Velu Pillai, J.
1. T. R.C. Nos. 90, 91 and 109 of 1960 are three petitions in revision filed under Section 15B of the Travancore-Cochin General Sales Tax Act 1125, or the Act, for short, directed against the order of the Sales-tax Appellate Tribunal, by which it disposed of a batch of 32 appeals, T.R.C. Nos. 90 and 91 of 1960 being by the same petitioner who was the appellant in two of such appeals and T.R.C. 109 of 1960 being by the sales-tax department. T.R.C. Nos. 90 and 91 of 1960 relate to the petitioner's assessment for sales-tax for the years 1956-57 and 1955-56 respectively.
2. The petitioner has been doing business in arecanuts in Kokkalai market, Trichur. The following extract from the order of the Appellate Assistant Commissioner made in the order sought to be revised, serves to set out the case of the petitioner as to the course of business in that market, the word 'appellant' being understood as referring to the petitioner and others like him, and the term 'curers' being understood as denoting the sellers:
'He (the petitioner) Is acting as a commission agent for the sale of cured arecanut. The curers bring the commodity to the market and entrust the same with the appellant (petitioner). Usually the appellant advances money to these curers sometimes before the goods are actually brought to the market and at other times when the goods are brought and entrusted with him for sale. Appellant has a lien on the goods to the extent of the advances and has also a right to pledge or dispose of the same tor realising the advances with interest and other charges agreed upon. Purchasers who are generally from outside the Kerala State go over to the market. According to the appellant either the purchaser or his broker will be present at the time of transactions. In many cases the curers will also be present. Even if they are not Dresent appellant will have authority to sell on their behalf at reasonable prices already intimated. The goods offered for sale will be inspected by the intending purchasers or their brokers and then offers and counter-offers by conventional and secret modes of communication by symptoms are made through the appellant and the final rate will be fixed. A cheetu will then be executed by the purchaser in favour of the appellant acknowledging the purchase and authorising him to pay off the curer. The goods are then weighed by the appellant and a bill is issued in favour of the curer showing the quantity, rate of price, total amount, commission etc., and he will be paid off by the appellant.
Appellant also draws an invoice on the purchaser for the price as also for other charges like drying, packing etc., and brokerage if any and debits the purchaser for this amount.
The goods are then transported to the purchasers' places outside the State or in some cases which are very few disposed of in this State itself if such a course is authorised by the purchaser.'
Till September 30, 1955, the turnover on arecanuts was subject to tax under the Act at the sale point, and thereafter at the last purchase point within the state. The petitioner being undisputedly an agent of the sellers and being covered by a licence issued to him under Section 9 of the Act, the extent of his liability for tax for we period ending with September 30, 1955 depended on whether he was entitled to exemption from tax in terms of that Section or not. His liability for the relevant period commencing from October 1, 1955, depended on whether he could be assessed under Section 18 of the Act as the agent within the State of the non-resident buyers.
On the former, the Tribunal remitted the case for fresh enquiry giving certain directions, to which the department has taken exception in T. R. C. 109 of 1960, and on the latter, the Tribunal negatived the contention of the department, that any agent, not necessarily an agent to buy within the State concerned in the business of the nonresident, would be liable to be assessed in accordance with Section 18 of the Act and came to the conclusion that an agent with authority to buy alone could be so dealt with but held the petitioner to be such an agent, in these petitions, both the petitioner and the department have contested the findings in so far as they are against them.
3. It seems convenient to dispose of first, the questions which relate to the period of assessment beginning with October 1, 1955. Section 18, so far as it is relevant, may be quoted:--
'Section 18. In the case of any person carrying on the business of buying or selling goods in the State but residing outside it (hereinafter in this Section reterred to as a 'non-resident'), the provisions of this Act shall apply subject to the following modifications and additions, 'homely;
(i) In respect of the business of the non-resident, his agent residing in the State shall be deemed to be the dealer.
(ii) The agent of a non-resident, shall be assessed to (ax or taxes under this Act at the rate or rates leviable thereunder, in respect of the business of such non-resident in which the agent is concerned, irrespective of the amount of the turnover of such business being less than the minimum specified in Section 3, Sub-section (3)'.
