The court's interpretation of rule 12(3) of the Madras General Sales Tax Rules, 1939, as not requiring the maintenance of two separate account books, but rather as requiring the transactions to be separable and identifiable.

( 1 ) THE State of Andhrais the appellant. The respondent herein filed a suit for recovery of the sales tax wrongly collected from him under the provisions of the Madras General Sales Tax Act. The trial Court dismissed his suit. But on appeal, the Subordinate Judge decreed his claim.

( 2 ) THE main question raised by the learned Government Pleader is that the respondent has violated the provisions of section 8 of the Act and rule 12 (3) of the madras General Sales Tax Rules, 1939. Section 8 is in the following terms :-"the State Government may on application and on payment of such fee as may be prescribed in that behalf, license any person under this section who for an agreed commission or brokerage, buys or sells on behalf of known principals specified in his accounts in respect of each transaction and may exempt from the tax or taxes payable under section 3, such of his transactions as are carried out in accordance with the terms and conditions of his license. "

( 3 ) RULE 12 (3) runs as follows :-"if a person who holds a license under section 8 also deals otherwise than for an agreed commission or brokerage on behalf of known principals in the State, he shall keep separate accounts in respect of such transactions and of transactions covered by the licence. "according to the learned Government Pleader, the respondent has not maintained separate accounts of his own dealings and the transactions which he carried on as a commission agent and that therefore he is not entitled to claim exemption under section 8 of the Act. There is no doubt that the respondent has been maintaining separate ledgers in respect of the commission agency business. The chitta that he was maintaining, however, contained both the dealings which he carried on his own behalf as also as a commission agent. The point which falls to be determined is what exactly is the meaning of separate accounts in rule 12 (3 ). The chitta maintained by the respondent shows clearly what transactions relate to his own business and what transactions he carried on as a commission agent. Though it is no doubt written in a single chitta or account book, the transactions are separable and are identifiable. I, therefore, hold that separate accounts are being maintained by the respondent though noted in a single chitta and that he has not in any way violated the provisions of rule 12 (3 ). The same question was considered recently by Bhimasankaram, J. , in S. A. No. 2268 of 1950. The relevant observations are as follows :-"again, it is true that the rule requires the maintenance of separate accounts. But I am not satisfied that it is necessary that two separate account-books should be kept. In fact, it appears from the facts in the present case, that the plaintiff has been keeping two ledgers, one relating to his personal business and another relating to his commission business, though the day-book that he keeps mixes up both the kinds of transactions. I do not read the rule as necessitating the maintenance of two separate account-books, i. e. , two separate day-books and two separate ledgers. "

( 4 ) THE facts pf the present case are directly governed by that decision. I follow that judgment and hold that the terms of rule 12 (3) are not violated. I only wish to add, that on the facts of this case, the transactions are not mixed up though they are written in the same chitta. Moreover, there are also separate ledgers maintained in this case for the commission business.

( 5 ) THE next contention ur ged by the learned Government Pleader was that column 5 was not filled up in Exhibits B-5 to B-13 and that it also amounts to a violation of the rules framed under the Act. The forms show that the returns were made under rule 13 (2) as a dealer and not as a commission agent under section 8 of the act. The form which the respondent is bound to submit is as a commission agent form No. 6. When the respondent submitted a return in form No. 6, it was returned with the following endorsement :- "t

Click Here to Read the rest of this document