Case: State of Rajasthan &amp; Another Vs. M/s. Karamchand Thappar &amp; Bros

coal could only be supplied to the State of Rajasthan.13. It seems to us that the petitioner is not a dealer within the definition of the word dealer in the first para of S. 2(f), set out above. The petitioner did not sell or supply coal. What it did was to procure the supply of coal. Under the direction issued under cl. (8) of the Colliery Control Order, it is the Equitable Coal Company that supplied the coal directly to the Rajasthan Government. No property in the coal ever passed or could pass to the petitioner. If the agreement dated April 28, 1955, contemplated a sale by the petitioner to the Rajasthan Government, the agreement could not be carried out in view of the provisions of the Colliery Control Order, at least as far as supplies from collieries are concerned, because the collieries could not but obey directions issued under clause (8). Therefore, we must reject the contention of Mr. Tewari that the petitioner fell within the first para of S. 2(f).14. Mr. Tewari put his alternative point thus: The High Court has omitted to notice the explanation to S. 2(f). The petitioner is an agent within the explanation because the Equitable Coal Company had sold or supplied goods to the Rajasthan Government through the petitioner, under the agreement dated September 2, 1948. The Colliery Control Order does not prohibit collieries from securing orders through agents. Under the said agreement, the petitioner had to arrange despatches to cover monthly quantities of coal reserved on its account. Therefore, the petitioner was carrying out its obligations to the Equitable Coal Company when it entered into the agreement dated April 28, 1955.15. It seems to us that there is considerable force in his contention. Clause (1) of the said agreement mentions the collieries from which the coal is to be supplied and these collieries belonged to the Equitable Coal Company. The petitioner charged no remuneration from the Rajasthan Government. It had to supply coal at the controlled rate and, therefore, the only profit which the petitioner could make was from the brokerage it received from the Equitable Coal Company. Therefore, it seems reasonable to conclude from these facts that the petitioner was acting as the agent of the Equitable Coal Company. The fact that the remuneration it received was called brokerage is not conclusive. Whether the petitioner is an agent or not must depend on the facts of each case. Therefore, it is not necessary to discuss the decisions of this Court in G. Gilda Textile Agency v. State of Andhra Pradesh, (1963) 2 SCR 248 and Firm Shivratan G. Mohatta v. Sales Tax Officer, Jodhpur, AIR 1964 Raj 5 relied on by Mr. Tewari. Mr. Sastri contends that the petitioner was also an agent of the Government, but we are unable to agree with him. Apart from the fact that the petitioner was charging no remuneration from the Government, the agreement dated April 28, 1955, read as a whole is clearly between two principals. Accordingly, we hold that the petitioner is an agent within the explanation to S.2(f), and therefore, he is deemed to be a dealer for the purposes of the Act. We may mention that Mr. Sastri has not contended that assuming that the supply of coal amounted to sale the Equitable Coal Company was not carrying on the business of selling or supplying goods within Rajasthan.16. We may now deal with the point raised by Mr. Tewari that the High Court should not have granted relief under Art. 226. He does not dispute that the High Court had the jurisdiction, but he says that on the facts of the case, the High Court should not have interfered. We are unable to agree with him. The High Court has given good reasons for interfering. The High Court observed that "the petitioner had challenged the authority of the State of Rajasthan to enact a law whereby tax on the sale of goods outside the State of Rajasthan could be levied and the application of the law itself to the circumstances of the case. The petitioner has also averred in its petition that it has a fundamental right of free trade and any such imposition infringes this right of the petitioner. We cannot, therefore, entertain the plea in bar."17. Regarding delay, the High Court excused the delay on the following ground:-"The petitioner has also in our opinion adequately explained the delay in seeking relief from this Court. The petitioner has alleged, and this allegation has not been controverted, that the Secretary of the Government Public Works Department, submitted a proposal to the Council on 30th December, 1957, recommending that the transactions under dispute be exempted from the levy of sales tax. The council passed a resolution to that effect on 10th January, 1958, but since the papers were not submitted through the Finance Department, the decision of the Council could not be implemented. This decision was verbally communicated to the petitioner and, therefore, the petitioner did not move this Court earlier. In our opinion, in view of these uncontroverted facts, the petitioner was justified in not rushing to this Court."18. In the result the appeal must succeed, but as the High Court did not deal with the question of the situs of sale or whether the sale was made in the course of inter-State trade, the case must be remitted to the High Court. Although Mr. Tewari has opposed the raising of the question at this stage whether the supply of coal amounted to sale, we are inclined to allow this point to be raised because the question is one of law which can be decided on the material on the records of the case, in the light of the decision of this Court in (1963) Supp 2 SCR 459 :(AIR 1963 SC 1207 ) which was decided after the judgment of the High Court in this case. We express no opinion whether the said decision covers the present case or not.

