Civil Appeal No 326164 of 1988
From the Judgment and Order dated 371987 of the Kerala High
Court in TRC Nos
54 to 57 of 1983
AK Ganguli and CN Sreekumar for the Appel lant
AS Nambiar and KR Nambiar for the Respond ents
The Judgment of the Court was delivered by 722 RANGANATHAN J
Ms Cardamom Planters  Association Bodinayakanur hereinafter referred to as the society  appeals from orders of the Kerala High Court upholding its liability to the levy of surcharge under the Kerala Sur charge on Taxes Act 1957 as amended in 1970
The Kerala General Sales Tax Act 1963 imposes sales tax on every dealer whose total turnover for any year ex ceeds a specific sum
The sum prescribed was initially Rs 10000 but was gradually stepped up to Rs20000 in 1971 Rs25000 in 1976 Rs35000 in 1980 Rs50000 in 1981 Rs75000 in 1982 and Rs1 lakh in 1984
The expressions dealer  taxable turnover  total turnover  and turn over  are defined in section 2 of the Act
The relevant portions of these definitions read as follows Section 2 viii Dealer means any person who carries on the business of buying selling supplying or distributing goods executing works contract transferring the right to use any goods or supplying by way of or as part of any service any goods directly or otherwise whether or for cash or for deferred payment or for commission remuneration or other valuable consideration and includes
b XX XX XX c a commission agent a broker or a del credere agent or an auctioneer or any other merchantile agent by whatever name called who carries on the business of buying sell ing supplying or distributing goods execut ing works contract transferring the right to use any goods or supplying by way of or as part of any service any goods on behalf of any principal
 Section 2 xxiv taxable turnover means the turnover on which a dealer shall be liable to pay tax as deter mined after making such deductions from his total turnover and in such manner as may be prescribed 
Section 2 xxvi 723 total turnover means the aggregate turnover in all goods of a dealer at all places of business in the State whether or not the whole or any portion of such turnover is liable to tax  
Section 2 xx vii turnover means the aggregate amount for which goods are either bought or sold or supplied or distributed by a dealer either directly or through another on his own ac count or on account of others whether for cash or for deferred payment or other valuable consideration provided that the proceeds of the sale by a person of agricultural or horti cultural produce grown by himself or grown on any land in which he has an interest whether as owner usufructuary mortgagee tenant or otherwise shall be excluded from his turn over
Explanation iAgricultural or horticultural produce shall not include XXX XXX XXX ii tea coffee rubber cardamom or timber
XXX XXX XXX In 1957 the Kerala Legislature introduced a surcharge on sales tax
Section 3 of the Kerala Surcharge on Taxes Act 1957 reads as follows The tax payable under the Kerala General Sales Tax Act 1963 shall in the case of a dealer whose turnover exceeds Rs30000 a year be increased by a surcharge at the rate of five per centum of the tax payable for that year and the provisions of the Kerala General Sales Tax Act 1963 shall as the case may be apply to the levy and collection of the said surcharge
 Kerala Act 40 of 1976 stepped up the rate of surcharge by amending section 31 to read as follows 1 The tax payable under the Kerala General Sales Tax Act 1963 shall in the case of a dealer whose turnover 724 a is not less than one lakh rupees but does not exceed ten lakhs rupees in a year be increased by a surcharge at the rate of five per centum and b exceeds ten lakhs rupees in a year be increased by a surcharge at the rate of eight per centum of the tax payable for that year and the provisions of the Kerala General Sales Tax Act 1963 shall apply in relation to the said surcharge as they apply in relation to the tax payable under the said Act
We may note here two important features of the latter Act
the first is that unlike sales tax which the dealer is entitled to get reimbursed from the purchaser of the goods sold by him the surcharge has to be borne by the dealer himself for sub section 2 of section 3 of the Surcharge Act prohibits the dealer from collecting the surcharge payable by him under sub section 1 on pain of prosecution under sub section 3
The second is that while a dealer might be liable to sales tax at different rates on the turnover of the different goods dealt in by him he has to pay a surcharge calculated on the amount of the sales tax payable by him in respect of his total dealings throughout the year
The assessee is a society registered under the Socie ties  Registration Act
Its members are cardamom growers in the State of Kerala
Under the Cardamom Act Act 42 of 1965 read with the Cardamom Licensing  Marketing Rules 1977 no person is entitled to carry on business as auction eer dealer or exporter of cardamom except under and in accordance with the terms and conditions of a licence issued under the Act and Rules
One of the conditions of the grant of licence to a person as an auctioneer is that he shall not charge more than one per cent of the sale price as commission for the services rendered by him
It is common ground that it is the society that has obtained the relevant licence for this purpose and that the individual cardamom growers who are members of the society have no such licence
