Commission agents for known principals qualified for sales tax exemption where the principal sold the goods and agents only earned commission.

Commission agents acting for known principals were held entitled to exemption under Section 8 of the Madras General Sales Tax Act. The dealings showed that the Government treated the firewood owners as the real sellers, while the respondents only procured and supplied the goods for an agreed commission. Because the arrangement was controlled by the Government, which fixed the commission and consistently proceeded on the basis that the respondents were agents, they were not independent dealers selling on their own account. The respondents were therefore not liable to sales tax on the turnover in question.

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Issues: Whether the respondents were commission agents acting for known principals so as to obtain the exemption under Section 8 of the Madras General Sales Tax Act.

Analysis: The course of dealings showed that the Government treated the owners of the firewood as the real sellers, while the respondents merely procured and supplied the firewood for an agreed commission. The arrangement was controlled by the Government, which fixed the commission and proceeded throughout on the footing that the respondents were only agents. On these facts, the respondents were not independent dealers selling on their own account, but commission agents acting for known principals.

Conclusion: The respondents were entitled to the benefit of Section 8 of the Madras General Sales Tax Act and were not liable to pay sales tax on the turnover in question.

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