Commission agent to be held as dealer liable to sales tax.

SATYANARAYANA RAO, J.

All these four second appeals by the Provincial Government of Madras raise interesting and difficult questions of law under the Madras General Sales Tax Act, 1939, (Madras Act IX of 1939), referred to in the judgment as "the Act"). The appellants were unsuccessful in both the Courts and hence these second appeals.

The four suits out of which these second appeals arise were instituted in the District Munsif's Court of Bellary by different plaintiffs against the Provincial Government for a declaration that the assessment of sales tax imposed upon them was illegal and void. As the suits raised common questions of law and similar questions of fact, by consent of parties they were tried together and disposed of by a common judgment both by the District Munsif and by the learned District Judge.

The plaintiffs are commission agents who carry on trade at a place called Adoni in Bellary District. Besides the commission business, they also carry on independent business of their own. Under Section 8 of the Act they were granted licences permitting them to carry on commission business which is styled Dalali Agency in the judgment. Under the terms of the licence the plaintiffs are not liable to pay sales tax in respect of their commission businesses. There was no trouble till March 1943, as no tax was imposed upon them by the Deputy Commercial Tax Officer in respect of the commission business. In the years 1943-44, however, the Deputy Commercial Tax Officer thought fit to impose upon the plaintiffs sales tax on the ground that they had violated the terms of the licence and were therefore disentitled to the exemption. The plaintiffs carried the matter in appeal to the Commercial Tax Officer and also in revision in the Board of Revenue but they were unsuccessful throughout. Hence these suits.The main ground on which the Commercial Tax Officer imposed sales tax was that the plaintiffs collected double commission in respect of the same transaction of sale both from the buyer as well as the seller and that the commission received from the purchaser was not entered in the seller's account. In addition to this, it was also contended by the defendant that the plaintiffs collected certain amounts as rusums for Dharmam, Gumastha, Vasool, etc. and without spending these amounts for the purpose for which they were collected they were in the hands of the plaintiffs without even rendering an account of such collections from the buyer in the seller's account. Fro these reasons it was alleged by the Government that the conditions of the licence had been violated and that therefore the plaintiffs should be treated as not entitled to any exemption and should be deemed to be "dealers" within the meaning of the Act. Various issues have been raised in the suits covering the contentions between the parties. Most of these points on which there was controversy in the Courts below have now not been urged before us in the second appeals and it is not, therefore, necessary to advert to them in detail.

Before referring to the relevant provisions of the Act and the rules framed thereunder it is necessary to refer to the nature of the business carried on by the plaintiffs as established by the evidence in the case. The findings of fact by the courts below have been accepted on behalf of the appellants in these second appeals. The nature of the business which was proved by the evidence in the case was not seriously contested by the Government in the trial Court. The learned District Munsif carefully considered the evidence and stated his conclusion in very clear terms on this aspect of the case. In order to better appreciate the contentions that have been urged before us it is necessary to have those conclusions as background for this judgment. The matter has been ably and clearly summarised by the learned District Munsif in paragraph 8 of his judgment as follows :-"The villagers who raise groundnuts on their lands or on the lands taken by