R.N. Misra, J.
1. This is an application under Articles 226 and 227 of the Constitution asking for a writ of certiorari to quash orders of assessment made under the Orissa Sales Tax Act (briefly referred to as the 'Act' hereafter) for three years, namely, 1967-68, 1968-69 and 1969-70. The assessing officer (opposite party No. 2) has assessed the petitioner under Section 12(5) of the Act, the petitioner being an unregistered dealer, and has raised the demand of tax for all the three years and penalty for the last two of the three years. The assessee had carried appeals under the Act, but Mr. Mohanty undertook to withdraw the same when objection was raised regarding maintainability of this petition during the pendency of the appeals. Mr. Mohanty assured us that steps have been taken to withdraw the appeals.
2. The assessee is a public limited company and has its registered office in India at New Delhi. For business convenience it has a branch at Calcutta. Under annexure-1, a document dated 1st February, 1965, the petitioner-company appointed Messrs. International Stores as its distributing agent at Sambalpur. The relevant terms of agreement were as follows:
(1) The godown at Sambalpur belongs to the agent but the goods despatched to the agent and stored in the said godown would continue to be the property of the petitioner-company and would be disposed of only in accordance with the instructions of the company's representative.
(2) For the services rendered by the agent, he would be entitled to a commission of one and half per cent on the total value of the goods sold. He would also be remunerated at one per cent on account of clearance and delivery expenses.
The Sales Tax Officer issued notice in August, 1970, in form VI and required returns to be filed for assessment under the Act. The petitioner took the stand in its reply dated 10th September, 1970, to the assessing officer:. We submit that we do not carry on the business of purchasing or selling goods in the State of Orissa and as such we are not a 'dealer' under the sales tax law of your State. We submit that the notice issued by you is without jurisdiction and we contest the same. Our goods are, however, marketed in the State of Orissa by our authorised commission agent. M/s. International Stores are our agents at Sambalpur. They sell our goods and collect the applicable sales tax. They have been remitting the net sale proceeds to us and regularly paying the sales tax collected to you.
The stand of the petitioner was ultimately rejected and assessments for the three years as already indicated were completed under Section 12(5) of the Act. The petitioner impugns the assessments on the following counts:
(i) The transfer of the stocks by the agent to himself does not constitute sale.
(ii) The petitioner is a non-resident principal and has an agent within the State who carries on business within the jurisdiction of the Sales Tax Officer (opposite party No. 2). The agent alone could be liable as a dealer and the non-resident petitioner has no liability under the Act.
(iii) The petitioner being a non-resident principal, the Sales Tax Officer has no jurisdiction to make the assessments.
(iv) In the absence of delegation under Section 12(5) of the Act, the notice of the Sales Tax Officer is bad in law.
3. The opposite parties in their counter-affidavit have pleaded that one Sri Chandak happens to be the proprietor of Messrs. International Stores and is a registered dealer under the Act. Title in the goods remained in the company when the goods were received and stored in the godown at Sambalpur and such title was transferred to Messrs. International Stores at Sambalpur. The transferee, a registered dealer under the Act, in its turn sold the goods to others and became accountable under the Act. According to the department there were thus two sales: one by the petitioner through its agents to Messrs. International Stores and the other by Messrs. International Stores to others. Messrs. International Stores had two capacities -- one as the petitioner's agent and the other as an independent registered dealer carrying on its own business. In the order of assessment it has been indicated:. The statement as recorded from M/s. Jamunadas Chandak goes to prove that there are 2 separate transactions, first being transfer of stock to the shop account of M/s. International Stores against receipt of commission by the latter, besides direct sales in the cash memo of M/s. Nestle's Products. It is interesting to note that M/s. International Stores with the sole distributorship of such product initially transfers the goods with their value to his shop account and commission is immediately charged against such transfer. Further the transfer of stock and such nature with its value find place in the column '(sales)' as per the stock account pertaining to the stocks of M/s. Nestle's Products maintained by M/s. International Stores....
In paragraphs (10), (11) and (12) of the counter-affidavit, the following has been pleaded:
(10)... From the statement of Sri Jamunadas Chandak it was found by opposite party No. 2 that he is the sole distributor of the petitioner. As the sole distributor, the goods of the petitioner came to him. He effects sales of the goods which may be divided into two categories. One category is that sales are effected to third parties. The other category is that Sri Chandak transfers the goods to his own account for retail sale by him.
