COMMISSIONER SALES TAX Vs. GANGA RAM GHUREY LAL

JUDGEMENT

(1.) THE Additional Judge (Revisions) Sales Tax, Agra, has submitted this reference at the instance of the Commissioner of Sales Tax, U.P., Lucknow, under section 11(3) of the U.P. Sales Tax Act and invited the opinion of this court on the following question of law :

(2.) THE assessee is a dealer in food-grains, oil-seeds and gur. In respect of assessment yeas 1960-61 and 1961-62 it filed returns of its turnover showing gross sales of Rs. 4,368 and Rs. 3,773 for the two years respectively. These figures were not accepted by the Sales Tax Officer and were enhanced to Rs. 6,583 and Rs. 10,383 for the two years respectively. Even the enhanced figures of sales are below the minimum taxable limit which is Rs. 12,000 per year. The assessee would, therefore, have not been liable to any tax. The assessee, however, had made certain sales through commission agents and the extent of such sales was Rs. 24,000 for the year 1960-61 and Rs. 21,000 for the year 1961-62. If the sales made through the commission agents are also added to the turnover of the assessee, the assessee becomes liable to tax. It appears that the sales made through the commission agents were not included in the assessee's net turnover labial to sales tax but were included in the assessee's gross turnover with a view to levy tax on the sales effected by the assessee directly. The question is as to whether this could be done under the law. Section 3 which is the charging section provides that every dealer shall for each assessment year pay the tax at the rate of 2 naye paise per rupee on his turnover provided the turnover exceeds Rs. 12,000. The dealer has been defined in section 2(c) of the Act to mean "any person ...... carrying on the business of buying or selling goods in Uttar Pradesh" and according to the explanation attached to that provision "a factor, a broker, a commission agent or arhati, ..... or any other mercantile agent by whatever name called .... who carries on the business of buying and selling goods on behalf of his principals, or through whom the goods are sold or purchased shall be deemed to be a dealer for the purposes of this Act." The word "turnover" according to its definition under section 2(1) means "the aggregate amount for which goods are supplied or distributed by way of sale ... either directly or through another on his account or on account of others."

(3.) A Division Bench of this court in Commissioner of Sales Tax, U.P., Lucknow v. Balbir Singh and Co. ([1963] 14 S.T.C. 546) was called upon to answer the following question :