The society conducts weekly cardamom auction sales at two places Santhanpara and Bodinayakanur
The planters leave their produce with the society
The produce of all the growers is mixed together and put to auction
It is open to the planters to be present at the auction
If any planter desires to sell at a specific price he can express his opinion in advance to the association
If he wants to with draw his lot put up for sale he could do so
Stitching charges and miscellaneous 725 charges are to be paid to the society
The society collects 1 as commission out of the sale proceeds from each of the planters
Besides sale of cardamom which constitutes the major part of its turnover the society also sells other goods such as gunnies pesticides sprayers manure and the like
It is contended on behalf of the appellants that the society has sold the goods only in its capacity as a commis sion agent for various principals and that on the general principles of agency an agent like the assessee can be liable to surcharge only to the same extent as the principal whom it represents
Hence it cannot be made liable for any surcharge in respect of the sales effect by it on behalf of principals whose sales through the society do not exceed the limits set out in section 31 of the Surcharge Act
The above contention was accepted by the Tribunal in the appeals against the assessments made on the society for the assessment years 1967 68 to 1969 70
The sales tax assess ments of the society for 1973 74 to 1976 77 were completed by the Sales Tax Officer on the basis of the Tribunal s order
These assessments were however set aside by the Deputy Commissioner of Sales tax who was of the opinion that the society was liable to pay surcharge on its aggregate turnover in each of these years and he directed accordingly
The assessee preferred appeals to the Appellate Tribunal from the orders of the Deputy Commissioner
The Tribunal allowed the appeals by a common order dated 3rd November 1982 following its order for the earlier assessment years
It set aside the revisional orders passed by the Deputy Commissioner and restored the assessments made by the Sales Tax Officer for the assessment years 1973 74 to 1976 77
The High Court on revision by the Department has set aside the orders of the Tribunal and restored the orders of the Deputy Commissioner
Hence these appeals
We are unable to see any flaw in the High Court s rea soning
The present assessee is clearly a dealer within the meaning of the statute particularly in view of the inclu sive part of the definition contained in clause c
This is also the finding of the Tribunal and is also admitted by the assessee
Likewise the provisions of section 5 of the Sales Tax Act and section 3 of the Surcharge Act read with the definitions of the words turnover  taxable turnover  and total turnover  leave no doubt that the assessee s taxable turnover has to be determined by taking the aggregate price of all the goods sold by it
There is no statutory warrant for breaking up the sales turnover of the assessee by reference to 726 the turnover of the principals on whose behalf it deals
Also a logical corollary of the assessee s argument would be that even in respect of tax the society can be assessed to sales tax only on the aggregate turnover relating to those of its principals who are liable to tax under section 5 of the Act
The High Court has rightly pointed out that the assessee had not claimed for purposes of sales tax that the turnover of goods dealt with by it on behalf of principals who did not have a taxable turnover should be excluded
If this be so the High Court observes rightly it is difficult to see on what principle the assessee can seek in the matter of surcharge the exclusion from its taxable turnover of the turnover of principals who would not have been subjected to a surcharge if they had directly sold the goods entrusted by them to the assessee for sale
This is particularly so because the Surcharge Act does not envisage a fresh determination of the assessee s turnover at all
It prescribes nothing more than a simple arithmetical calcula tion of the prescribed percentage on the sales tax deter mined as payable by the assessee for that year
There can be no doubt about this figure
The statute does not permit the computation of the surcharge for whatever reason on a part only of the tax determined as payable by the assessee for the year in question
On behalf of the assessee objection has been taken to the levy of surcharge in the manner in which it has been levied on three grounds 1
The general principle of law is that the liability of an agent is co extensive with that of the principal and his liability to tax or surcharge in respect of transactions put through on behalf of a principal cannot be higher than that which the principal would have himself incurred had he directly sold the goods 2
It is contrary to the principle underlying rule 9k of the Kerala Sales Tax Rules under which the turnover of sales or purchases made by a dealer through his agent in respect of which tax has been paid by the agent is excluded from his taxable turnover 3
