PROVINCE OF MADRAS Vs. FIRM OF KANIGOLLA SIVALAKSHMINARAYANA

JUDGEMENT

(1.) The judgment which my learned brother is about to deliver, which I have, with advantage and pleasure read before-hand, deals with adequate particularity of detail the questions in issue and therefore I propose to add only a few words as regards the legal question arising in the case.

(2.) Though fiscal statutes resembling the Madras General Sales Tax Act of 1939, had been in vogue in at least three of the Nations constituting the British Commonwealth before the enactment of the Act in question by the Madras Legislature, and General Sales Tax Acts were in force in about 25 States of the U. S. A. as well as in various European countries, our attention has not been drawn to any provision of an enactment similar to Section 8 of the Statute which we have to interpret. Such being the case, the decision on the point should rest solely on the interpretation of the words of the section unhampered and uninfluenced by any notions of things prevalent in other countries.

(3.) A strict grammatical and etymological interpretation of the word " dealer " as denned in Section 2(b) of Act IX of 1939 would include persons like the plaintiffs in the present action even if they had merely acted as commission agents, because either as agents for buying goods on behalf of a known principal or as a selling agent on behalf of a known principal, they should be deemed to be persons who carry on the business of buying or selling goods. If such a person is a " dealer " then Section 3 of the Act says that subject to the provisions of the Act every dealer shall pay, in each year, a tax in accordance with the scale specified. There are also various provisos to the section with which we are not actually concerned at this stage. It is only by a later section, viz., Section 8, that an agent is excluded. Had it not been for the incorporation of Section 8, even a person who, for an agreed commission or brokerage, buys or sells goods on behalf of known principals, specified In his accounts in respect of each transaction, will be a " dealer " within the meaning of the Act and hence liable to be taxed. Therefore the question is how far the exemption contained in the last mentioned section absolves the present plaintiffs from liability to pay the tax in regard to the dealings mentioned in the suit. The real nature of a commission agency in relation to the dominion over goods is defined by Blackburn, J., in Ireland V/s. Livingston (1871) L.R. 5 H.L. 395. The discussion arose there, as a result of the question put to the Judges by Lord Chelmsford, L.G., for which the Judges responded with the answer. At page 408, Blackburn, J., observes as follows: It is quite true that the agent who in thus executing an order, ships goods to his principal, is in contemplation of law a vendor to him. The persons who supply goods to a commission merchant sell them to him, and not to his unknown foreign correspondent, and the commission merchant has no authority to pledge the credit of his correspondent for them. There is no more privity between the person supplying the goods to the commission agent and the foreign correspondent than there is between the brickmaker who supplies bricks to a person building a house, and the owner of that house. The property in the bricks passes from the brickmaker to the builder, and when they arc built into the wall, to the owner of that wall; and just so does the property in the goods pass from the country producer to the commission merchant; and then, when the goods are shipped, from the commission merchant to his consignee. And the legal effect of the transaction between the commission merchant and the consignee, who has given him the order, is a contract of sale passing the property from the one to the other; and consequently the commission merchant is a vendor, and has the right of one as to stoppage in transitu. Again at page 409, the learned Judge observes as follows: My opinion is, for the reasons I have indicated, that when the order was accepted by the plaintiffs there was a contract of agency by which the plaintiffs undertook to use reasonable skill and diligence to procure the goods ordered at or below the limit given, to be followed up by a transfer of the property at the actual cost, with the addition of the commission; but that this super-added sale is not in any way inconsistent with the contract of agency existing between the parties, by virtue of which the plaintiffs were under the obligation to make reasonable exertions to procure the goods ordered as much below the limit as they could.... A commission merchant using reasonable exertions to get the goods as cheap as possible, ought to buy them in small parcels if the state of the market in the country is such that it is the reasonable way to get them. If the merchant, would get the goods cheaper by giving a wholesale order to the manufacturer, which probably would be the case in England, where Manchester goods are ordered from a London or Liverpool commission agent, he ought to give the wholesale order. This dictum of Blackburn, J., has been considered by the Court of Appeal in Cassaboglou V/s. Gibb (1883) L.R. 11 Q.B.D. 797, but for the purpose of the present case it is unnecessary to deal with the criticisms or discussions either by the Master of the Rolls or by the Lord justices in that case.