Commission agent as dealer bars double assessment on the principal for the same consignment sales turnover.

A commission agent carrying on sales business in Tamil Nadu is treated as the dealer for consignment sales made on behalf of an out-of-State principal, so assessment must be made on the agent for that turnover. Section 2(g) of the Tamil Nadu General Sales Tax Act, 1959 includes such an agent within the definition of dealer, while Rule 6(h) of the Tamil Nadu General Sales Tax Rules, 1959 only permits deduction from the principal's turnover where tax has already been paid by the agent. The decisive distinction is between the person liable to assessment and the person from whom tax may later be recovered. The principal could not be directly assessed again for the same sales, and the assessment was therefore impermissible in law.

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Issues: Whether, on a consignment sale through an agent in Tamil Nadu, the sales tax assessment could be made against the out-of-State principal instead of the agent who carried on the sale business in the State.

Analysis: Section 2(g) of the Tamil Nadu General Sales Tax Act, 1959 brings a commission agent or other mercantile agent within the definition of dealer when he carries on business on behalf of a principal. Rule 6(h) of the Tamil Nadu General Sales Tax Rules, 1959 only provides for deduction from the principal's turnover where tax has already been paid by the agent. The governing distinction is between the person liable to be assessed and the person from whom tax may later be recovered. On the facts, the agent at Coimbatore was the dealer for the disputed transactions, and there cannot be two dealers for the same turnover. The principal could not be directly assessed for the same sales merely because the agent had not paid the tax.

Conclusion: The assessment against the principal was not permissible in law and was set aside in favour of the assessee.

Ratio Decidendi: Where a commission agent is the dealer for a transaction, assessment must be made on the agent and the principal cannot be separately assessed for the same turnover, though recovery from the principal may arise if tax assessed on the agent remains unrecovered.

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