The first question which arises is whether the petitioned Was the agent of the non-resident buyers with authority to buy as found by the Tribunal. The finding of the Tribunal is based almost entirely on the Chettus or memos like Ext. P-3 (1), signed by the buyers after the purchases were completed. The memos are not by themselves the conferment of authority on agents like the petitioner except perhaps of an authority to pay, and so they constitute but an item of proof of the authority to buy. Having been brought into existence after the purchases were made, the transactions themselves and the course of business at Kokkalai market must possess greater evidentiary value than the memos. After all, the language of the memos acknowledging that the purchases were made on their behalf is not conclusive, and may have been employed as indeed was suggested, only in a loose sense and not necessarily to connote a relationship of principal and agent with respect to buying. The present is not a case where these memos stand by themselves and constitute the sole evidence. The Tribunal recorded evidence on the course of business, and if no agency to buy can be spelled from such evidence, it must follow that the Tribunal's finding, based as it is on a piece of evidence which is inconclusive, cannot be maintained in revision. Moreover, whether a given set of facts constitutes agency is one of law, the correctness of which is liable to be canvassed in these petitions.
4. The Sales Tax Officer did not apparently notice the distinction between authority to buy and authority to do other acis for the principal. The Appellate Assistant Commissioner found that the petitioner had authority to buy and to transport, but based his finding on the cheettu or memo, there being no evidence before him as to the course of business in the market. But the Tribunal thought, to use its own language, that 'for the proper disposal or the appeal it was necessary to take some evidence relating to the exact nature of the transactions that take place in the arecanut market at Kokkalai', and 'therefore allowed both sides to adduce evidence relating to the matter.' Accordingly, the petitioner who was for some time the president of the Trichur Arecanut Merchants' Association, and We Sales-tax Officer were called as witnesses, and some documentary evidence was also adduced.
The Tribunal quoted the summary of the petitioners case as to the course of business from the order of the appellate Assistant Commissioner as extracted earlier in the judgment, and said that it was in accord with the evidence of both of the winesses, except that in the case of the Sales Tax Officer there was a variation in one respect which was more in the nature of an inference made by him, than of a statement in relation to a matter of fact. The Tribunal may be taken to have accepted the above summary as correctly depicting the course of business. The learned counsel had nothing further to add to the above summary, on the course of business.
5. The fact cannot be overlooked, that in most cases the buyers themselves and in others their brokers, personally inspect the goods and attend the purchase. In the generality of cases the sellers too are present. Otters and counter-offers are made between the sellers and the buyers or the brokers of the latter, through the petitioner and others like him. The petitioner is but the medium or the conduit pipe and has no power to strike the bargain on behalf of the buyers, though when the sellers are not present he has authority to sell on their behalf and presumably offers are then made to him by the buyers or their brokers. That the petitioner acts as the medium and in that sense negotiates the transaction, that he finances the buyers where they do not make payment of the price forthwith and settles accounts with the sellers on their behalf and that he arranges for the weighing, drying, packing and transport of the goods, while useful to establish his agency in certain respects or to prove that, he is concerned in the business of the buyers, do not point to an authority on behalf of the non-residents to buy.
In the face of this evidence, memos like P-3 (1) have to be treated as inconclusive and could not be made the sole basis of the decision. The Tribunal also made a passing reference to the statement made in Ext. P-8, a memorandum submitted by these merchants of Trichur in the year 1951 for a licence under Section 9, that they were 'acting merely as agents of sellers and purchasers'. This again is not conclusive on the authority to buy. The finding of the Tribunal that the petitioner was an agent for buying is vitiated by an error of law and is therefore set aside.
6. The next question is, whether even without an authority to buy on behalf of the non-residents, the petitioner can still be regarded as their agent within the meaning of Section 18 of the Act. In terms, the Section employs the word 'agent', and is not limited in its opera-lion to a buying or selling agent, that is, an agent buying or selling on behalf of the non-resident, while Section 9 employs the words 'agent who buys or sells on behalf of known principals'. Though, unlike the amended definition of the word 'dealer' in the Madras General Sales Tax Act, 1939, the definition in Section 2(d) of the Act does not expressly include an agent, there is no reason to think, that an agent who carries on the business of buying or selling though on behalf of another, is excluded from it.
