MUNICIPAL COUNCIL Vs. GVCBABU NAIDU

JUDGEMENT

(1.) The appellant is entitled to succeed. The appeal arises out of a suit filed by the respondent in the Court of the District Munsif of Bellary for a declaration that the appellant council had acted illegally in requiring him to pay profession-tax in respect of the three half years ending with 31 March, 1931, 30 September, 1931 and 31 March, 1932, and for an injunction restraining the appellant from levying the tax. The District Munsif held that the respondent was liable to the tax except in respect of the half year which ended with 31 March, 1931. He was of the opinion that the respondent was not liable in respect of that half year because the notice of demand had not been given within the required period. The respondent appealed to the District Judge of Bellary in respect of the reliefs which had been refused him and the appellant filed a memorandum of objections challenging the correctness of the District Munsif's decision that the respondent was not liable to pay the tax in respect of the first of the three half years. The respondent's appeal failed and the appellant's memorandum of objections was accepted. The result was that the District Judge dismissed the suit with costs. The respondent then filed a second appeal which was heard by Wadsworth, J., who allowed it. The learned Judge held that the respondent was not liable for the payment of the profession-tax because in his opinion the respondent was not carrying on business at Adoni.

(2.) The facts are these. The respondent is a licensed distiller and owns an arrack distillery at Bellary. Under the terms of his license he is required to maintain depots for the sale of arrack at various paces in the Bellary District. One of these places is Adoni. The depot at Adoni is in charge of an agent of the respondent and he sells arrack to licensed retail dealers. The price is fixed by the Government and the sales are restricted to licensed retail vendors. The money received in respect of arrack sold at the Adoni depot is paid by the respondent's agent into the treasury the same evening. The question which arises is whether in these circumstances the respondent transacts business in Adoni within the meaning of Section 93(1) of the Madras District Municipalities Act, 1920. The section gives a Municipal Council the right to levy profession tax on a. person who transacts business within the Municipality for not less than sixty days in any half year. Section 94A says that if a person employs a servant or agent to represent him for the purpose of transacting business in a Municipality the person shall be deemed to transact business there and the servant or agent shall be liable for the profession- tax whether or not he has power to make binding contracts on behalf of his employer. Wadsworth, J., held that the respondent was not carrying on business within the Municipal area of Adoni, and his reasons may be gathered from the following passage in his judgment: It is true that the depot keeper at Adoni has authority to deliver goods in return for cash and I suppose that on the narrowest view it might be said that every time he delivered liquor in return for cash there is an executed contract of sale. But his control over the trade is in fact purely mechanical. The price is fixed elsewhere; the vendee must be only certain licensed persons; the money is paid straight into an account in the treasury and all these accounts from which profits can be ascertained and with the help of which control can be exercised are maintained in Bellary.

(3.) The learned Judge here disregards the essential factor that the respondent's agent in charge of the Adoni depot enters into contracts for the sale of arrack on behalf of his master who makes profits on these transactions. A person who sells goods in a particular place must be deemed to be carrying on business in that place and the respondent sells arrack at Adoni. The fact that the prices which he charges are fixed by the Government does not make his transactions any the less sales; nor does the fact that the respondent's only customers at Adoni are licensed retail dealers alter the character of his transactions. The fact that the respondent's agent is required to pay into the treasury at the close of a day's business the moneys which he has received for the arrack sold that day has no bearing on the question and the same is to be said with regard to the keeping of accounts at Bellary. The respondent sells arrack at Adoni and therefore is carrying on business at Adoni within the meaning of Section 93 of the Act It would be a different matter if all contracts for the supply of arrack were made in Bellary and goods were merely delivered in Adoni through an agent, but that is not the position.