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Karelal Kundanlal Trust Vs. the Commissioner of Sales Tax - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtMadhya Pradesh High Court
Decided On
Case Number Miscellaneous Civil Case No. 202 of 1973
Judge
Reported in[1980]46STC202(MP)
AppellantKarelal Kundanlal Trust
RespondentThe Commissioner of Sales Tax
Appellant Advocate Y.S. Dharmadhikari and ; H.S. Shrivastava, Advs.
Respondent Advocate S.L. Saxena, Government Adv.
Cases ReferredMarketing Society v. Commissioner of Sales Tax
Excerpt:
.....presumption against appellant can be raised, it cannot be said that onus shifts exclusively and heavily on him to prove his innocence. conviction of appellant is liable to be set aside. - the deputy commissioner, after referring to the evidence produced before him, came to the conclusion that the goods were sold in the assessee's kaccha adat by the cultivators themselves, the assessee only helping them to sell their goods as best as they could by lending his technical knowledge of the market and thus bringing the buyers and cultivators together so that the goods could be sold in the market by auction......in the circumstances of the case, kaccha adat transactions not taxable in the hands of the dealer or sales to be included in the taxable turnover of the dealer ?2. the relevant period of assessment is diwali 1965-66. the mode of business carried on by the assessee in respect of the transactions under reference is disclosed fully in the order of the deputy commissioner dated 29th november, 1968, which forms part of the statement of case. the assessee functions as a commission agent within the market yard of agricultural produce market, sagar. the cultivators bring their produce to the fad of the assessee. fad, we are informed, is a piece of land in the mandi in occupation of the assessee as licensee. the produce so brought by the cultivators is sold by auction. the bid is accepted.....
Judgment:

G.P. Singh, C.J.

1. This is a reference made by the Sales Tax Appellate Tribunal under Section 44 of the Madhya Pradesh General Sales Tax Act, 1958, referring for our answer the following question of law :

Whether the transactions of Rs. 74,00,741.96 represent, in the circumstances of the case, kaccha adat transactions not taxable in the hands of the dealer or sales to be included in the taxable turnover of the dealer ?

2. The relevant period of assessment is Diwali 1965-66. The mode of business carried on by the assessee in respect of the transactions under reference is disclosed fully in the order of the Deputy Commissioner dated 29th November, 1968, which forms part of the statement of case. The assessee functions as a commission agent within the market yard of Agricultural Produce Market, Sagar. The cultivators bring their produce to the fad of the assessee. Fad, we are informed, is a piece of land in the mandi in occupation of the assessee as licensee. The produce so brought by the cultivators is sold by auction. The bid is accepted by the cultivators who remain present till the goods are sold. The buyers remove the goods from the fad,. The names of the buyers and sellers are entered in the chukara bahi of the assessee. The assessee issues a bill to the buyers. Apart from the price of the produce sold, the assessee recovers sales tax and commission. The price is paid to the cultivators and the assessee retains the sales tax and commission. The Deputy Commissioner, after referring to the evidence produced before him, came to the conclusion that the goods were sold in the assessee's kaccha adat by the cultivators themselves, the assessee only helping them to sell their goods as best as they could by lending his technical knowledge of the market and thus bringing the buyers and cultivators together so that the goods could be sold in the market by auction. It was further found that the cultivators were present and the bids were not knocked down until they accepted the bids which showed that the ultimate decision to sell rested with the cultivators. The Deputy Commissioner, however, held that the assessee was a dealer on the ground that in the bill that he prepared he included sales tax and he was, therefore, estopped in saying that he was not a dealer as defined in the Act. Somewhat same view was taken by the Tribunal. A reading of the statement of case would show that the facts found by the Deputy Commissioner were accepted by the Tribunal and the question only is whether on those facts the assessee can be held to be a dealer in relation to the transaction of Rs. 74,00,741.96 which were completed in the manner stated above.

3. The definition of 'dealer', as it stood at the relevant time, reads as follows:

2. (d) 'dealer' means any person who carries on the business of buying, selling, supplying or distributing goods, directly or otherwise, whether for cash, or for deferred payment, or for commission, remuneration or other valuable consideration and includes-

(i) ...

