The State of Bombay Vs. M/S. Ratilal
Vadilal and Bros  INSC 197 (15 November 1960)
CITATION: 1961 AIR 1106 1961 SCR (2) 367
CITATOR INFO :
D 1962 SC1326 (4) R 1973 SC 804 (11)
Sales Tax--'Dealer'--Meaning of--Appeal by
special leave--When available--Bombay Sales Tax Act, 1953 (Bom. III of 1953),
ss. 27(1), (b), (c), 30(1), 34(1) and (2)--Constitution of India, Art. 136.
One Nanalal Karsandas, who was a brick manufacturer,
held a priority certificate for purchasing coal under the Colliery Control
Order and purchased a certain quantity of coal from M/s. S. G. Rungta Colliery
through the respondents who were commission agents. The respondents applied to
the Collector for determining whether they could be described as
"dealers" under the Bombay Sales Tax Act, 1953. The Collector held
that they were dealers but the Sales Tax Tribunal held otherwise. No step was
taken thereafter for a reference to the High 368 Court under ss. 34(1) and
30(1) of the Act. On appeal by the State of Bombay by special leave, Held, that
the respondents could not be described as "dealers" under the Act as
the nature of their business as disclosed by them did not show that they were
carrying on the business of selling goods in the State of Bombay but were only
commission agents arranging sales to other persons.
The proper course for the appellant was to
move the High Court and exhaust all his remedies before invoking the
jurisdiction of this court under Art. 136 of the Constitution.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 429 of 1959.
Appeal by special leave from the judgment and
order dated December 6, 1957 of the former Bombay Sales Tax Tribunal in Appeal
No.6 of 1956.
C. K. Daphtary, Solicitor-General of India,
H. R. Khanna and R. H. Dhebar, for the appellant.
N. A. Palkhivala, S. P. Mehta, J. B.
Dadachanji, Rameshwar Nath and P. L. Vohra, for the respondents.
1960. November 15. The Judgment of the Court
was delivered by HIDAYATULLAH, J.-The State of Bombay has appealed to this
Court with special leave, against an order of the Sales Tax Tribunal, Bombay,
dated December 6, 1957, by which the Tribunal allowing the appeal before it,
set aside an order of the Collector of Sales Tax passed under s. 27 of the
Bombay Sales Tax Act, 1953.
The respondents, Ratilal Vadilal & Bros.,
are commission agents doing business as clearing and transport contractors.
On June 25, 1954, they applied to the
Collector of Sales Tax, Bombay, under ss. 27(a), (b) and (c) of the Act
describing the nature of their business, citing one instance thereof, for
determination of the question whether they could be called "dealers "
within the Act. The Collector by his order held that they were dealers, and
were required to register themselves under the Act. On appeal, the Tribunal
held otherwise, and hence this appeal by the State of Bombay.
369 It appears that no action was taken to
ask for 'a reference to the High Court of Bombay under s. 34(1) read with ss. 30(1)
and (2) of the Act. We have frequently noticed that all the remedies which are
open to an appellant are not first exhausted before moving this Court.
Ordinarily, this Court will not allow the High Court to be bypassed in this
manner, and the proper course for an appellant is to exhaust all his remedies
before invoking the jurisdiction of this Court under Art. 136. In the present
case, however, the matter is simple, and the learned counsel for the respondent
requested us to determine the question, stating that his client who was a small
trader and who made the application for the clarification of the law, would be
dragged through Courts once again, if we were to decide this appeal on this
short point. In view of this, though we decide this appeal, we must not be held
to lay down a cursus curiae for this Court.
The matter relates to a time after the
Colliery Control Order, 1945, came into force. Under that Order, no person
could acquire or purchase coal from a colliery except under authority of the
Central Government for which purpose he had to obtain a priority certificate
from the State Coal Controller. Under the scheme of the Order, del credere
agents were allowed to act and to charge a commission of one rupee per ton of
One Nanalal Karsandas, a brick manufacturer,
was allotted a priority certificate in respect of 22 tons of coal on June 17,
1954. He dealt with M/s. S.C. Rungta Colliery, Burhar, through the respondents.
The consignment was in the name of Karsandas, but the bill was sent by the
Colliery to the respondents, and the respondents, in their turn, made out a
bill in which they charged, in addition to the amount of the bill of the
Colliery, a sum of Rs. 22 as their commission.
The liability to pay the Colliery rested upon
the respondents, but they claimed to be acting as mere "middlemen "
between the Colliery and Karsandas. The respondents stated that their business
was along these lines with other constituents also, and asked the Collector to
determine whether they could be described as "dealers" within the
Act, and required registration.
370 "Dealer " in the Bombay Sales
Tax Act, 1953, is defined as follows:
"dealer " means any person who
carries on the business of selling goods in the State of Bombay, whether for
commission, remuneration or otherwise..." (Explanation omitted).
It would appear that to be a dealer, the
person must carry on the business of selling goods in the State of Bombay.
The short question in this case, therefore,
was whether the respondents were carrying on such a business in respect of
The scheme of the Control Order shows that no
sale of coal could take place except to a person holding a certificate.
A sale otherwise was in contravention of the
The certificate which has been produced in
the case, though made out in the name of the respondents, shows the consumer as
the consignee. It is thus plain that there was no sale by the Colliery to the
respondents, but directly to Karsan- das, though through the agency of the
respondents. The respondents also, when they made out the bill to Karsandas,
mentioned that he was the consignee, and that they were only charging their
" middlemen " commission. In these circumstances, it is difficult to
hold that the Colliery sold coal to the respondents, and that they, in turn,
sold it to Karsandas. There were no two sales involved; there was only one
sale, and that was by the Colliery to the consumer. The respondents never
became owners by purchase from the Colliery, because the Colliery would not
have sold coal to them, nor could they have bought it unless they had obtained
a certificate. The position of the respondents was merely that of agents,
arranging the sale to a disclosed purchaser, though guaranteeing payment to the
Colliery on behalf of their principal. In view of what we have said, no
business of selling coal was disclosed in the instance cited before the
Collector, and the order of the Tribunal was correct on the facts placed before
In the result, the appeal fails and will be
dismissed with costs.