An agent for buying or selling has been held to be a dealer by a full bench of the Madras High Court in K. Radhakrishna Rao v. Province of Madras, 1952-3 STC 121: (AIR 1952 Mad 718) (FB). The use of the expression 'his agent.....shall be deemed to be the dealer' in Clause (i) In Section 18 signifies, that an agent who is not a dealer is also meant to be comprehended. This is not to say, that an agent who buys or sells for the principal is not a dealer; being an agent, no fiction is necessary in his case to consider or treat him as a dealer for the purpose of Section 18. At the same lime, not any agent of a non-resident is an agent contemplated by Section 18. The Section imports two conditions, first that the agent must be residing in the State and second, that he must be concerned in the business of the non-resident; this is apparent from Clauses (i) and (ii) of the Section. Whether he is concerned in the business of a principal or not, is a question of fact depending on the circumstances of each case. To be concerned in the business is not necessarily to be authorised to buy or sell. Short of striking the actual bargain which may be done by the principal directly, an agent may do other acts on behalf of the principal, such as paying or receiving the price, storing, pre-serving or sorting the goods, packing or transporting them, and in that manner, be concerned in his business.
It was pointed out for the petitioners that on this extended interpretation of the term, agents may be in a multitude to choose from. That is a possibility which could not wholly be avoided in the case of a buying or selling agent too, say, where the non-resident employs as many such agents as there are transactions which together go to constitute his business. It seems to us, that there is no Warrant on the terms of the Section, for limiting its operation to an agent who does the buying or selling. On this point, speaking with respect, we find ourselves in agreement with the view taken in more than one bench decision of the Andhra Pradesh High Court.
In G. Gilda Agency, Vijayawada v. Government of Andhra Pradesh, 1959-10 STC 368 (AP), there were three categories of transactions the second of which is relevant. The petitioners in revision before the High Court, Who were assessed under Section 14-A of the Madras General Sales; Tax Act, 1939, which corresponds to Section 18 of the Act, canvassed orders in Andhra State, on the acceptance of which by the Bombay sellers, the goods were consigned by rail to the buyers. The petitioners were concerned in the transactions of the category mentioned, only in so far as they had taken the indents, received the railway receipts, handed them over to the buyers and sometimes collected the price and transmitted it to the sellers. These facts were held sufficient to constitute the petitioners' agents concerned in the business of the principal for the purpose of Section 14-A. The Tribunal referred to this decision in the order sought to be revised by as, but we are afraid, it has misunderstood it.
In Sriram Venkata Subbarao and Son v. State of Andhra Pradesh, 1960-11 STC 646 (AP), the petitioner used to send market quotations to the Bombay buyer who wired acceptance. He then got the contract form signed by the seller, and himself signed it as agent. He advanced part of the price, had the goods tested, marked, pressed and weighed, and paid the balance having been put in funds previously by the buyer. Though the contract forms were signed by the petitioner, the quotations were accepted by the buyer directly. The court said, that the petitioner
'handled the goods on behalf of Bombay buyers for the purpose of testing the same, for getting it pressed into bales and weighed and for keeping custody of the same till they are despatched by railway wagons to the Bombay dealers. He charges commission.....and it is this agent who in fact pays the amount to the sellers in the State'.
In Ramdayal Ghaslram and Sons v. Govt. of Andhra Pradesn, 1960-11 STC 705: (AIR 1960 Andh Pra 502), the petitioner acting as the agent of a non-resident Bombay company for taking delivery of goods purchased in Hyderabad, used to pay the price, take delivery and store the same on behalf of the company. He had a first charge on the goods for the amounts advanced on behalf of the buyers. He had thus authority to handle the goods and to deal with them by taking delivery and storing. In the above two cases also, the petitioners were held to be agents under the provisions which correspond to Section 18 of the Act.