(11) That it was further found out that Sri Chandak has paid the tax in respect of the goods sold on account of the petitioner to third parties by acknowledging his own liability to pay the tax and by incorporating the same to his return. But the transfers to his own account for retail sales have neither been returned nor any tax has been paid on that transfer though Sri Chandak has paid tax on the retail sale of the petitioner's product on his own account.
(12) That it was found out from the accounts that no sooner the goods of the petitioner are transferred to the account of Sri Chandak for retail sale, Sri Chandak as the sole distributor has accounted for the disposal of such goods to the petitioner and has charged commission on the amount representing the price of such goods which was never objected to by the petitioner at any time.
From the pleadings and the orders of assessment, the following facts clearly emerge:
(1) Sri Chandak as proprietor of Messrs. International Stores worked as the agent of the petitioner.
(2) The agent has a godown at Sambalpur. All the goods received from the petitioner were stocked in the said godown but title in the said goods still continued to be in the petitioner.
(3) The arrangement with the agent was that he would be entitled to commission of one and half per cent on all sales effected by him out of the stock. The agent used to transfer the entire stock to his account and claim commission.
(4) After the agent became owner of the goods by such transfer of title, he effected sales in his own turn to others.
(5) There is no dispute regarding the sales effected by the agent to others. The agent is a registered dealer and has duly accounted for his sales.
(6) While the petitioner claims that there is no sale by it to the agent, according to the taxing department, there is a sale at Sambalpur after the goods are received and stored in the godown by the petitioner through its agent to Messrs. International Stores. The petitioner has been taxed on that event of sale and this assessment is impugned before us as being an imposition in the absence of any taxable event.
4. On the conceded position that title in the goods continued with the petitioner-company even when the goods lay stored in the godown until appropriation, there can be no scope for dispute that when upon appropriation the agent claimed commission, there was passing of title. The agency agreement under which commission is payable reads thus:
In consideration of the above services to our company, we shall be pleased to credit to your account, with 1 per cent on the total value of goods sold, as commission for your services....
The fact found is that in the accounts maintained by the agent, transfer of title from the company to the agent is recorded whereupon only commission has been claimed.
5. Two questions have been ultimately raised by Mr. Mohanty for the petitioner:
(1) The assessee cannot be treated as a dealer in view of the fact that it is non-resident and it has an agent within the State of Orissa; and
(2) Transfer of the stock by the agent to himself does not constitute a sale.
We shall examine these two points now.
6. Point No. 1: 'Dealer' has been defined in Section 2(c) of the Act to mean:. any person who carries on the business of purchasing or selling
or supplying goods in Orissa, whether for commission, remuneration or otherwise, and includes a department of Government which carries on such business and any firm or Hindu joint family, and any society, club or association which purchases goods from, or sells or supplies goods to, its members and also includes a casual dealer as hereinbefore defined.
Explanation, -- The manager or agent of a dealer who resides outside Orissa and who carries on the business of purchasing or selling or supplying goods in Orissa shall, in respect of such business, be deemed to be a dealer for the purpose of this Act.
An analysis of this definition shows that 'residence' has no bearing upon the question whether or not a person is a 'dealer'. Whether 'resident' or 'non-resident', a person becomes a 'dealer' when he carries on the business of selling, purchasing or supplying goods within the State. A nonresident becomes a dealer if he carries on the activities referred to in the main portion of the definition and merely because he has an agent within the State, makes him none the less a dealer. The scope of the explanation is to make the agent also liable as a dealer. It is true, where the principal is a resident within the State, the agent cannot become a dealer because the explanation would not be attracted. But if under the parent definition a non-resident becomes a dealer, merely because he has an agent in the State his liability qua dealer under the Act does not cease. In the case of V. 0. Vakkan and Ors. v. The State of Madras  6 S.T.C. 647 (S.C.), the Supreme Court dealing with the definition of 'dealer' occurring in the Madras General Sales Tax Act of 1939 (ingredients being similar) stated:. But the question of his residence is really immaterial. We have to see whether he is a 'dealer' within the meaning of the Act; and he is undoubtedly so, as he is a person who carried on the business of selling goods within the State of Madras. Explanation (2) to Section 2 makes the agent (if any) also a 'dealer' and is not intended to take the principal outside the scope of liability.
