# SUPREME COURT REPORTS [1963) G. GILDA TEXTILE AGENCY v. STATE OF ANDHRA PR,\ DRSH - **Citation:** [1963] 2 S.C.R. 248 - **Court:** Supreme Court of India - **Decided:** 1963 - **Case number:** Civil Appeals Nos. 397 and 398 of 1961 - **Bench:** S. K. Das, i\I. HIVAYATULLAH, J. C. SH.Au - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/supreme-court-reports-1963-g-gilda-textile-agency-v-state-of-andhra-pr-drsh-2682 - **Pages:** 7 ## Headnote tla/,. Tar-Agent of non-r'8ident pnncip<1l-f,iabilityMadrM General Salts Tar Act, /.9.W (.~fad. fl of t.9.19), <. 14A. The appellant was an a!jCnt in Andhra Pradesh of certain non-resident princip:-ils \\"ho \\'Cre dealers in cloth. It received commission in so:nc cases nn the order~ bnoked and in others on all the sales eff~ctl:'cl by the principals in the territory. One kind of transactinns it carried on in course of its bwiness r~latetl to goods sold by ito; principal to buyers in the State. The appellant in these transactions, l>rsides booking orders, received the railway receipts from the outside principals, handed them order to the buyers and sJme times collected and transmitted the amount to the outside principal.c;. The appellant was assessed to sales tax on its turnover for the years 1954-55 and 1955-56. The question wa• whether in carrying on such transactions the appellant was a d1·aler within s. l 4A of the Madras General Sales Tax Act, 1939. The Tribunal held that the appellant was such a dealer and the High Court in affirming that decision held that the non-resident principals were doing the business of sell in~ in the State and the sales in question were by the appellant either on behalf the principal or on its own behalf and that the appellant was in either cass liable. Held, that the High Court ha'.! taken the right view of the matter. Section 14A of the Act made the agent fictionally liable as a dealer in the circumstances as specified by it, and the agent was liable irrespective of w~c_ther the tum--0vor of its business was more or less than the m1n1mum prescribed by the Act. M ahadayal Premchandra v. Oommercial 1'a:r: O!fiur OalctUla, [1959] S. C.R. 551, distinguished. Crvn. APPELLATE JURISDICTION: Civil Appeals Nos. 397 and 398 of 1961. Appeals by special kavo from the judgment and order dated Eepttmber 19, 191i8, of the Andhra ·- .. - - 2 S.C.R. SUPREME COURT REPORTS 2411 Pradesh High Court in Tax Revision Cases Nos. 62 and 63of1956. ~ B. Sen and B. P. Mahe,shwari, for the appellants. K. N. Rajagopal Sa&tri and D. Gupta for the respondenta. 1962. April 19. The Judgment of the Court was delivered by HIDAYATULLAH, J.-These two appeals with special leave have been filed hy Messrs. G. Gilda Textile Agency, Vijayawada, against the State of Andhra Pradesh. 'l'hey are directed against a common order of the High Court of Andhra Pradesh in two revisions filed under s. 12-B(l l of the Madras General Sales Tax Act, 1939 (9 of 19:39). The matter relates to the levy of sales tax from the appellant on its turn-over for the years, 1954-55; and 1955-56. The appellant was an agent of several non-resident prin· cipals, on whose behalf it booked orders and dealt with the indents. There were agreements between the non-rtisident principals and the appellant, and three such agreements contained in letters have been produced as instances, and are marked Exs. A-3, A-3(a) and A-3(b). Under these agreementa, the appellant was appointed as indenting agent in Andhra Pradesh for cloth merchants, who, admittedly, resided and carried on business outside Andhra Pradesh. It was required to book orders and to forward them to the principals, receiving commission on sale of goods despatched to Andhra Pradesh. In some cases, this commission was only availabfo on the orders booked by the appellant, and in others, on all the sales effected by the princi- ~ pals in this territory. The appellant did business in three aifferent ways, which have been described aa three separate categories in the case. In the first IU6S G. Gilda Tutile Agency v. Sia11 of Andhra Pradesh H idayc,tullah J • 1HJ G,GaM Tutit. il1111CJ v. si.11 •f fnl'fMri PP••slt 2&0 SUPREME OOUR'I' BBPoRTB [1963] category, the appellant took delivery of the goods from the railway, stocked them in it.a own godowne, fonnd buyers and delivered the goods to the buyers. Thie category of eales was held to be within the ,1Jadras General Sa.Jes Tax Act and the appellant, liable to the tax. Th ## Text ]f62 Abril 19. 