7. On the facts of the case before us, though in receiving the goods from the sellers and retaining them, land in advancing amounts to them the petitioner had acted as their agents and in transmitting otters and counteroffers, he had acted as a medium without authority to buy, yet he may be said to have negotiated the purchases in the above manner, and what is more, paid the price and settled accounts with the sellers, was in custody of the goods from the time of the completion of the purchases, and arranged for the drying, packing and transport all on behalf of the buyers. These are good grounds for holding that even though the petitioner lacked the authority to buy, he was an agent concerned in the business of the non-resident buyers. His residence in the state of Kerala was not disputed. This is sufficient to attract Section 18 of the Act. The Tribunal was not therefore justified in remanding the case.
8. On the finding that the petitioner was not the buying agent, it was conceded by the learned counsel for the petitioner, that the contention that the purchases by the non-resident buyers were in the course of inter-state trade or commerce cannot stand and does not arise. We therefore do not deal with it.
9. It remains to consider the point taken in T. R. C. 169 of 1960 on behalf of the department, that the petitioner is not entitled to exemption of tax under Section 9 of the Act in respect of transactions which were put through during the relevant period ending with September 30, 1955, when the tax on the turnover of arecanuts was on the sale-point and the petitioner had been acting as the agent of the sellers. The relevant part of Section 9 is in the following terms :--
'Section 9. Government may on application and on payment of such fee as may be prescribed in that behalf, licence any person under this section who for an agreed commission or brokerage buys or sells on behalf of known principals specified in his accounts in respect of each transaction and may exempt from the tax or the taxes payable under Section 3 such of his transactions as are carried out in accordance with the terms and conditions of his licence:
Provided always that, save where the transaction consists of a sale by a grower of produce grown by him, or on his land, no such exemption shall be given unless the amounts for which the goods concerned in such transactions are sold, are included in the turnover of the principals or of the dealers from whom purchases were made, or would have been so included but for an exemption provided under this Act.X X X X X
Provided also that the burden of proving that a transaction is exempt, by virtue of this section, from the tax or taxes payable under Section 3, shall be on the licencee.' As observed, the petitioner held a licence under this Section. According to him, the amount of each sale put through during the period was evidenced by a voucher signed by the seller and also by the Adakkapattika book maintained by him. Vouchers were of the form Ext. P-2(1), and Adakkapattika books of the form Ext. P-20. The department contended that these are irrelevant to show that the amounts of the sales were actually included by the principals in their turnover in terms of the first proviso to Section 9. The Tribunal over-ruled this contention, accepted Exts. P-2(1) and P-20 as sufficient for complying with the proviso and directed the Sales Tax Officer to reconsider the claim for exemption on this basis.
According to the department no exemption can be allowed, unless the principals have for a fact included the amounts for which the goods were sold in their turnover, either in their returns for assessment or at least in their books of account or unless the assessing authorities have assessed them on that turnover; on the contrary, for the petitioner it was urged, that all that need be proved is that the amounts formed part of the turnover of the principals.
10. A licence under Section 9 implies, that for an agreed commission or brokerage an agent buys or sells goods on behalf of known principals specified in his books of account in respect of each transaction. It enables the agent to claim exemption from tax in respect of his transactions, subject to two conditions which alone are material to the present case, first, that they were tarried out in accordance with the terms and conditions of the licence, and second, that the requirements of the first proviso to Section 9 are fulfilled. The latter, with slight Immaterial variations, have also been incorporated, as prescribed by Form XI of the General Sales Tax Rules, 1950, as a term and condition of the licence.
The interpretation of the first proviso is beset with difficulty. The use of the term, 'turnover of principals' as distinguished from 'turnover of dealers' is far from clear and does not fit in with Section 2(k) of the Act which defines turnover in relation to dealers only. But the real difficulty so tar as this case is concerned, ties in discovering the true import of the words 'are included', and of the words 'would have been so Included'. Excluding words which are unnecessary for the present purpose, the two provisos have together enacted in substance, that no exemption shall be given to the agent unless he proves, that the amounts for which the goods were sold are included in the turnover of the seller or would have been so included but for an exemption applicable to the seller.
