Single-point sales tax rule, agent liability, and intra-State sale principles upheld under the statutory scheme.

A rule fixing the single taxable point and identifying the liable buyer was upheld as consistent with the parent sales tax statute because it operated within the charging scheme and did not enlarge the tax. A resident agent who conducted buying and selling operations in the State for a non-resident principal was held liable to assessment under the agency deeming provision. The transactions were treated as completed intra-State sales because sale, payment, and delivery all occurred within the State, and any later movement of goods outside the State was not shown to form part of the contract of sale; Article 286(2) therefore did not bar the levy.

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Issues: (i) Whether rule 4-A(iv)(b) of the Turnover and Assessment Rules was inconsistent with section 5 of the Madras General Sales Tax Act and invalid to that extent; (ii) Whether the assessee, as purchasing agent of a non-resident principal, was liable to assessment under section 14-A of the Madras General Sales Tax Act; (iii) Whether the transactions were sales in the course of inter-State trade so as to attract the ban under Article 286(2) of the Constitution of India.

Issue (i): Whether rule 4-A(iv)(b) of the Turnover and Assessment Rules was inconsistent with section 5 of the Madras General Sales Tax Act and invalid to that extent.

Analysis: Section 3 of the Act was the charging provision, while section 5(2) fixed cotton for single-point taxation at one-half per cent. The rule identified the last dealer not exempt from taxation as the buyer on whom the tax would be levied. The rule was treated as working within the statutory scheme by fixing the point of levy and the person liable, and not as enlarging the charge beyond the Act.

Conclusion: The rule was held to be consistent with the Act and valid.

Issue (ii): Whether the assessee, as purchasing agent of a non-resident principal, was liable to assessment under section 14-A of the Madras General Sales Tax Act.

Analysis: Section 14-A applied to a person carrying on business of buying or selling goods in the State though residing outside it, and deemed the resident agent concerned with that business to be a dealer. On the facts, the assessee signed contracts as agent, handled the goods, received and paid sale proceeds, and performed the business operations in the State for the non-resident principals. The exemption for agents did not extend to this category of agency.

Conclusion: The assessee was held liable to assessment as agent of the non-resident principal.

Issue (iii): Whether the transactions were sales in the course of inter-State trade so as to attract the ban under Article 286(2) of the Constitution of India.

Analysis: The sale, payment, and delivery all took place within the State. The subsequent movement of goods outside the State was not shown to be part of the contract of sale itself. A sale attracts the constitutional ban only when the movement of goods from one State to another is under the contract of sale and forms part of the transaction. The transactions were therefore treated as completed intra-State sales.

Conclusion: The transactions were not held to be sales in the course of inter-State trade, and Article 286(2) did not bar the levy.

Final Conclusion: The statutory levy and assessment were upheld on all the substantive challenges, and the revision failed.

Ratio Decidendi: A rule fixing the single taxable point and the person liable under the parent Act is valid if it operates within the charging scheme, and a sale is in the course of inter-State trade only where the movement of goods across State lines is under and part of the contract of sale.

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