STATE OF MADRAS v. CEMENT ALLOCATION CO-ORDINATING ORGANISATION
Citation: [1972] 1 S.C.R. 548; 1971 INSC 232
Court: Supreme Court of India
Bench: K.S. HEGDE , A.N. GROVER
Judgment date:
Case summary
1971 INSC 232. Supreme Court of India judgment dated 1971-09-01. STATE OF MADRAS v. CEMENT ALLOCATION CO-ORDINATING ORGANISATION. Read the judgment and case...
Judgment text
550 SUPREME COURT REPORTS STATE OF MADRAS v, CEMENT ALLOCATION CO-ORDINATING ORGANISATION September 1; 1971 [K, S. HEGDE AND A. N. GROVER, JJ. l Madras General Salt'. \' T(/x Act 1959 and Rules-A~ent a 'dealer' under . 'i. 2(9)-PackinR n1nterials deductible front total turnover under r. 6(c) (11)-Agent selling cement on behalf of principal-Price of packinR nu1teriaL shOll'n separately in hf! ls-ARellt is enritled to so111e exe1np~ tions as principcd-Deduction in rrspect of pocking 111aterinl 11 1hen ran he claimed. The assessee (respondent herein) \V~s the . s defined in the Act. The expression "dealer' is defined in section 2 (g). Because of section 2(g) (iii) a Commission agent is also considered as a 'dealer' for the purpose of the Madras General Sales Tax Act, 1959. Hence the taxable turnover of a Commission agent is liable to be brought to tax. The only other provision that we need refer is rule 6 of the Rules framed under the Act.
That rule reads : "The tax or taxes under section 3, 4 or 5 shall be le\·icd on the taxable turnover of the dealer. In determining the taxable turnover, the amounts specified in the following clauses shall, subject to the conditions specified therein, be deducted from the total turnover of a dealer:- ( c) all amounts falling under the following two heads, when specified and charged for by the dealer separately, without including them in the price of the goods sold :- - (i) freight; and (ii) charges for packing, that is to say, cost of packing materials and cost of labour and other such like services. " The first question that we have to consider is whether an agent of a principal who is also a dealer under the Act is entitled to the same rights as his principal has under the Act. Under the general law the agent merely represents his principal. Therefore, while functioning within the scope of the agency he can exercise all the rights which his principal could have exercised.
In fact, in the ca1e of an ordinary agency, the agent merely acts for h1. s principal. This provision must hold good even under the Madras General Sales Tax Act unless otherwise provided therein. The fact that for the purpose of that Act an agent is considered as MADRAS v. CEMENT ORGANISATION (liegde, J. ) 5o! a dealer does not alter the legal position in other respects. Excepting to the extent otherwise provided in the Madras Ge. neral Sales ! 'ax Act the agent must he held to represent lus prrnc1pal while dealing with the goods of his principal; he merely steps into the shoes of his principal. He is entitled to th~ same exemptions as his principal would have got had he dealt with the concerned goods himself. Agents are considered as dealers under the tax so as to effectively enforce th~ provisions of the Act. But that provision does not convert an <. gent into a principal for al! purposes un'. \er the Act.
But the question whether the principal is entitled tu the exemption claimed has been left open by the High Court. That quest10n has to be decided after going into th\:. tacts of the case. How tha< question should be decided has been laid down by this Court in Hyderabad Deccan Cigarette Factory Y. The State of Andhra Pradesh (1). Therein this Court has ruled that it is for the department to establish that a particular turnover con-stitutes a part or whole of the taxable turnover. For establishing that fact the department may call upon the assessee to produce before it such material which the assessee has in his possession or under his control. The department before coming to the conclusion that a particular turnover is taxable must take into consideration all the facts and circumstances of the case.
On the question whether certain packing charge:; are exempt from tax, the authorities under the Act before deciding that question have to take into consideration the various aspects mentioned in that judgment. This is what the Court oberved therein : "In the instant case, it is not disputed that there wer~ no express contracts of sale of the packing materials between the assessee and its customers. On the facts, could such contracts be inferred'? The authority concerned should ask and answer the question wheihcr the parties in the instant case, having regard to the circumstances of the case, intended to sell or buy the packing materials, or whether the subject-matter of the contracts of sale was only the cigarettes and that the packing materials did not torm part of the bargain at all, but were used by the seller as a conven-ient and cheap vehicle of transport.
He may' also have to consider the question whether, when a trader in cigarettes sold cigarettes priced at 'l particular figure for <1 specified number and handed them 0ver to a customer in a cheap card-board container of insignificant value, he intended to sell the cardboard container and (! )SIC 11 p, bl~. tne customer intended to buy the same '! It is not possi-ble to state as a proposition of law that whenever particular goods were sold in a contain~r the parties did not intend to sell and buy the container also. Many cases may be visualized where the container is compa-ratively of high value and sometimes even higiler than that contained in it Scent or whisky may be sold ll in c0stly containers. Even cigarettes may be sold in silver or gold caskets. It may be that in such cases the agreement to pay an extra price for tht; container may be more readily implied. In the present case, if .
we may say so with respect, all the authorities, including the High Court, dealt with the queslion as a question of Jaw . without considering the relevant factors which would . sustain or negative any such agreement. The determining factor in all such cases is whether the buyer buyer directly or by implication agree to buy and the seller to sell separately the packing material. In this case we are not called upon to· go into that question. We lllerely indicated the approach as a matter of guidance. The question for decision by us lies within a narrow colllpass and that question is whether the assessee is entitled to. claim exemption in respect of packing charges if his principal could have claimed it had it sold the cement itself. On that question, we agree with the view taken by the High Court. For the reasons mentioned above, this appeal fails and the same is dismissed. No costs. G. C. Appeal dismissed. 1J40Sup. CI/71-2500--(S<c. VII )-26-9-72-G 1PI'.
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