11. An agent, who does business by buying or selling, and whose right may be no more than to his commission or brokerage, being himself a dealer, is assessable as such and but for Section 9, has to work out his right of reimbursement against his principal, if need be, by resort to the civil court. The object of Section 9 is to avoid this 39 far as possible, by exempting the agent from the tax-burden, wherever and to whatever extent it can be readily and indisputably laid on the principal, to whom the turnover, which is the base of the tax, really belongs; but where this is not possible, the agent is denied the exemption and is left to his remedy under the general law. To lay down, that all that need be proved by the agent under the proviso is that the turnover in respect of which exemption is claimed, is part of or is includable or ought to be included in, the principal's turnover, is virtually to deprive the proviso of its content. The main part of the section might then suffice, for there can be no genuine transaction of an agent whose turnover is not really that of the principal. It is not therefore reasonable to construe the word 'included' as contended for the petitioner. The word must be understood as pointing to some volition of the principal or perhaps of the assessing authorities. So to construe the proviso, is not to deprive the agent of the benefit of the exemption conferred by the main part, for the right of exemption may well be made to depend on what the principal actually does in making up his turnover.
Normally the principal and agent may be presumed to work in co-ordination to each other, and where they do not or where one tries to over-reach the other, the department is not to suffer. Turnover is a concept which is related to assessment proceedings and in that sense, the inclusion in the turnover may well be, by the principal by including it in his return or by the assessing officer by making it the subject of assessment. Giving 'turnover' a wider meaning, but consistently with its definition, the inclusion in the turnover by the principal may also be in his books of account which form the most important evidence in assessment proceedings.
The burden of proving the exemption, which is cast on the agent by the last proviso to Section 9, is not necessarily an impossible burden to discharge. Section 17 of the Act authorises any officer empowered by Government in that behalf for the purpose of the Act to require a dealer to produce before him, his accounts and other documents and to furnish any other information relating to such business. Rule 40 of the rules aforesaid empowers the assessing authority, to require any person whose evidence is considered necessary to appear before him and give evidence on oath or affirmation. By Rule 41, the assessing authority is given all the powers conferred on a court by the Code of Civil Procedure for securing the attendance of persons and the production of documents and Rule 42 authorises him to issue summons for the purpose. The petitioner did not seek any further opportunity for adducing proof.
12. In the present case, all that the petitioner has shown is, that there is a voucher signed by the seller for each transaction The vouchers may perhaps be genuine it they are supported by the petitioner's books of account; put then, they only show that the turnover might well belong to the principals. It was stated, that there have been assessments on the sellers, but it was not suggested, that they include any of the amounts in respect of which exemption was claimed by the petitioner.
The learned Government pleader stated, that if there is one case of such double assessment, the department will make good the irregularity. It was finally argued for the petitioner, that some of the sellers may be 'growers of produce (arecanut) grown by them' within the meaning of the first proviso. No such point was taken either in the revision petitions preferred by the assesses or before the Tribunal and the scope of the remand ordered by it did not cover it. It is not open to the petitioner to take the point at this stage.
13. On this, we consider that the admissions by the principals which may be spelled from the vouchers are not sufficient for holding that the amounts for which the goods were sold were included in their turnover. It must follow from this, that the fresh investigation into the claim for exemption on the basis of the vouchers and the adakkapattika ordered by the Tribunal cannot be sustained.
14. Finally, the learned counsel urged, that there ought to have been as many assessments as there were principals. This point too was not taken in the revision memorandum or before the Tribunal or the assessing authorities. The learned Government Pleader objected to the point being enter-tained, for according to him, there have been several cases, in which considering perhaps the inconvenience of having to file separate returns, the agents preferred to have and even pressed for, joint assessments. We think the point is not open and decline to consider it.
This disposes of all the contentions which were pressed before us in the three revision petitions. The result is, that the order of the Tribunal is vacated and the order of the Appellate Assistant Commissioner is restored. T.R.C. Nos. 90 and 91 of 1960 are dismissed with costs including advocate's fee Rs. 200/-. T. R. C. 109 of 1960 is allowed to the extent and in the manner indicated above, but there will be no order as to costs.