Groundnut stock entrustment was not a sale, so dealer liability under sales tax law was rejected.

Transactions involving groundnut stock were treated as a loan coupled with entrustment for sale, not as purchases by the plaintiffs. Sale proceeds were credited to the respective owners and accounts were settled at season end, while no purchase price was credited on receipt of stock in the godown. On these facts, the plaintiffs acted neither as purchasers nor as sellers in the ordinary sense, so the dealings did not amount to sales under the Madras General Sales Tax Act. They were therefore not liable to sales tax as dealers, and the appeal failed.

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Issues: Whether the respondents were liable to pay sales tax as dealers under the Madras General Sales Tax Act on the ground that the transactions in question constituted sales of groundnuts.

Analysis: The arrangement was treated by both parties as a loan coupled with entrustment of the groundnut stock for sale, with the sale proceeds being credited to the respective owners and the accounts settled at the end of the season. The receipt of stock in the godown did not involve any credit of purchase price to the owners, and the surrounding circumstances showed that the plaintiffs acted neither as purchasers nor as sellers in the ordinary sense. On these facts, the transactions could not be characterised as sales so as to bring the plaintiffs within the meaning of dealers under the sales tax law.

Conclusion: The respondents were not liable to sales tax as dealers, and the appeal failed.

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