Commission agents as dealers under sales tax law, but agreed rusum formed part of commission and preserved exemption.

Commission agents who, with authority from their principals, sell goods and pass property in them to buyers are treated as dealers under the Madras General Sales Tax Act, because they carry on the business of selling goods rather than acting as mere brokers. The Act's charging provision therefore applies to such agents, subject to any available exemption. On the licence issue, rusum collected in the locality as an accepted trade charge was treated as part of the agreed commission or brokerage, not as part of the goods' price, so it did not breach the licence conditions under Section 8. The exemption remained available and the tax demands could not stand.

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Issues: (i) Whether the amounts collected as rusum by commission agents formed part of the agreed commission and did not amount to a breach of the licence conditions under Section 8 of the Madras General Sales Tax Act, 1939. (ii) Whether commission agents who, with authority from their principals, sold goods and passed property in the goods to buyers were dealers within the meaning of Section 2(b) of the Madras General Sales Tax Act, 1939 and liable to tax under Section 3.

Issue (i): Whether the amounts collected as rusum by commission agents formed part of the agreed commission and did not amount to a breach of the licence conditions under Section 8 of the Madras General Sales Tax Act, 1939.

Analysis: The collections described as rusum were shown by the evidence to be open and well-established trade charges accepted in the locality. They were treated by the parties in practice as part of the remuneration earned by commission agents and were not regarded as part of the price of the goods. The Court accepted that the seller principals must be deemed to have acquiesced in the practice and that the amounts were covered by the agreed commission or brokerage contemplated by Section 8.

Conclusion: The rusum collections did not constitute a breach of the licence conditions, and the assessees remained entitled to the exemption under Section 8.

Issue (ii): Whether commission agents who, with authority from their principals, sold goods and passed property in the goods to buyers were dealers within the meaning of Section 2(b) of the Madras General Sales Tax Act, 1939 and liable to tax under Section 3.

Analysis: The Court construed the definitions of dealer and sale in the Act to include a person who, with the owner's authority, sells goods and transfers property in them to the buyer, even if the sale is on behalf of an undisclosed principal. Section 8 was treated as significant because it presupposed that such commission agents would otherwise fall within the charging provision. The Court distinguished mere brokers who only bring parties together from commission agents entrusted with possession and authority to sell, and held that the latter carry on the business of selling goods within the statutory definition.

Conclusion: Commission agents of the kind before the Court were dealers within the Act and would be liable to tax under Section 3 but for the exemption under Section 8.

Final Conclusion: The assessees were held to be within the charging scheme of the Act, but their commission business was protected by the statutory exemption, so the tax demands could not stand.

Ratio Decidendi: A commission agent entrusted with goods and authorised to transfer property in them to buyers carries on the business of selling goods and is a dealer under the sales tax law, but where the commission received is part of the agreed remuneration and the licence conditions are not breached, the statutory exemption remains available.

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