A commission agent who merely acts as an intermediary, bringing together agriculturists and purchasers in an auction held in the presence of the agriculturists, and who has no hand in determining the price or selling the goods, is not a 'dealer' within the meaning of section 2(g) of the Tamil Nadu General Sales Tax Act and is not liable for assessment of sales tax.

S. A. KADER, J.

This writ petition has been filed under article 226 of the Constitution of India for the issuance of a writ quashing the assessment order passed by the respondent against the petitioner in TNGST No. 719976/86-87 dated 15th February, 1988, for the assessment year 1986-87.

2. The petitioner is a partnership firm carrying on business of turmeric commission agency at Erode. According to the petitioner, agriculturists in and around Erode used to bring their turmeric to the petitioner-firm to be stored in the godowns of the petitioner. They are sold subsequently in public auction in the premises of the Erode Turmeric Merchants' Association in the immediate presence of the concerned agriculturist. The highest offer is accepted by the concerned agriculturist and thereafter the goods are sold in specific quantities. The contention of the petitioner is that he is not a dealer within the meaning of section 2(g) of the Tamil Nadu General Sales Tax Act (hereinafter referred to as "the Act") and is not liable for any assessment of sales tax. Previously the petitioner not being aware of the correct legal position was paying sales tax. As soon as it came to know of the real legal position, the petitioner denied its liability for assessment. But, the respondent-Deputy Commercial Tax Officer, Erode, rejected the contention of the petitioner and passed impugned order levying tax for the year 1986-87 on a total turnover of Rs. 23, 57, 198. Hence this writ petition.

3. The Deputy commercial Tax Officer, Erode, has filed a counter-affidavit challenging the contentions of the petitioner and disputing the maintainability of this writ petition.

4. Under section 3 of the Act, the liability to pay sales tax on the taxable turnover is fastened on every dealer whose total turnover for a year is not less than Rs. 50, 000. The main question which, therefore arises is whether the petitioner is a "dealer" within the ambit of section 2(g) of the Act, which runs thus :

"'Dealer' means any person who carries on the business of buying, selling, supplying or distributing goods, directly or otherwise, whether for cash or for deferred payment, or for commission, remuneration or other valuable consideration, and includes -

(i) ............

(ii) ............

(iii) a commission agent, a broker or a del credere agent, or an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of buying, selling, supplying or distributing goods on behalf of any principal" *

It has been held by a Bench of this Court in National Chamber of Commerce v. State of Madras 1970 (25) STC 185, that the "distribution" referred to in the aforesaid definition is such as involves a transfer of property. "Supplying" and "distributing" are therefore associated with the transfer of property. We have now to see whether the petitioner is a dealer.

5. The modus operandi adopted in the transactions carried on by the petitioner and similar commission agents is this : The agriculturists being the turmeric grown in their lands to the petitioner and other commission agents in Erode and these goods are stored in the godowns of the commission agents. Periodically, auction is held in the premises of the Erode Turmeric Merchants' Association on the basis of the samples taken from the stock stored in the godowns of the commission agents. The concerned agriculturists are present at the time of the auction and the highest bid has to be accepted by the particular agriculturist and thereafter his goods are sold in specified quantities at the agreed price. They are then weighed and delivered to the buyer. The price is received by the commission agent, and after deducting the storage, labour, weighment and other charges he pays the balance to the agriculturist concerned. It is, therefore, the contention of the petitioner that it acts only as an intermediary bringing together the agriculturists and the respective purchasers in the auction held in the presence of