DASARATHI MOHAPATRA Vs. STATE OF ORISSA

JUDGEMENT

(1.) THIS is a petition under Article 226 of the Constitution against an order of the Orissa Sales Tax Authorities directing payment of sales tax in respect of the supply of gunny bags containing paddy and rice to the Government.

(2.) AN agreement was entered into between the petitioner and the Government of Orissa on the 4th December, 1953, for the purchase of paddy and rice by the petitioner for Government purposes and a copy of the agreement between the two has also been filed along with the petition. The salient features in the terms of the agreement are as follows : The petitioner agreed to serve as an agent of the Government of Orissa for the purchase of paddy and rice in the district of Puri. His responsibilities as an agent were as follows :-

(3.) THE main point of law for decision is whether the petitioner is liable to pay sales tax on the cost of gunny bags in which he supplied foodgrains to the Government in pursuance of the agency agreement. It is admitted that his purchase of paddy and rice was as an agent to the Government and consequently when he subsequently supplied the same to the Government there was no transfer of property in paddy and rice. Section 188 of the Contract Act says that an agent having an authority to carry on a business has also the implied authority to do every lawful thing which is necessary for that business including those things which are usually done in the course of conducting such business. Paddy and rice are ordinarily collected and supplied in gunny bags and consequently the purchase of gunny bags and the storage and transport of paddy and rice in such gunny bags would come within the scope of section 188 of the Contract Act. Hence, the relationship of principal and agent which existed between the Government and the petitioner for the primary purpose of procuring paddy and rice would, by implication, subsists for the ancillary purpose of purchasing gunny bags for storage and supplying of such foodgrains. It is difficult to conceive how the relationship of seller and buyer would exist between the petitioner and the Government so far as the supply of gunny bags is concerned, when in respect of the supply of foodgrains the relationship of agent and principal admittedly existed between the two. There is no express provision in the agreement to indicate a distinct jural relationship between the two in respect of these two transactions. On the other hand, it was expressly stated that as agent the petitioner was responsible for taking custody, packing, transport to depot and safe storage of foodgrains. Packing of foodgrains was obviously to be done in gunny bags. Again, the quality of gunny bags used for such packing was required to be in accordance with the standard prescribed by the Government. On a fair reading of the terms of the agreement, I am of the view that even in respect of the supply of gunny bags for the storage and supply of foodgrains the relationship of principal and agent subsisted between the two. It is true that there is no express provision in the agreement as to which party should bear the cost of gunny bags. But once it is held that the supply of gunny bags is also impliedly included in the terms of the agency it is obvious that the petitioner is entitled to be reimbursed for the actual expenses incurred by him for that purpose.