The assessee has been placed in a financial predicament because all that the assessee can get out of the sales is the commission which cannot exceed 1 of the turn over and since the statute has prohibited it from collecting any part of the surcharge from the purchasers or the principals the society has to meet the surcharge liability out of its meagre commission earnings
We are unable to see how these contentions can help the assessee 727 to overcome the surcharge levy
The general principle of the law of agency as rightly pointed out by the High Court cannot prevail in the face of the statutory provisions
The assessee s contention upheld by the Tribunal in its earlier order is this    an agent is as many dealer as he has principals  an agent can be assessed  only on the aggregate of the turnover relating to principals who are liable to tax under section 5 and surcharge can likewise be levied only in respect of the turnover of the princi pals where total turnover is not less than Rs30000
 This will also mean that after the amendment of section 3 of the Surcharge Act in 1976 that the agent will be liable to a surcharge at 8 in respect of the turnover on behalf of principals whose total turnover exceeds Rs 10 lakhs at 5 in respect of the turnover on behalf of principals having turnover of between Rs1 lakh and Rs I0 lakhs and no sur charge in respect of the turnover on behalf of principals with turnovers of less than Rs 1 lakh
This may be equita ble but it clearly amounts to running a coach and pair through the statutory provisions
As already pointed out these provisions clearly treat a commission agent as a dealer and make him liable to sales tax as well as surcharge in respect of his entire turnover
The Act does not contem plate any dissection of this turnover into transactions on behalf of various principals by reference to their individu al liability to pay either sales tax or surcharge
The question of statutory interpretation apart it will easily be seen that the assessee s contention which is equally applicable to the levy of both sales tax and sur charge would make the whole Act unworkable
A commission agent will be dealing on behalf of hundreds of constituents and each of his constituents may be dealing not only through him but also through several other agents
The transactions may not be confined to the territories of one State and may be spread over the entire Indian sub continent
The sales through different agents may be of different goods attract ing liability to tax at different rates
It may be that a principal whose sales through one commission agent may not come upto the limits of turnover for levy of tax or sur charge may have been dealing through other agents and if assessed directly may have a turnover exceeding those limits
In this state of affairs it will be absolutely impracticable if not impossible for a Sales Tax Officer having jurisdiction over one particular commission agent to make his sales tax assessment on the basis suggested 728 by the assessee
That would require the collection of data in the assessment of every commission agent regarding the entire sales turnover of each of his constituents who may or may not be assessed by the officer assessing the particular commission agent
The assessment order on the commission agent would then have to be split up as it were  into a number of parts each containing the determination of turn over tax and surcharge qua each of the constituents
These determinations require exercises which cannot be practically undertaken by an officer assessing a commission agent but can easily be undertaken by the different officers assessing the principals
That is why the statute evolved a very simple procedure to meet the situation
It brought the commission agent within the definition of a dealer and made his aggregate turnover liable to tax
But it provided at the same time that the turnover so included and taxed in the hands of the agent should be excluded from the turnover of the principal where he is separately assessed
This is rule 9k
Rule 9k confers an exemption not on the commission agent but on the principal and does not help the assessee
So far as sales tax is concerned this rule provides com plete protection against double taxation
The rate of tax on any type of goods being uniform irrespective of the turn over the turnover in regard to that item will get assessed only at one place either in the hands of the principal or in the hands of the agent but not both
The treatment of the commission agent as a dealer no doubt means that an agent will be taxed where his turnover exceeds the relevant limits even though some or all the principals who sold through him may have turnovers below those limits
But he is not really affected as he can collect the sales tax from the purchasers and thus reimburse himself
The difficulty that has arisen in regard to the sur charge stems principally from the requirement that the society has to pay it out of its funds and cannot reimburse itself either from its vendees or its principals
This difficulty has been further accentuated by the fact that in regard to cardamom its earnings are limited to a small commission which cannot be varied by it at its desire
These considerations cannot however justify a different interpre tation as the statutory provisions are clear
A suggestion was mooted before us that the hardship to the assessee on this account is so substantial that this requirement should be held to be an unreasonable restriction violating article 19
