madras General Sales Tax Act, which is similar to the definition in the U.P. Sales Tax Act. State of Mysore v. Hanumanthappa  6 S.T.C. 34 also distinguishes between a commission agent, who acts as an agent on behalf of others and another who deals in the capacity of an owner.
8. I find that the assessee was a dealer even though it acted as a commission agent and was liable to pay sales tax under Section 3 unless exempted. It was exempted only in respect of the turnover of sales carried out by it after 25th November, 1949, and has not been assessed on that turnover. It was not exempted from paying tax on the turnover of the transactions carried out prior to 26th November, 1949, for the simple reason that they could not be said to have been carried out in accordance with the terms and conditions of the licence and was liable to be taxed to sales tax on it. There was no question of its being required to pay any more licence fee because it has not been shown that the licence fee paid by it was insufficient. My answer to question No. (3) is that the assessee was liable to pay sales tax on the turnover ; there was no question of its being required to pay any more licence fee.
9. Copies of this judgment should be sent to the Judge (Revisions) Sales Tax, U. P., and the Commissioner, Sales Tax, U. P., under the seal of the Court and the signature of the Registrar, as required by Section 11(6) of the U. P. Sales Tax Act. The assessee should pay to the Commissioner the costs of this reference, assessed at Rs. 100, Counsel's fee may be assessed at Rs. 100.
K.B. Asthana, J.
10. I agree.