Case: G. Gilda Textile Agency Vs. State Of Andhra Pradesh

a dealer under S. 14-A and thus liable to tax under that section.4. Section 14-A of the Act reads as follows:In the case of any person carrying on the business of buying and selling goods in the State but residing outside it (hereinafter in this section referred to as a non-resident), the provisions of this Act shall apply subject to the following modifications and additions, namely:(i) In respect of the business of the nonresident, his agent residing in the State shall be deemed to be the dealer.(ii) The agent of a non-resident shall be assessed to tax or taxes under this Act at the rate or rates leviable thereunder in respect of the business of such non-resident in which the agent in concerned, irrespective of the amount of the turnover of such business being less than the minimum specified in S. 3, sub-s. (3).(iii) Without prejudice to his other rights, any agent of a non-resident who is assessed under this Act in respect of the business of such non-resident may retain out of any moneys payable to the non-resident by the agent, a sum equal to the amount of the tax or taxes assessed on or paid by the agent.(iv) Where no tax would have been payable by the non-resident in respect of his business in the State by reason of the turnover thereof being less than the minimum specified in S. 3, sub-s. (3), he shall be entitled to have the amount of the tax or taxes paid by his agent refunded to him on application made to the assessing authority concerned, or where more than one such authority is concerned, to such one of the authorities as may be authorised in this behalf by the State Government by general or special order.(v) Such application shall be made within twelve months from the end of the year in which payment was made by or on behalf of the non-resident of the tax or taxes or any part thereof.5. The section makes the agent liable fictionally as a dealer in the circumstances laid down in the section, viz., that he is acting on behalf of a non-resident person doing business of buying or selling goods in the State. The agent is assessed to tax under the Act in respect of the business of such non-resident in which the agent is concerned, irrespective of whether the turnover of such business is more or less than the minimum prescribed in the Act. It is contended that the first thing to decide is whether the non-resident could be said to be carrying on the business of selling in Andhra Pradesh in the circumstances of this case, and reliance is placed upon a decision of this Court reported in Mahadayal Premchandra v. Commercial Tax Officer, Calcutta, (AIR 1958 SC 667 ). In that case, this Court was called upon to consider the Bengal Finance (Sales Tax). Act, 1941 (6 of 1941). There also, the agent was sought to be made liable in respect of the sale of goods belonging to a non-resident principal under a section which may be taken to be in pari materia with the section, we are considering. This Court held that the Kanpur Mills,. whose agent the appellant in the case was, were not carrying on any business of selling goods in West Bengal and were selling goods in Kanpur and despatching them to West Bengal for consumption. This part of the judgment is called in aid to show that the first condition of the liability of the agent in the present case under the Madras General Sales Tax Act is not fulfilled. Unfortunately for the appellant, in this case there is a clear finding by the High Court that the non-resident principals were carrying on the business of selling in Andhra Pradesh. The High Court has observed that if the non-resident principals took out railway receipts in their own names, thereby manifesting their intention to remain the owners and to retain the control over the goods, the sales must be taken to have been completed or to have taken place in the State of Andhra Pradesh. From this, the High Court came to the conclusion that the non-resident principals were doing business of selling in, Andhra Pradesh. The High Court pointed out that inasmuch as the appellant after securing the orders received the railway receipts from the sellers and handed them over to the buyers and sometimes collected the consideration and transmitted the same to the sellers, the sales thus resulting must be held to have taken place in the State either on behalf of the appellant or on behalf of the non-resident principals, and whichever view be correct, the appellant as agent was liable as a dealer within the Act. Either it was a dealer itself, or it became a dealer by the fiction created by S. 14-A, since the non-resident principals had done business in each case in the State of Andhra Pradesh. The case of this Court on which reliance has been placed, turned on its own facts, and a finding there cannot be used in the present case, because no finding on the facts of one case can be applied to the facts of another.6. Sub-section (2) of S. 14-A was said to be connected with the opening part, and it was argued that the tax was leviable on the turnover relating to the business of a non-resident, which was carried on by the non-resident in the taxable territory. In our opinion, once the finding is given that the non-resident principal carried on the business of selling in Andhra Pradesh and the appellant was the admitted agent through whom this business was carried on, the rest follows without any difficulty. The High Court, in our opinion, was, therefore, right in upholding the levy of the tax from the appellant, in view of our decision that the appellant came within the four corners of S. 14-A in relation to the transactions disclosed in the last category.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]5. The section makes the agent liable fictionally as a dealer in the circumstances laid down in the section, viz., that he is acting on behalf of a non-resident person doing business of buying or selling goods in the State. The agent is assessed to tax under the Act in respect of the business of such non-resident in which the agent is concerned, irrespective of whether the turnover of such business is more or less than the minimum prescribed in the Act. It is contended that the first thing to decide is whether the non-resident could be said to be carrying on the business of selling in Andhra Pradesh in the circumstances of this case, and reliance is placed upon a decision of this Court reported in Mahadayal Premchandra v. Commercial Tax Officer, Calcutta, (AIR 1958 SC 667 ). In that case, this Court was called upon to consider the Bengal Finance (Sales Tax). Act, 1941 (6 of 1941). There also, the agent was sought to be made liable in respect of the sale of goods belonging to a non-resident principal under a section which may be taken to be in pari materia with the section, we are considering. This Court held that the Kanpur Mills,. whose agent the appellant in the case was, were not carrying on any business of selling goods in West Bengal and were selling goods in Kanpur and despatching them to West Bengal for consumption. This part of the judgment is called in aid to show that the first condition of the liability of the agent in the present case under the Madras General Sales Tax Act is not fulfilled. Unfortunately for the appellant, in this case there is a clear finding by the High Court that the non-resident principals were carrying on the business of selling in Andhra Pradesh. The High Court has observed that if the non-resident principals took out railway receipts in their own names, thereby manifesting their intention to remain the owners and to retain the control over the goods, the sales must be taken to have been completed or to have taken place in the State of Andhra Pradesh. From this, the High Court came to the conclusion that the non-resident principals were doing business of selling in, Andhra Pradesh. The High Court pointed out that inasmuch as the appellant after securing the orders received the railway receipts from the sellers and handed them over to the buyers and sometimes collected the consideration and transmitted the same to the sellers, the sales thus resulting must be held to have taken place in the State either on behalf of the appellant or on behalf of the non-resident principals, and whichever view be correct, the appellant as agent was liable as a dealer within the Act. Either it was a dealer itself, or it became a dealer by the fiction created by S. 14-A, since the non-resident principals had done business in each case in the State of Andhra Pradesh. The case of this Court on which reliance has been placed, turned on its own facts, and a finding there cannot be used in the present case, because no finding on the facts of one case can be applied to the facts of another.6. Sub-section (2) of S. 14-A was said to be connected with the opening part, and it was argued that the tax was leviable on the turnover relating to the business of a non-resident, which was carried on by the non-resident in the taxable territory. In our opinion, once the finding is given that the non-resident principal carried on the business of selling in Andhra Pradesh and the appellant was the admitted agent through whom this business was carried on, the rest follows without any difficulty. The High Court, in our opinion, was, therefore, right in upholding the levy of the tax from the appellant, in view of our decision that the appellant came within the four corners of S. 14-A in relation to the transactions disclosed in the last category.