MURRAY AND COMPANY Vs. GOVERNMENT OF MADRAS

JUDGEMENT

(1.) THESE three cases arise out of three appeals in respect of auction sales held by the assessee during the assessment years 1959-60, 1960-61, and 1961-62. The modus operandi adopted by the assessee when it receives an article and when it subjects it to a public sale in its auction room, and the conditions under which the auction is held, were noticed by the tribunal. We may for purposes of completion, refer to the relevant details therein. As soon as the goods are received by the assessee from the respective owners, the assessee issues a receipt stating that the goods are for sale by outright public auction or private sale. It also notifies that it would be charging a commission of 12 per cent. besides deducting the usual charges. The goods are kept at the risk of the owner and the assessee does not take any responsibility for its loss, damage or breakage when in its custody. Thereafter, the owner is intimated about the date of auction and it is common ground that in most cases the owners are not present, though in some rare cases some of them are. One of the conditions of sale of which the owner has notice, is that the purchaser should pay the sales tax as an extra item. Thus, the assessee, on every occasion of sale of the goods received by it from the owners, treats it as a sale by it to the respective purchasers and charges sales tax thereon in accordance with the prescribed rate and collects the same from the parties and passes on such sales tax to the State. The Tribunal has found that the assessee is entrusted with the goods with specific authority to transfer the property in such goods for a price which the assessee would characterise as the highest bid in the auction, unless otherwise a reserve price is fixed by the owner. The assessee having thus subjected all such sales held by the assessee in the course of the business to sales tax under the madras General Sales Tax Act, complained that its sales turnover was not exigible to tax. This was after their accounts were called and examined. The assessee stated that in respect of certain transactions of theirs at their mount Road branch, they were not dealers in the eye of law and that in all such transactions, they were acting as brokers, thus bringing together the seller and the buyer, while auctioning the goods of the owner. Several other contentions were also raised by the assessee. But, the assessing officer rejected every one of them. On appeal before the Appellate Assistant commissioner, similar contentions were urged and in particular, the argument centred round a legal concept that the assessee's liability (agent's liability)cannot be any more than that of their principals. Incidentally, the assessee stated before the Appellate Assistant Commissioner that they could not be characterised as dealers as defined under the Act as they cannot be deemed to be carrying on business in a commercial sense. It appears that a vague contention was hesitantly made before the assessing authorities, that the transactions in question were on behalf of dealers and non-dealers and therefore the relief ought to be given at least in cases where the goods transmitted by the assessee to the respective buyers belong to private parties who were not dealers or to those whose turnover did not come within the exigible limits as prescribed. In that connection, the Appellate Assistant Commissioner observed as follows :"it may be stated at once that the Advocate does not specifically separate the transactions on behalf of dealers and non-dealers, nor has any attempt been made either before the assessing officer or in this forum to separate the different commodities liable to different rates of tax. In the absence of details, not furnished by the appellant though required, the assessing officer has resorted to estimation of the turnover for the different rates of tax Ultimately, the Appellate Assistant Commissioner could not comprehend the contention that the levy of tax on the sale of goods held by the appellant at its premises at Mount Road or at Thambu Chetty Street, was not in order. He, therefore, dismissed the appeals.

(2.) BEFORE the Tribunal, no more attempt was made to produce evidence, except to press the legal contentions. The Tribunal, therefore, was constrained to consider the propriety of the arguments addressed before it and rightly therefore the Tribunal, applying the ratio in Kandula Radhakrishna Rao v. The Province of Madras came to the conclusion that the assessee was a person who was entrusted with the goods by the owner (principal) with authority to transfer the property and title in the goods to the buyer in the auction, who obtains delivery of the goods from the assessee without even being aware of the identity of the owner. The Tribunal, therefore, after weighing the legal contentions urged, came to the conclusion that the assessees were not mere brokers who brought together the seller and the buyer for certain commission, but they were persons who were to be treated as dealers not only under the common law but also under the provisions of the Madras General Sales Tax Act.