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The Deputy Commissioner of Commercial Taxes Vs. A.R.S. Thirumeninatha Nadar Firm - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtChennai High Court
Decided On
Case Number Tax Case No. 38 of 1965 (Revision No. 26 of 1965)
Judge
Reported in[1968]21STC184(Mad)
AppellantThe Deputy Commissioner of Commercial Taxes
RespondentA.R.S. Thirumeninatha Nadar Firm
Appellant Advocate K. Venkataswamy, Adv. for ; The Additional Government Pleader
Respondent Advocate S.V. Subramaniam, Adv. for ;Subbaraya Ayyar, ;Sethuraman and ; Padmanabhan, Advs.
Excerpt:
- .....the tribunal, disagreeing with the departmental authorities, was of opinion that in selling the goods the banks did not act as the agents of the assessee, but exercised the pawnee's right under section 176 of the contract act, and that even assuming the banks were agents, they should be regarded as dealers liable to pay the tax on the turnover. the second item of rs. 23,460 related to what the assessee claimed to be sales of unread newspapers in the course of import. the tribunal held that the assessee's contention was right.2. we are of the view that the tribunal was right in its opinion on the second item. there was clear evidence, which the tribunal touched upon, to show that the sales were of that character. what is, however, argued for the revenue in this court is that the.....
Judgment:

Veeraswami, J.

1. This case relates to the assessment year 1956-57. Two items of turnover, a total of Rs. 41,761-3-3, were included in the chargeable turnover by the departmental authorities, but the Tribunal, on the assessee's appeal, took a different view and deleted both of them. The first item is Rs. 18,301-3-3. That represents the proceeds of sales effected by two banks with whom the assessee had pledged the goods. After crediting the proceeds towards the debts, the banks paid over to the assessee the balance. The Tribunal, disagreeing with the departmental authorities, was of opinion that in selling the goods the banks did not act as the agents of the assessee, but exercised the pawnee's right under Section 176 of the Contract Act, and that even assuming the banks were agents, they should be regarded as dealers liable to pay the tax on the turnover. The second item of Rs. 23,460 related to what the assessee claimed to be sales of unread newspapers in the course of import. The Tribunal held that the assessee's contention was right.

2. We are of the view that the Tribunal was right in its opinion on the second item. There was clear evidence, which the Tribunal touched upon, to show that the sales were of that character. What is, however, argued for the Revenue in this Court is that the documents of title themselves were not produced and it was not shown that they were transferred in the course of import by making an endorsement thereon to that effect. There may be cases where it may be legitimately stated that the production of documents of title will be essential to see whether the sales have been effected by transfer of documents in the course of import of goods. But we are not convinced that this is the case here, because there is other evidence to show that the sales were in the course of import and should have been effected by transfer of documents. Transfer of documents may be effected by handing them over and an endorsement to that effect on the documents is only one mode of proof, but not necessarily the only way of proving the fact. Actually, an endorsement is not a legal requisite for a valid transfer of documents, which, as we said, can take place by delivery of the documents themselves. We accept the opinion of the Tribunal that the sales were effected in the course of import by transfer of documents.

3. On the other item of turnover, however, we must disagree with the Tribunal. In so far as it held that the banks in selling the goods pawned to them did not act as the agents of the assessee, it was right. As pledgees, the banks, acting under Section 176 of the Contract Act, had a right to sell the goods. Their sale was but an exercise of the statutory power and not as agents. But the sales were nevertheless on behalf of the pledger, for, the pawn or pledge by itself did not make the pawnee or pledgee the owner of the goods. The very concept of a pledge carries with it the elements of custody and a power to sell the goods in default of payment. This is evident in this case by the fact that after crediting towards the debts due from the pawner, the balance of the sale proceeds were paid over to him. We are also unable to accept the other view of the Tribunal that even assuming that the banks acted as agents, they would be dealers and they alone would be liable to pay the tax under Section 8 or Section 14(a).

4. The petition is allowed in respect of the first item of turnover but dismissed in other respects. No costs.


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