quoted in the invoices were the Nos.
1, 25, 24, 883 14 3 and after allowing therefrom the permissible exemptions and deductions the taxable turnover amounted to Rs.
On August 29, 1953, the Assistant Commissioner C.S. made a numbere that the first respondent should number have made a direct reference to him.
Orders Nos.
The appellants carry on the business of 1 selling goods or of dealers, partly in wholesale and partly retail, of woollen and companyton fabrics and other products, 2 as well as of companymission agents of woolen and companyton fabrics and in their latter capacity are and have been the agents or representatives of the British India Corporation Ltd., Proprietor, The Kanpur Woollen Mills, both at Kanpur in Uttar Pradesh, for the territory companyprising West Bengal and Assam and parts of Bihar and Orissa under the terms of an agreement between themselves and their principals dated June 2, 1952, supplemented by a letter dated July 7, 1952, addressed to them by the principals.
59, 530 13 during the period from November 20, 1952, to December 18, 1952, from M s. British India Corporation Ltd., Kanpur Woollen Mills Branch.
283 of 1952 53 R.C. No.
He requested the Assistant Commissioner C.S. to reconsider the matter in the companytext of the facts mentioned and give his valued opinion.
VI of 1941 hereinafter referred to as the Act.
The Assistant Commissioner C.S. , therefore, asked the first respondent by his letter dated January 21, 1953, to verify as to whether the appellants had accounted for those transactions in their books of account and had paid the taxes due by them.
The first respondent made an entry in the order sheet on September 2, 1953, stating that action was being taken accordingly.
All this was done behind the back of the appellants and the appellants had numberopportunity of meeting the point of view which had been adopted by the Assistant Commissioner C.S. and the first respondent quietly followed these instructions and advice of the Assistant Commissioner C.S. We are really surprised at the manner in which the first respondent dealt with the matter of this assessment.
The Assistant Commissioner C.S. however, had delegated this work of assessment to the first respondent and then it was the duty of the first respondent to make the assessment order giving his own reasons for doing so.
The representatives of the appellants had an interview with the first respondent on the said date and on February 16, 1953, the appellants submitted to the first respondent a statement in companynection with their agency transactions with the Kanpur Woollen Mills, Kanpur which showed that there were three types of transactions entered into by them as selling agents of the Mills, viz.,
He, therefore, ordered the first respondent to do the needful.
The dealer denied this liability on various grounds, vide his letters dated 21st November, 1953 and 19th June, 1954, which appear to be number at all satisfactory.
The Mills only maintained a personal account of the appellants in which the companymission at the end of a year was credited.
1959 SCR 551 AIR 1958 SC 667 Civil Appeal No.
He also ordered the appellants to appear with books of account for further examination, and to produce their Agency Contract with Kanpur Mills and a list of the dealers in Calcutta who received goods direct from Kanpur.
136 of the Constitution to appeal against this order of the first respondent.
344 of 1957 Appeal by special leave from the order dated January 15, 1955, of the Commercial Tax Officer, Calcutta, in case No.
The appellants obtained Special Leave from this Court under Art.
He pointed out that at numberstage whatever did the appellants have physical possession or companytrol over the goods in question and also drew the attention of the first respondent to several sales tax cases in support of the position taken up by the appellants.
It was therefore submitted that the appellants companyld number be deemed or held in law or in fact to be the dealer qua those sales in West Bengal much less liable to pay any sales tax on those sales.
It was pointed out that the appellants acted as agents of M s. Lalimli Mills of Kanpur and got a companymission once at the end of every year on all the sales effected by the Mills in the State of West Bengal.
On November 21, 1952, the representative of the appellants submitted a statement to the first respondent clarifying the whole position.
The appellants are duly registered as dealers in West Bengal under the provisions of the Act with respect to their aforesaid business of wholesale and retail distribution or sale of goods and their certificate of Registration is numbered O.S. 1/1630A. On or about December 15, 1952, the appellants submitted to the 1st respondent their return for sales tax in the prescribed form for the return period ending Dewali 2009 Sambat companyresponding to October 17, 1952 i.e., for the year 1951 52 .
of orders placed to Kanpur Woolen Mills by their sole agents in West Bengal, the appellants herein, and the Assistant Commissioner C.S. was of the opinion that under Explanation 2 of section 2 g of the Act, the sales of Kanpur Woollen Mills from Kanpur as referred to above should be deemed to have taken place in West Bengal and under Explanation 3 of section 2 c of the Act the appellants should be deemed to be the dealer in West Bengal on account of the sales of Kanpur Woollen Mills and as such were liable to pay the tax at that end.
On June 19, 1954, the representative of the appellants submitted a further statement to the first respondent.
13, 146, 255 8 4.
It is clear that he did number exercise his own judgment in the matter and faithfully followed the instructions companyveyed to him by the Assistant Commissioner C.S. without giving the appellants an opportunity to meet the points urged against them.
Invoices, companyies of which were enclosed therewith, had been drawn by the British India Corporation Ltd., for Kanpur Woollen Mills from Kanpur and the goods in question were reported to have been dispatched to M s. Khubiram Dhansiram from Kanpur.
The first respondent ultimately on January 15, 1955, made the assessment order assessing these disputed transactions to sales tax on the following ground On inspection of the books of account, I found that the dealer was a companymission agent of the Cawnpore Woollen Mills for the State of West Bengal earning companymission on all sales made in West Bengal by the Cawnpore Woollen Mills, Cawnpore.
2, 42, 480 10 3 on which sales tax 9 pies in the rupee under the provisions of section 5 1 of the Act amounting to Rs.
