TaxTMI 
TaxTMI 
1952 (10) TMI 30
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....y them. The learned Additional City Civil Judge decreed the suit holding that the demand and levy were illegal. The facts necessary for a disposal of this appeal may be stated briefly as the scope of the controversy in the suit lies within a narrow compass. In or about December, 1943, there was acute scarcity of firewood in the City and the Government were anxious to introduce in the City a system of rationing of firewood. For this purpose it was necessary to provide for a regular and satisfactory supply of firewood. The respondent-firm, who were engaged in firewood business, submitted to the Government that they had been carrying on the business of supplying firewood as commission agents for over 25 years, that if the Government were to ge....
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....ement, the course of dealings between the three parties, viz., the producers, i.e., the owners of the firewood, the respondent-firm and the Government was as follows: The respondent-firm were transporting the firewood from the areas specified and collecting from the Collector, or to be more accurate from the dealers to whom the firewood was eventually consigned, the cost of firewood supplied by them, and after retaining a sum of Rs. 0-13-0 per ton of casuarina and Re. 1-0-0 per ton of junglewood as their commission, paying over the balance to the sellers. It appears from the correspondence, that this rate of commission was fixed by the Government and agreed to by the owners of the fire- wood, i.e., the sellers. When, however, the respondent....
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....t. When the Sales Tax Officers demanded sales tax on this turnover, the respondents objected on the ground that they had been supplying the firewood on behalf of the owners of the firewood who were the principal sellers and they took only such commission as was fixed by the authorities. This objection was, however, overruled. The Deputy Commercial Tax Officer held that having regard to the nature of the transaction and other attendant cir- cumstances the business of the respondents could not be considered to have been done on commission basis and hence their entire turnover was liable to sales tax. The respondents filed an appeal to the Commercial Tax Officer, Madras, but the appeal was dismissed. The appellate authority took the view that ....
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....e no doubt that the Government never treated the respondents that way. The Government knew, and proceeded throughout, on the basis that the sellers were the persons who owned the firewood. The Government, instead of themselves buying the firewood from the owners, gave a sort of monopoly to the respondents to procure from the sellers the firewood and to supply them, i.e., the Government. It was agreed, or in any event it must be taken as an implied term of the agreement between the parties, that the respondents should get a commission, which itself was fixed by the Govern- ment. Ordinarily no doubt it is the principal who fixes the commission payable to the commission agent; but it must not be overlooked that we are dealing with a set of cir....