This is a new contention involving investigation into facts which we are not inclined to permit the assessee raise here for the first time
We may howev er mention that during the hearing of these appeals we 729 adjourned the appeals to enable the assessee to move the State in this behalf but we were told that its efforts were unsuccessful
We need hardly say that the assessee will be at liberty to pursue the matter put forward its difficul ties and seek to persuade the State Government to either reduce or dispense with the surcharge in regard to cardamom sales or to sanction an increase in the rate of commission chargeable by the assessee on its cardamom sales and fail ing such efforts to challenge the validity of the levy for the future if so advised in appropriate proceedings
In the circumstances we affirm the view taken by the High Court and dismiss these appeals
We however make no order as to costs
Y Lal Appeals dismissed


Summary:
Respondent Town Improvement Trust Bhopal acquired 152 acres of land in village Jamalpura under section 68 of the Madhya Pradesh Town Improvement Trust Act within the munici pal limits of Bhopal
That land included 1262 acres of land belonging to the appellant on which stood a house a well and some trees
The appellant being not satisfied with the amount of compensation offered to him by the Trust made a Reference to the Compensation Tribunal
The Tribunal awarded compensation at the rate of Rs6000 per acre for the land Rs5000 for the building Rs3000 for the well and Rs815 for the trees
Thus the Tribunal awarded a total sum of Rs120000 as compensation as against a claim of Rs1339560 made by the appellant
On appeal the High Court maintained the award in respect of the building well and the trees but enhanced the same so far as the land is concerned by determining the market value of Rs12000 per acre
Working or this basis including 15 solatium the total amount of compensation awarded worked out to he Rs 184923
Being dissatisfied with the Order of the High Court he has come up to this Court after obtaining special leave
The main contentions urged by the appellant are i that the house and well are undervalued ii that the land ought to have been treated as urbanised developed land iii that potential value of the land has not 909 been taken into consideration while determining compensa tion iv that the value of the sales of similar plots has wrongly been rejected
Partly allowing the appeal this Court HELD In determining market value where there was no sufficient direct evidence of market price the Court is required to ascertain as best as possible from the materials before it what a willing vendor would reasonably have expected to obtain from a willing purchaser from the land in its particular position and with its particular potentiali ty
914C D A land which is certainly or likely to be used in the immediate or reasonably near future for building purposes but which at the valuation date is waste land or has been used for agricultural purposes the owner however willing a vendor he is is not likely to be content to sell the land for its value as waste or agricultural land as the case may be
The possibility of its being used for building purposes would have to be taken into account
However it must not be valued as though it had already been built upon
It is the possibilities of the land and not its realised possibilities that must be taken into consideration
914E F In estimating the market value of the land all the capabilities of the land and all its legitimate purposes to which it may be applied or for which it may be adapted are to be considered and not merely the condition it is in and the use to which it is put at the time applied by the owner
The proper principle is to ascertain the market value of the land taking into consideration the special value which ought to be attached to the special advantage possessed by the land namely its proximity to developed urbanised areas
915A B The value of the potentiality has to be determined on such materials as are available and without indulgence in fits of imagination
915B C A court of appeal interferes not when the judgment under attack is not right but only when it is shown to be wrong
912E In an appeal under article 136 of the Constitution of India involving the question of valuation of acquired land the Supreme Court will not interfere with the award unless some erroneous principle has been invoked or some important piece of evidence has been overlooked or misapplied 912B C 910 When the willing vendor had agreed to sell land at 14 annas per sq
feet after development and the development charge was to be paid by the willing purchaser it could be reasonable to deduct only 50 on account of the land to be set apart for roads drains etc
and not beyond that
Con sidering this aspect of the matter and the potential value of the land as urban developed area the Court took the view that the compensation may justly be enhanced by 16th ie to Rs14000 per acre
Solatium 15 was maintained but the rate of interest was raised to 9 on the enhanced compensa tion till payment
918F G  Atmaram Bhagwant vs Collector ofNagpur AIR 1929 PC 92 followed Dollar Company Madras vs Collector of Madras  Gajapatiraju vs Rev Divisional Officer  Mahabir Prasad Santuka vs Collector Cuttack 1987 1 SCC 587 and UP Government vs
HS Gupta AIR 1957 SC 202