SAMBAMURTHI Vs. STATE OF ANDHRA PRADESH

JUDGEMENT

(1.) In T. R. C. No. 51 of 1955 the assessee, a merchant of Chodavaram, seeks revision of an order of the Andhra Sales Tax .Appellate Tribunal, Guntur, relating to the assessment year 1951-52. Objection is taken to two sums of Rs. 85,003-9-0 and Rs. 14.826/- included in his turnover, the first relating to the turnover in a commission agency business in jaggery carried on by the assessee and the second relating to the value of 1059 bags of bran alleged to have been kept outside the books. The assessee held a licence under Section 8 of the Madras General Sales Tax Act but exemption on the turnover of Rs. 85,003-9-0 representing the price of jaggery sold by the assessee as commission agent, was refused on the ground that he had not included the amounts collected by him by way of dharmam (charity), valtar (subscriptions to a local Merchants' Association) and katha cooly (accountancy charges) aggregating to Rs. 780-9-9 in his turnover or in the pattials issued to his principals. It is admitted on behalf of the assessee that this sum of Rs. 780-9-9 did not form part of his agreed commission. The contention is that the above sums did not also form part of the sale price but were paid by the buyers of jaggery for the specific purposes for which they were intended and applied by the assessee for those purposes and did not therefore appear in his turnover or the pattials issued to the sellers. It was also urged that these were customary payments made by purchasers of jaggery and were well-known to the principals. It was argued on behalf of the respondent that the amounts in question formed part of the consideration for the sale of jaggery and that the omission to include them in the turnover and in the pattials issued to the principal constituted a breach of the conditions of section 8 and of the licence and disentitled the assessee to the the exemption granted by section 8 of the Act.

(2.) A commission agent in the position of the assessee having control over or possession of the goods and having authority from the owners of the goods to pass the property in and title to the goods is a "dealer" within the definition in section 2 (b) of the Madras General Sales Tax Act which includes a person carrying on the business of selling goods. Radha Krishna v. The Province of Madras'. "Sale" is defined in section 2 (h) of the Act as meaning every transfer of property in goods by one person to another in the course of trade or business for cash or other valuable consideration. Jaggery was sold by the assessee to different buyers during the assessment year for a price. Under Section 3 of the Act every dealer has, subject to the provisions of the Act, to pay for each year a tax on his total turnover. Under Rule 4 (1) of the turnover and assessment Rules the gross turnover of a dealer is the amount for which the goods are sold by the dealer. But for the exemption given by Section 8 of the Act the assessee would be liable to pay tax as a dealer on the sales of jaggery effected by him. Section 8 of the Act, so far as it is here relevant, runs as follows :

(3.) This amendment is expressly made retrospective by section 12 of Act XIII of 1954 which provides that it " shall be deemed to have effect from the com- mencement of the Madras General Sales Tax (Amendment) Act, 1947". According to the amended definition of " turnover" the consideration for the sale of goods includes sums charged by a dealer for anything done in respect of the goods at the time of or before their delivery and any other sums charged by the dealer, whatever be the description, name or object. Dharmam, .Valtar and Katha cooly would clearly fall'within this extended definition of " turnover ". The payments are made to the assessee by the buyer of jaggery as part of the transaction of sale at a fixed percentage of the value of the goods sold. But for the sale, the buyer would not have made these payments and the assessee could not have realised them. The fact that a small part of the payments made by the buyer is not appropriated by the assessee for his commission or by his principals for their own use but is set apart by them for certain specified objects or purposes, does not mean that the payment is gratuitous or dissociated from the sale. In substance, though not in form, the payments must be regarded as part of the consideration for the sale. In any case the Amending Act treats these payments as part of the consideration for the sale and that too, retrospectively so as to apply to the assessment now in question. The assessee should have included the sums in his turnover and should also have included them in the pattials issued by him to his principals. His omission to do so disentitled him to the exemption granted by section 8 of the Act.