Export sale through commission agent remains taxable turnover deductible, and sales to registered dealers qualify on proof of statutory conditions.

Goods purchased as binola or kapas and resold within the prescribed six-month period to a registered dealer were treated as deductible from gross turnover if the statutory conditions were proved, with factual verification left to the Assessing Authority. Cotton sold through commission agents at Bombay to a foreign buyer was also deductible because the agents acted only on behalf of the assessee, and the sale that occasioned export formed part of an export transaction protected from State taxation. The assessment was quashed to the extent inconsistent with these principles and remitted for reconsideration.

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Issues: (i) whether the purchase price of binola or kapas purchased in the market and sold within six months to a registered dealer was deductible from the gross turnover under section 5(2)(a)(vi) of the Punjab General Sales Tax Act, 1948; (ii) whether the purchase price of cotton sold through commission agents at Bombay to a foreign buyer, resulting in export, was deductible under section 5(2)(a)(vi) and protected by Article 286(1)(b) of the Constitution of India.

Issue (i): Whether the purchase price of binola or kapas purchased in the market and sold within six months to a registered dealer was deductible from the gross turnover under section 5(2)(a)(vi) of the Punjab General Sales Tax Act, 1948.

Analysis: The deduction provision granted relief for goods purchased and then sold within six months after the close of the year to a registered dealer. The Court held that where the dealer had in fact purchased binola or kapas as such in the market and could prove subsequent sale within the prescribed period to a registered dealer, the statutory conditions were satisfied. The assessment record was not clear on the factual verification, so the matter required reconsideration by the Assessing Authority on proof of the claim.

Conclusion: The claim was legally admissible in principle and was to be examined afresh by the Assessing Authority; the issue was in favour of the assessee.

Issue (ii): Whether the purchase price of cotton sold through commission agents at Bombay to a foreign buyer, resulting in export, was deductible under section 5(2)(a)(vi) and protected by Article 286(1)(b) of the Constitution of India.

Analysis: The Court treated the commission agents as mere agents of the assessee and held that a sale effected through them was not to be treated differently from a direct sale by the assessee. It further held that the place from which the goods were moved did not matter where the sale itself occasioned the export. A sale that forms an integrated part of the export transaction falls within the constitutional exemption against State taxation on sales or purchases in the course of export. The deduction could therefore not be denied merely because the transaction was routed through Bombay or through an agent.

Conclusion: The assessee was entitled to deduct the purchase price of the cotton so sold from the gross turnover; the issue was in favour of the assessee.

Final Conclusion: The assessment order was quashed to the extent inconsistent with these holdings, and the matter was sent back for reconsideration in accordance with law.

Ratio Decidendi: A sale through a commission agent remains a sale by the assessee where the agent acts merely on behalf of the assessee, and a transaction that occasions export is a sale in the course of export and cannot be subjected to State purchase tax.

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