A commission agent, despite pooling goods belonging to several principals for sale, may not be liable to pay sales tax if the provisions of the relevant Act are not contravened.

( 1 ) THESE are connected petitions. They are filed by the same assessee. Writ Petition No. 595 of 1962 relates to the assessment for the assessment year 1959-60, Writ Petition No. 596 of 1962 relates to the assessment for the assessment year 1960-61 and Writ Petition No. 597 of 1962 relates to the assessment for the assessment year 1961-62. The turnover computed for the assessment year 1959-60 is Rs. 6,10,665 on which a tax of Rs. 12,213-30 is levied; the turnover computed for the assessment year 1960-61 is Rs. 21,91,168 on which the tax levied is Rs. 43,932-46 and the turnover computed for the assessment year 1961-62 is Rs. 14,86,730 and the tax levied is Rs. 29,956-96. Aggrieved by the orders of assessment made by the Commercial Tax officer, Additional Circle, South Kanara, Mangalore, the petitioner has moved this Court under article 226 of the Constitution to quash the orders of assessment alleging that on the proved facts, the assessing authority had no competence to make any levy of sales tax on the petitioner.

( 2 ) THE petitioner is a commission agent residing in the town of Mangalore holding a licence under section 11 of the Mysore Sales Tax Act, 1957, to be referred to as the "act" hereafter. According to him during the relevant period, the growers of arecanut had entrusted to him for sale the arecanuts grown by them and they had also authorised him in writing permitting him to grade the arecanuts entrusted to him into several grades and pool them with the arecanuts of the same grade entrusted to him by other growers and thereafter sell the same at the Bombay market at the best available prices. It is found as well as admitted that the arecanuts entrusted by the several growers had been graded into several grades; thereafter the respective grades of arecanuts were pooled together and sent to the Bombay market for sale and sold there. The price fetched at the Bombay market after meeting the incidental expenses and deducting the commission due to the petitioner was distributed between the several growers on the basis of the quality and quantity of arecanuts supplied by them. The case of the petitioner is that despite the pooling in question, he continues to have the benefits available to the commission agents under the Act. To be exact, he contends that he continues to be not liable to pay sales tax. But according to the assessing authority, he had lost the privileges conferred on him under the Act as he had pooled the arecanuts belonging to the several growers. The question for consideration is whether the view taken by the assessing authority can be justified on the language of the relevant provisions in the Act.

( 3 ) BEFORE proceeding to answer this question, we may conveniently dispose of a subsidiary contention advanced by the learned Government Pleader. It was contended by him that a commission agent in order to avoid being assessed to sales tax, should not deduct any sum from the price fetched, as incidental expenses; he can only deduct the commission agreed and nothing else. This contention evidently overlooks the second proviso to section 11 of the Act which reads thus :

"the commission or brokerage agreed upon the specified in the accounts represents the entire remuneration payable to the agent, apart from the tax paid by him on behalf of the principal and the legitimate incidental charges actually incurred by him and specified in the accounts in respect of insurance, transport, loading and unloading, godown rent, interest, correspondence, telegram, the use of the telephone and the like. "

( 4 ) IT is not the case of the Revenue that the expenses deducted are not genuine items of expenditure. Hence the argument that because the petitioner had incurred certain incidental expenses he should be considered as a "dealer" pure and simple, who is liable to pay sales tax, has to be negatived. The basis on which the Commercial Tax Officer came to the conclusion that the petitioner is liable to be taxed as