Commission agent liability under sales tax law depends on custody, licence compliance, and proof of agricultural produce exclusion.

A commission agent with custody or control of goods was treated as a dealer liable to sales tax rather than a mere broker, because the evidence and account books did not support the broker-only characterization. Exemption under the Section 8 licence failed since the licence conditions were not complied with, including the requirement to furnish particulars of principals and their turnover. The claim that the transactions were outside turnover as agricultural produce dealings also failed, because the factual foundation was not pleaded or proved and the record did not show the necessary agency and cultivation facts.

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Issues: (i) whether the plaintiff was a commission agent liable to sales tax as a dealer, and not merely a broker; (ii) whether the plaintiff was entitled to exemption under the licence granted under Section 8 of the Madras General Sales Tax Act, 1939; and (iii) whether the transactions were excluded from turnover or otherwise exempt as agricultural produce transactions under Section 2(i) and Rule 4.

Issue (i): whether the plaintiff was a commission agent liable to sales tax as a dealer, and not merely a broker.

Analysis: Liability under Section 3 of the Madras General Sales Tax Act, 1939 depended on whether the plaintiff carried on business as a dealer. The evidence, read with the books of account, did not establish that he was merely a broker. The plaintiff had custody or control of the goods and the courts below were justified in treating him as a commission agent rather than a pure broker.

Conclusion: The finding that the plaintiff was a commission agent and a dealer was upheld, against the appellant.

Issue (ii): whether the plaintiff was entitled to exemption under the licence granted under Section 8 of the Madras General Sales Tax Act, 1939.

Analysis: Section 8 granted exemption only for transactions carried out in accordance with the licence conditions. The record showed non-compliance with the requirement to furnish the particulars of principals and their turnover, and the exemption could not be claimed for transactions not shown to be within the licence terms.

Conclusion: The claim to exemption under Section 8 failed, against the appellant.

Issue (iii): whether the transactions were excluded from turnover or otherwise exempt as agricultural produce transactions under Section 2(i) and Rule 4.

Analysis: The contention depended on facts not pleaded or proved. The record did not establish that the relevant principals had grown the produce on land in which they had an interest, nor did it show that the plaintiff had acted only as an agent in all transactions. The plea involved a mixed question of law and fact and could not succeed on the existing record.

Conclusion: The exclusion from turnover was not proved and the contention failed, against the appellant.

Final Conclusion: The tax demand was sustained because the plaintiff failed to establish any legal basis for exemption or exclusion from taxable turnover.

Ratio Decidendi: A commission agent who has custody or control of goods and who fails to prove compliance with the statutory licence conditions or the factual foundation for exclusion from turnover remains liable to sales tax as a dealer.

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