1. The plaintiff-appellant was a merchant as well as a commission agent at Tellicherry. As a commission agent, he sold goods on behalf of known principals and he also bought goods on behalf of known principals. The dealings were apparently mainly in pepper and cashewnuts. In 1944-45, his business turnover- for the business he did on his own was Rs. 2,22,563-5-9. His liability to sales tax on this turnover was never in dispute. For the same period, he showed his turnover as a selling agent, i.e., a commission agent selling goods on behalf of known principals, at Rs. 8,89,297-11-5. As a buying agent, his turnover was Rs. 88,684-0-0. He was assessed to a sales tax of Rs. 9,779-13-1 on these two items.
The plaintiff filed the suit out of which this appeal arose for a declaration that the levy of sales tax on his turnover as a commission agent, i.e., both as a selling and as a buying agent, was illegal.
2. The claim was resisted, among others, on the ground that the plaintiff collected commission both from the buyer and seller, and that the plaintiff allowed unauthorised rebates to some of the buyers; but these contentions were negatived by the learned Subordinate Judge. The learned Subordinate Judge, however, upheld the contention of the defendant, that the collection by the plaintiff of certain amounts as 'dharmam' and 'dhallal', which amounts were not disclosed to the principals of the plaintiff, and which amounts were not accounted for by the plaintiff to his principals, was in violation of the terms of the licence issued under Section 8 of the General Sales Tax Act and that therefore the plaintiff was liable to be assessed also on his turnover as a commission agent.
3. Though the plaintiff called himself a commission agent, from the nature of the business, he would certainly appear to be a 'dealer' as defined by the General Sales Tax Act. That was held by a Full Bench of this court in -- 'Radhakrishna v. Province of Madras', : AIR1952Mad718 (A). The real question, therefore, is, is the plaintiff entitled to the exemption granted by Section 8 of the Act? That is, did the collection of the 'dharmam' and 'dhallal' by the plaintiff the benefit of which did not go to his disclosed principals, amount to a violation of the terms ofthe licence granted to the plaintiff to carry on business as a commission agent within the meaning of Section 8 of the Act?
4. The learned Subordinate Judge found in paragraph 69 of his Judgment :
'So far as 'dharmam' collections are concerned,they have been fully spent and plaintiff hasnot made any profit by it.'
With reference to the collections of 'dhallal', the plaintiff's case was that these collections were made over to the 'dhallalis'. But, in the assessment year, out of the amounts collected as 'dhallal' from the various buyers, a sum of Rs. 302-10-6 was not paid to the 'dhallalis'. The plaintiff, however, claimed, as P. W. l, that these amounts had been disbursed in the next accounting year. But the account books for the next accounting year were not produced. The learned Subordinate Judge declined to accept the oral evidence of P. W. 1 011 this point and held that this sum of Rs. 302-10-6 had been utilised by the plaintiff for himself.
5. The plaintiff rested his case, that he was entitled to the exemption granted by Section 3 of the Act on two grounds. One was that the collection of 'dharmam' and 'dhallal' was known to the principals, and, as in most of the transactions the principals themselves were present, they must be deemed to have agreed to the collection of these items from the buyers by the plaintiff. The alternative ground was that collection of 'dharmam' and 'dhallal' was in accordance with the usage of the trade at Tellicherry. Besides the plaintiff as P. W. 1, P. Ws. 2 and 4 were examined to prove this usage. Their oral testimony the learned Subordinate Judge declined to accept.
6. We see no reason at all to reject the testimony either of P. W. 2 or of P. W. 4. (His Lordship perused their evidence and proceeded:) That there was such a trade usage was specifically averred in paragraph 11 of the plaint. The Government, whose officers must certainly have been aware of the conditions under which trade was carried on at Tellicherry, did not specifically deny it. All that the defendant pleaded was that the defendant 'was not aware of any such usage'. The Commercial tax Officer, in the course of his assessment of merchants at Tellicherry, must have come across the books of various merchants; and if for instance, the plaintiff, or P. W. 2, or P. W. 4, were the only people who collected 'dharmam' or 'dhallal', it should have been easy to prove that.
We are really unable to see any real basis for rejecting the testimony of P. Ws. 1, 2 and 4. We accept that evidence and hold that the trade usage was proved. As part of the trade usage they proved that, on most of the occasions when the commission agents sold goods on behalf of their principals, the principals were also present. Therefore, in this case, the plaintiff has certainly made out his claim that the collection of 'dharmam' and 'dhallal' was with the knowledge of the principals.
As pointed out in -- ' : AIR1952Mad718 (FB) (A)', such collection of 'dhallal' and 'dharmam' with the knowledge of the principals was certainly not a violation of any of the terms of the licence granted under Section 8 of the Act. The question really turns on the facts of this case; we differ from, the learned Subordinate judge's rinding and we hold that the collection of 'dhallal' and 'dharmam' by the plaintiff from the buyers in no way violated the terms of the licence.
The plaintiff is entitled to the benefit of Section 8 of the Act.
The decree of the lower court is set aside andthe plaintiff will be granted a declaratory decreehe sought with costs in both the courts.