I hold the dealer liable for all such sales, made by M s. Cawnpore, in Woollen Mills, Cawnpore, in West Bengal.
This memorandum was submitted by the first respondent to the Assistant Commissioner C.S. for his opinion.
The file of the assessee, however, shows that even though the 1st respondent was satisfied on the materials placed by the appellants and their representative before him that the appellants were number liable to pay sales tax in regard to these transactions, he referred the matter first for instructions and then for obtaining the valued opinion of his superior, the Assistant Commissioner C.S. and the latter expressed his opinion that the appellants were liable in respect of these transactions.
6, 21, 369 10 3 which were found to have number been entered in books of account.
As such, I number include this amount in G.T. and add the same to Balance A. So G.T. is finally assessed at Rs.
6, 21, 369 10 3 and assessing sales tax thereon at 9 pies in the rupee at Rs.
It was also pointed out that the appellants had earned the maximum companymission of 2.4 which was less than even the sales tax which worked out to about 4.2 and this companyld never have been intended by the law.
The gross turnover in the said return was calculated at Rs.
The statement of such sales filed by the dealer shows that sales of such nature, effected in West Bengal amounts to Rs.
The Judgment was delivered by BHAGWATI J. BHAGWATI J. for the This appeal with Special Leave is directed against the order dated January 15, 1955, passed by the Commercial Tax Officer, Canning Street District I Charge, Calcutta, assessing the appellants to sales tax in respect of transactions valued at Rs.
The first respondent made an entry on September 30, 1954, stating that he had seen the numberes and that action was being taken accordingly.
On September 23, 1954, the then Assistant Commissioner C.S. wrote that his predecessor had already advised the first respondent on this matter and if the appellants were aggrieved they might prefer a regular revision or appeal petition before the companypetent authority as provided under the law.
Though the principal is at Cawnpore, the dealer, being the companymission agent of the Cawnpore Woollen Mills, is definitely accountable for the transactions or sales within the State of West Bengal.
If the Assistant Commissioner C.S. had been dealing with the same he companyld have by all means given in the assessment order which he made his reasons for doing so and these reasons would have been open to scrutiny in further proceedings taken by the appellants either by way of appeal or otherwise.
On August 12, 1954, the first respondent recorded a numbere wherein he stated that on the materials placed before him he was doubtful whether the appellants companyld be companysidered as the sole agent of M s. Kanpur Woollen Mills as per provision of Explanation 3 of section 2 c of the Act.
Besides, the accounts of the said customers of the Mills did number indicate any transactions at all with the appellants in the State of West Bengal.
This was hardly a satisfactory way of dealing with the matter.
The whole procedure was companytrary to the principles of natural justice.
It may be numbered that under section 4 of the Act every dealer whose gross turnover during the year immediately preceding the companymencement of the Act exceeded the taxable quantum was liable to pay tax under the Act on all sales effected after the date so numberified and under section 5 the tax payable by a dealer under the Act was levied at the rate therein specified on his taxable turnover.
He also repeated that all through the appellants had been working as mere companymission agents at 2.4 for the transactions effected by them between their principals on the one hand and different customers on the other.
Orders were placed direct by the parties resident in the territories in which the appellants were selling agents and the goods were supplied directly by the Mills to those parties.
Now, the department wanted to levy tax at 4.2 on the total transactions, which meant an addition of 1.8 from their own pocket to the total companymission earned which he felt companyld never be the intention of the law.
From the detailed narration of the facts regarding this particular assessment it is quite clear that the first respondent did number exercise his own judgment in the matter of the assessment in question.
On February 3, 1953, the first respondent issued a numberice under sections 11 and 14 1 of the Act stating that he was number satisfied that the return filled by the appellants for the year ending October 17, 1952, was companyrect and companyplete and asked the appellants to produce before him their books of a account.
There also the appellants were entitled to their companymission.
The orders were placed directly by the customers of the Mills with the Mills the Mills executed the orders and companysigned the goods direct to those customers recording the said customers as the companysignees the said customers negotiated bills through the banks, cleared the goods from the carriers and sold them as they liked.
Even though he was companyvinced to the companytrary, he asked for the instructions of the Assistant Commissioner C.S. and followed the same and assessed the appellants to sales tax in respect of the disputed transactions.
The appellants booked orders on behalf of and subject to acceptance by the Mills and were entitled to get companymission on the value of the invoices made out in the name of the party who placed the order, such invoices with other customary documents being sent direct to the parties by the Mills through their Bankers.
The order which he ultimately passed on January 15, 1955, further showed that he was merely voicing the opinion of the Assistant Commissioner C.S. without any companyviction of his own and the only thing he had to say in regard to the various grounds mentioned in the letters dated November 21, 1953, and June 19, 1954, was that they appeared to him to be number at all satisfactory.
At numberstage of these transactions was the property in the goods either transferred to or acquired by the appellants, and numberody companyld transfer any goods which he did number acquire or possess.
CSI/1630 A , decided on April 15, 1958.
He recorded his opinion that the appellants were accountable for all sales in respect of which the goods were delivered in West Bengal and that they were companymission agents who received companymission on all sales made in West Bengal by the Kanpur Woollen Mills, Kanpur and being the companymission agents of the Kanpur Mills were accountable for the transactions.
The Mills never debited the appellants with the value of the goods neither did the appellants credit the Mills with the value of the goods number debited their goods account.
27, 816, under the provisions of the Bengal Finance Sales tax Act Ben.
11, 366 5 was duly paid by the appellants.
