TaxTMI 
TaxTMI 
1968 (6) TMI 63
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.... on 13th December, 1965, was served on the petitioner on 18th December, 1965. The petitioner then had to file W.P. No. 1989 of 1965 to quash that order. It has also filed another writ petition, because the 1st respondent commenced proceedings for 1965-66. Inasmuch as Writ Petition No. 1951 of 1965 for the issue of a writ of prohibition had become infructuous, we dismissed it. In these two writ petitions, the questions that arise for consideration, are whether the petitioner is a dealer within the meaning of the Andhra Pradesh General Sales Tax Act (hereinafter called as the A.P.G.S.T. Act), and whether the firm is liable to be assessed having regard to the fact that none of the principals, i.e., the owners who had entrusted the articles to the auctioneer have a taxable turnover. It is contended by Sri Anantha Babu, firstly that the Legislatures have power to tax only transactions which amount to sales as defined in the Sale of Goods Act, and have no power to extend their jurisdiction by artificial definition of "sale" or by laying down legal fictions. The power to tax a sale, according to him, comprehends the power to tax either party to the transaction, i.e., the seller and ....
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....oods and has the power to transfer the goods to the highest bidder when he knocks down the bargain, a transaction of sale takes place and sales tax is exigible. On the question whether the sale by the petitioner at the auction of goods of any one of the principals, does not attract sales tax in view of the fact that the principal did not have a taxable turnover, and whether having regard to the nature of the goods sold at the auction, the auctioneer is a dealer, it is contended that these are all matters which have to be determined on the facts of each case, and therefore, this Court is not the proper forum to investigate these matters. The questions raised before us can only be determined on an appreciation of the true scope and nature of the functions and transactions of an auctioneer vis-a-vis the provisions of the Sales Tax Act. The word "dealer" is defined in section 2(1)(e) of the A.P.G.S.T. Act as meaning "any person who carries on the business of buying, selling, supplying or distributing goods, directly or otherwise, whether for cash, or for deferred payment, or for commission, remuneration or other valuable consideration, and includes..............(iv) a commission age....
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....a convenient mode of collection of tax." While this is so, Sri Anantha Babu relies on a decision of the Calcutta High Court in Chowringhee Sales Bureau Ltd. v. State of West Bengal [1961] 12 S.T.C. 535. In that case, D.N. Sinha, J., observed at page 553: "Where an auctioneer is selling specific chattel and/or goods for an unknown or a disclosed principal and where the buyer knows that the auctioneer is not the owner, the auctioneer cannot be considered as the seller and there is no contract of sale between him and the buyer. In such a case, the auctioneer is not even a party to the sale. Therefore, in such a transaction the auctioneer cannot be made liable to payment of sales tax and the extension of the definition of the word 'dealer' in Explanation 2 of section 2(c) of the Bengal Finance (Sales Tax) Act, so as to include an auctioneer is ultra vires and must be declared as void." It was further held that since the power to tax is only on the sale of goods as defined in the Indian Sale of Goods Act, any attempt to tax something which is not a sale of goods according to that Act would be beyond the powers of the State Legislature. In our view, the functions and duties of a....
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....neer sells a specific chattel by auction, he is not liable upon the contract of sale, nor does he impliedly warrant the title of his principal, although the name of the principal has not been disclosed to the buyer, in which case, he impliedly warrants that he has authority to sell and that he knows of no defect in the title of his principal, and he undertakes to deliver the chattel in exchange for the price (for which he may sue) but his contract with the buyer is independent of the contract of sale, which he makes on behalf of the seller and to which he is not a party." From what has been stated as to the nature of the duties, functions and liabilities of an auctioneer, it is clear that every transaction or series of transactions are governed by the facts and circumstances of each case arising out of the contract between the purchaser and the auctioneer or the implied authority vested in him. Where goods or articles of third parties, whose names are not disclosed, are sold by auction, on the representation that the property in the goods will pass on payment of the price by the highest bidder in whose favour the sale is knocked down, it is implied that the dominion over that pr....
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....rincipal at another rate. The third situation is where the agent has not accounted to his principal for the entire collections or deductions made by him in the sales or purchases effected by him on behalf of his principal, and the fourth is where it appears that the agent has acted for a fictitious or nonexistent principal. It was contended on behalf of the appellant that the State Legislature was not competent to convert by a legal fiction a mere entrustment of goods for sale into a sale and to impose a tax thereon. In our opinion, there is no warrant for this argument. The real effect of the third Explanation is to impose the tax only when there was a transfer of title to the goods and not where there is a mere contract of agency. The Explanation says in effect that where there is in reality a transfer of property by the principal to the agent and by the agent in his turn to the buyer, there are two transactions of sale." Again at page 316, it was observed: "As a matter of law, there is a distinction between a contract of sale and a contract of agency by which the agent is authorised to sell or buy on behalf of the principal and make over either the sale proceeds or the goods ....
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.... "dealer" in section 2(1)(e)(iv) of the A.P.G.S.T. Act indicate that the agent is a dealer in respect of each of the principals, that he is deemed to be as many dealers as there are principals and that therefore the total turnover of the petitioners in respect of several principals could not be computed for assessing them, when in fact the turnover of each one of the principals was below the non-taxable limit, i.e. Rs. 10,000, should also have to be kept in view by the Commercial Tax Officer when determining the liability of the petitioner in respect of the auctions held by him. There is no doubt that that principle, which flows from the provisions of section 11, does apply to the case of auctioneers also if they satisfy the conditions already adverted to. At page 506 it was observed: "The agent is only liable in every case in which his principal would be otherwise liable to pay such tax or penalty in respect of that transaction. It will be observed that the correlation is between the agent and the principal, that is, that the transaction in respect of which the principal is held liable can be assessed, and the tax levied and collected in the hands of his agent. The necessary co....