Commission agent's supply to undisclosed principal is not a sale where the transfer is made in performance of agency.

A commission agent who buys goods in his own name for an undisclosed principal and later supplies them to that principal does not effect a sale within the meaning of the Sale of Goods Act when the transfer is made in performance of the agency. The statutory concept of sale requires a contract transferring property in goods for a price, and the decisive factor is whether the transaction is one of agency or a contract of sale. On this analysis, the subsequent supply by the agent to the principal is not liable to sales tax, because it is discharge of the agency obligation rather than a sale.

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Issues: Whether goods purchased by a commission agent on behalf of a principal and thereafter supplied to the principal, without any profit except commission, amounted to a sale by the agent within the meaning of the Sale of Goods Act and were therefore liable to sales tax.

Analysis: The transaction between the assessees and their customers was examined in the light of the statutory definition of a contract of sale, which requires a transfer of property in goods pursuant to a contract of sale for a price. The goods were bought by the assessees in their own name because the principals were not disclosed to the sellers, and the assessees became liable to the vendors for the price. But the subsequent supply to the principals was held to be the discharge of the assessees' duty as commission agents. The earlier English authorities on stoppage in transitu and the Bombay decisions on pakka adatias were treated as showing that such dealings may exhibit incidents of vendor and purchaser in a limited context, but do not necessarily create a contract of sale between agent and principal. The decisive factor was that the agent's undertaking was one of agency, not a contract of sale, and the transfer to the principal was made in performance of that agency.

Conclusion: The subsequent supply of goods by the commission agent to his principal was not a sale within the meaning of the Sale of Goods Act and did not attract sales tax. The question referred was answered in the negative, in favour of the assessees.

Final Conclusion: The reference was decided for the assessees on the substantive legal issue, with costs awarded to them.

Ratio Decidendi: Where a commission agent purchases goods for an undisclosed principal and supplies them in performance of the agency, the transfer of property to the principal is not a contract of sale but an act done under the agency relationship.

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