Purchase tax liability follows statutory definitions, and an alleged agency arrangement cannot override a taxable sale for consideration.

Under the Punjab General Sales Tax Act, 1948, the definitions of "dealer", "purchase" and "sale" in section 2 control whether goods transferred by a commission agent to a registered purchaser for consideration amount to a taxable purchase. The Court stated that principal-agent rights under the Contract Act and trade custom do not alter the statutory character of the transaction for sales tax purposes. If goods move from one dealer to another for consideration otherwise than by mortgage, hypothecation, charge or pledge, the transfer is a sale for the transferor and a purchase for the recipient. On those facts, the assessee could not insist on summoning commission agents to prove an alleged agency arrangement, and the assessing authority was justified in refusing that enquiry.

---

---

Issues: Whether goods acquired by a registered dealer from a commission agent on payment of consideration are a purchase within the meaning of the Punjab General Sales Tax Act, 1948, and whether the assessee can insist on examining commission agents to show that the transaction was one of agency and not sale.

Analysis: The definitions of "dealer", "purchase" and "sale" in section 2 of the Act were held to govern the controversy. The Court held that the inter se rights and liabilities of principal and agent under the Indian Contract Act, 1872, or trade custom, are irrelevant to determining whether a transaction is a purchase for sales tax purposes. What matters is whether the transacting parties are dealers and whether goods are transferred from one dealer to another for consideration otherwise than by mortgage, hypothecation, charge or pledge. A commission agent or arhtia may be a dealer, but where he transfers goods to the purchasing dealer for consideration, the acquiring dealer makes a purchase and the transfer constitutes a sale qua the transferor. The Court further held that the assessee, having admittedly received the goods for consideration and having furnished declaration forms to claim deduction, could not demand enquiry into an alleged agency arrangement to displace the statutory consequence of purchase tax liability.

Conclusion: The transaction amounted to a purchase by the assessee, and the Assessing Authority was justified in declining to summon the commission agents.

---