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

Explanation:
1[ds]13. It seems to us that the petitioner is not a dealer within the definition of the word dealer in the first para of S. 2(f), set out above. The petitioner did not sell or supply coal. What it did was to procure the supply of coal. Under the direction issued under cl. (8) of the Colliery Control Order, it is the Equitable Coal Company that supplied the coal directly to the Rajasthan Government. No property in the coal ever passed or could pass to the petitioner. If the agreement dated April 28, 1955, contemplated a sale by the petitioner to the Rajasthan Government, the agreement could not be carried out in view of the provisions of the Colliery Control Order, at least as far as supplies from collieries are concerned, because the collieries could not but obey directions issued under clause (8). Therefore, we must reject the contention of Mr. Tewari that the petitioner fell within the first para of S. 2(f).It seems to us that there is considerable force in his contention. Clause (1) of the said agreement mentions the collieries from which the coal is to be supplied and these collieries belonged to the Equitable Coal Company. The petitioner charged no remuneration from the Rajasthan Government. It had to supply coal at the controlled rate and, therefore, the only profit which the petitioner could make was from the brokerage it received from the Equitable Coal Company. Therefore, it seems reasonable to conclude from these facts that the petitioner was acting as the agent of the Equitable Coal Company. The fact that the remuneration it received was called brokerage is not conclusive. Whether the petitioner is an agent or not must depend on the facts of each case. Therefore, it is not necessary to discuss the decisions of this Court in G. Gilda Textile Agency v. State of Andhra Pradesh, (1963) 2 SCR 248     and Firm Shivratan G. Mohatta v. Sales Tax Officer, Jodhpur, AIR 1964 Raj 5   relied on by Mr. Tewari. Mr. Sastri contends that the petitioner was also an agent of the Government, but we are unable to agree with him. Apart from the fact that the petitioner was charging no remuneration from the Government, the agreement dated April 28, 1955, read as a whole is clearly between two principals. Accordingly, we hold that the petitioner is an agent within the explanation to S.2(f), and therefore, he is deemed to be a dealer for the purposes of the Act. We may mention that Mr. Sastri has not contended that assuming that the supply of coal amounted to sale the Equitable Coal Company was not carrying on the business of selling or supplying goods within Rajasthan.16.We may now deal with the point raised by Mr. Tewari that the High Court should not have granted relief under Art. 226. He does not dispute that the High Court had the jurisdiction, but he says that on the facts of the case, the High Court should not have interfered. We are unable to agree with him.The High Court has given good reasons for interfering. The High Court observed that "the petitioner had challenged the authority of the State of Rajasthan to enact a law whereby tax on the sale of goods outside the State of Rajasthan could be levied and the application of the law itself to the circumstances of the case. The petitioner has also averred in its petition that it has a fundamental right of free trade and any such imposition infringes this right of the petitioner. We cannot, therefore, entertain the plea in bar.In the result the appeal must succeed, but as the High Court did not deal with the question of the situs of sale or whether the sale was made in the course oftrade, the case must be remitted to the High Court. Although Mr. Tewari has opposed the raising of the question at this stage whether the supply of coal amounted to sale, we are inclined to allow this point to be raised because the question is one of law which can be decided on the material on the records of the case, in the light of the decision of this Court in (1963) Supp 2 SCR 459 :(AIR 1963 SC 1207  ) which was decided after the judgment of the High Court in this case. We express no opinion whether the said decision covers the present case or not.