( 1. ) THIS is a reference by the Board of Revenue, Madhya Pradesh, under Section 23 (1) of the C. P. and Berar Sales Tax Act, 1947, hereinafter called the Act.

( 2. ) THE reference has arisen out of an order of assessment of sales tax on the bidis of the value of Rs. 3,39,949 despatched by Ramchandra Rathore and Bros, of Saugar, the assessee-company, to one Kanhaiyalal Pradhan at Bareilly in Uttar Pradesh in the year ending 31st December, 1949. The despatches were made in pursuance of an agreement executed on 1st April, 1937, by the assessee-company on the one hand and the predecessor-in-title of Kanhaiyalal Pradhan on the other. The terms of the agreement are reproduced below : - (

(i) The agent shall stock for sale sufficient stock of Cannon Brand bidi, our own make, and shall not stock bidi from any other source of Saugar or of Saugar side. (ii) The rates for sales shall be fixed by the company. The agent is bound to adhere to these rates, any reduction or increase in which shall be made whenever desirable by the company. (iii) Out of the commission allowed to the agent as per para, (xi) below, the agent will pay to the wholesale dealer a commission of Re. 0-0-3 Per tho