In the case of The State of Madras v. Gannon Dunkerley and Co. (Madras) Ltd.  9 S.T.C. 353 (S.C.), the Supreme Court indicated that in order to constitute a sale it is necessary that there should be an agreement between the parties for the purpose of transferring title to goods which presupposes capacity to contract, that it must be supported by money consideration and that as a result of the transaction property must actually pass in the goods. All these elements indeed exist when the agent of the petitioner at Sambal-pur appropriates the goods hitherto owned by the petitioner and claims commission by making entries in his books. The petitioner, therefore, does carry on business of selling within the State of Orissa and, therefore, attracts the liability of a dealer.
In the case of Public Prosecutor v. K. Sankunny and Ors.  5 S.T.C. 5, the Madras High Court considering the definition of the word 'dealer' expressed almost in similar terms, came to hold that a person who is not a resident of a State cannot escape from or evade the imposition of tax by the particular State if the necessary requirements are fulfilled which justify the levy of a tax.
The case of Bombay Cycle Stores Co. v. The State of Bombay  7 S.T.C. 260 is a clear authority for the proposition that the petitioner would have liability as a dealer. The decision of the Sales Tax Tribunal in the said case is reported in  7 Sales Tax Cases 260, where it was held that a person, whether he is a resident or non-resident, is a dealer within the meaning of the Bombay Sales Tax Act, 1946, if he carries on the business of selling goods within the State of Bombay. The explanation to the definition of dealer in Section 2(c) of the Act makes the agent (if any) also a 'dealer' and it is not intended to take the principal outside the scope of liability. This decision was affirmed by the Bombay High Court in the case of Bombay Cycle Stores Co. Ltd. v. The State of Bombay  8 S.T.C. 455, and the judgment of the Supreme Court affirming the decision of the Bombay High Court is reported in Bombay Cycle Stores Co. (P.) Ltd. v. State of Bombay  12 S.T.C. 790 (S.C.). We, therefore, hold that the petitioner has been rightly treated by the Sales Tax Officer as a dealer under the Act and merely because the petitioner has an agent at Sambalpur, it is not open to the petitioner to dispute its liability as a dealer under the Act.
7. Point No. 2: This contention is obviously raised on the basis that one cannot sell his goods to himself. As indicated by the Supreme Court in the case of The State of Madras v. Gannon Dunkerley and Co. (Madras) Ltd.  9 S.T.C. 353 (S.C.), one of the necessary ingredients of sale is transfer of title. It is obvious that there can be no transfer of title where the seller and the purchaser happens to be the same person. Change of ownership necessarily stipulates that the vendor and the vendee must be two different persons. The petitioner claims that Messrs. International Stores transfers the goods to itself and, therefore, there can be no sale. But this is not so. As we have already indicated, title in the goods even when the goods were in the godown of Messrs. International Stores continued to vest in the petitioner. Messrs. International Stores as agent of the petitioner had physical custody of the goods and by authority of agency was entitled to pass on good title to any purchaser. Instead of selling it to outsiders it sold the goods of the principal to itself. There was certainly a transfer of title from the petitioner as principal represented by the agent to a dealer (the agent in his independent capacity) and thus there was a sale, all other ingredients having been satisfied and the existence thereof not being in dispute. We, therefore, see no force in the second point.
Both the contentions of the assessee must, therefore, fail.
8. There is, however, some amount of confusion apparent in the orders of assessment as also in the counter-affidavit. It is not known as to whether the entire stock received from the petitioner is transferred to the agent's personal account or a part of the goods is sold by Messrs. International Stores as the agent of the petitioner to third parties directly. This is a small confusion of fact which could have been appropriately settled if the statutory appeals had been pressed, but the assessee for reasons best known to it decided not to proceed with the appeals and wanted the writ petition to be disposed of. We do not propose to interfere with these assessments, but we think it appropriate in the interests of justice to indicate that in any assessment to be made henceforward, the assessing officer would clearly investigate and maintain a distinction between these two types of transactions so that confusion may not enter into his orders of assessment and the assessee may not be prejudiced thereby.
9. The writ petition fails and is dismissed with costs. Hearing fee is assessed at Rs. 100 (one hundred).
B.K. Ray, J.
10. I agree.