Taxability through commission agents turned on whether prior tax payment by the agent had to be proved for exemption.

Under section 44(2)(b) of the M.P. General Sales Tax Act, the dispute concerned whether sales through a registered commission agent could be taxed without proof that the adatiya had already paid tax, and whether the assessee had to establish such payment. The record noted a departmental practice, followed on the Commissioner's instructions, of granting exemption on production of the agent's undertaking. As the Tribunal had refused relief solely because no proof of prior tax payment by the agent was produced, the matter raised a debatable question of law rather than a purely factual issue. The reference application was therefore maintainable and the Tribunal was directed to state the case.

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Issues: Whether the assessee was entitled to a reference on the question whether sales made through a registered commission agent could be taxed in the absence of evidence that the adatiya had paid tax, and whether the assessee had to prove that tax had been paid by the adatiya.

Analysis: The application arose under section 44(2)(b) of the M.P. General Sales Tax Act for a direction to state a case on questions of law. The record showed that the department had followed a practice based on instructions of the Commissioner under which exemption was granted where the agent's undertaking was produced, and that the controversy turned on whether the Board could insist on proof that the agent had already been assessed to tax. Since the Tribunal had declined relief on the footing that no such evidence was produced, the matter involved a debatable question of law rather than a purely factual dispute.

Conclusion: The application for reference was maintainable and deserved to be allowed, and the Tribunal was directed to state the case and refer the questions to the Court.

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