(ii) ...

(iii) a commission agent, a broker, a del credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of buying, selling, supplying or distributing goods on behalf of any principal.

4. The view taken by the Deputy Commissioner that the assessee was a dealer on the ground of estoppel is on the face of it erroneous. There cannot be any estoppel against a statute. The question whether the assessee is a dealer has to be answered in the light of the facts found and the definition of 'dealer' as contained in Section 2(d). Indeed, the learned Government Advocate has not supported the line of approach adopted by the Deputy Commissioner and the Tribunal in finding the assessee a dealer on the basis of estoppel. A person is a dealer within Section 2(d) if he carries on the business of buying, selling, supplying or distributing goods directly or otherwise. The aforesaid business may be carried on by the person for himself or on behalf of a principal. In either case, the person carrying on the business will fall within the definition. If a person carries on the business of buying, selling, supplying or distributing goods on behalf of a principal, he would be a dealer and it would be immaterial as to what nomenclature, whether of commission agent, broker, del credere agent, auctioneer, mercantile agent or any other similar name he adopts in carrying on the said business. It is no one's case that the assessee carried on the business of buying, selling, etc., for himself. What is therefore to be seen is whether the assessee carried on the business of buying, selling, supplying or distributing goods on behalf of any principal within the meaning of Clause (iii) of Section 2(d). From the facts found by the Deputy Commissioner it is difficult to hold that the assessee was carrying on the business of buying, selling, supplying or distributing the goods on behalf of the cultivators. The assessee made available his fad to the cultivators for stocking their goods. The assessee helped them with his technical knowledge of the market. The assessee had no dominion over or custody of the goods. The sale was by the cultivators themselves who accepted the bids of the buyers. The goods were removed by the buyers from the fad. The assessee recovered the price from the buyers and paid over the same to the cultivators after retaining the commission. These facts do not bring the assessee within the definition of 'dealer'. The learned Government Advocate submitted that on the facts it has to be held that the assessee was supplying the goods on behalf of the cultivators. We are unable to accept this contention. The sale and supply of the goods were made by the cultivators themselves who were present on the spot. All that the assessee did was to collect the price and to pay the same to the cultivators. This activity of the assessee did not bring him within the definition of 'dealer' as contained in the Act. The conclusion reached by us is fully supported by the decisions of the Allahabad and Mysore High Courts in Commissioner of Sales Tax v. Vijay Kumar Krishna Kumar [1968] 21 S.T.C. 37 and Ayyanna Setty & Sons v. State of Mysore [1961] 12 S.T.C. 731. In the Mysore case [1961] 12 S.T.C. 731 the plaintiff was a dallali merchant (commission agent). The ryots brought their goods and unloaded them in front of his shop. The purchasers purchased the goods in the presence of the ryots on their acceptance of the price and removed the goods. The price was collected from the purchasers by the plaintiff and paid over to the ryots. On these facts the Mysore High Court held that the plaintiff was not a dealer and was not liable to sales tax. Similar were the facts of the Allahabad case [1968] 21 S.T.C. 37. The learned Government Advocate submitted that the definition of 'dealer' in Uttar Pradesh and Mysore in those days did not contain the words 'any person carrying on business of supplying or distributing goods' which are found in the Madhya Pradesh Act. This distinction ceases to be material on the finding that the assessee in the transactions with which we are concerned did not directly or indirectly supply or distribute goods to the buyers. The sale of the goods was made by the cultivators who were the owners of the goods and they supplied the goods directly to the buyers because they remained present at all material times when the transaction took place. The learned Government Advocate also relied upon the case of Madhya Pradesh State Co-operative Marketing Society v. Commissioner of Sales Tax [1971] 27 S.T.C. 45. This case is distinguishable on facts. In this case it was found that the assessee had complete dominion and control and full authority to sell the goods and was, therefore, a dealer. The facts here, as noticed above, are entirely different.

5. For the reasons given above, we answer the question referred to us as follows :

The assessee was not a dealer in respect of transactions of Rs. 74,00,741.96; and these transactions could not be included in the taxable turnover of the assessee.

There will be no order as to costs of this reference.


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