248 SUPREME COURT REPORTS [1963) G. GILDA TEXTILE AGENCY v. STATE OF ANDHRA PR,\ DRSH (S. K. DAS, i\I. HIVAYATULLAH and J. C. SH.Au, JJ.) tla/,. Tar-Agent of non-r'8ident pnncip<1l-f,iabilityMadrM General Salts Tar Act, /.9.W (.~fad. fl of t.9.19), <. 14A. The appellant was an a!jCnt in Andhra Pradesh of certain non-resident princip:-ils \\"ho \\'Cre dealers in cloth. It received commission in so:nc cases nn the order~ bnoked and in others on all the sales eff~ctl:'cl by the principals in the territory. One kind of transactinns it carried on in course of its bwiness r~latetl to goods sold by ito; principal to buyers in the State. The appellant in these transactions, l>rsides booking orders, received the railway receipts from the outside principals, handed them order to the buyers and sJme times collected and transmitted the amount to the outside principal.c;. The appellant was assessed to sales tax on its turnover for the years 1954-55 and 1955-56. The question wa• whether in carrying on such transactions the appellant was a d1·aler within s. l 4A of the Madras General Sales Tax Act, 1939. The Tribunal held that the appellant was such a dealer and the High Court in affirming that decision held that the non-resident principals were doing the business of sell in~ in the State and the sales in question were by the appellant either on behalf the principal or on its own behalf and that the appellant was in either cass liable. Held, that the High Court ha'.! taken the right view of the matter. Section 14A of the Act made the agent fictionally liable as a dealer in the circumstances as specified by it, and the agent was liable irrespective of w~c_ther the tum--0vor of its business was more or less than the m1n1mum prescribed by the Act. M ahadayal Premchandra v. Oommercial 1'a:r: O!fiur OalctUla, [1959] S. C.R. 551, distinguished. Crvn. APPELLATE JURISDICTION: Civil Appeals Nos. 397 and 398 of 1961. Appeals by special kavo from the judgment and order dated Eepttmber 19, 191i8, of the Andhra ·- .. - - 2 S.C.R. SUPREME COURT REPORTS 2411 Pradesh High Court in Tax Revision Cases Nos. 62 and 63of1956. ~ B. Sen and B. P. Mahe,shwari, for the appellants. K. N. Rajagopal Sa&tri and D. Gupta for the respondenta. 1962. April 19. The Judgment of the Court was delivered by HIDAYATULLAH, J.-These two appeals with special leave have been filed hy Messrs. G. Gilda Textile Agency, Vijayawada, against the State of Andhra Pradesh. 'l'hey are directed against a common order of the High Court of Andhra Pradesh in two revisions filed under s. 12-B(l l of the Madras General Sales Tax Act, 1939 (9 of 19:39). The matter relates to the levy of sales tax from the appellant on its turn-over for the years, 1954-55; and 1955-56. The appellant was an agent of several non-resident prin· cipals, on whose behalf it booked orders and dealt with the indents. There were agreements between the non-rtisident principals and the appellant, and three such agreements contained in letters have been produced as instances, and are marked Exs. A-3, A-3(a) and A-3(b). Under these agreementa, the appellant was appointed as indenting agent in Andhra Pradesh for cloth merchants, who, admittedly, resided and carried on business outside Andhra Pradesh. It was required to book orders and to forward them to the principals, receiving commission on sale of goods despatched to Andhra Pradesh. In some cases, this commission was only availabfo on the orders booked by the appellant, and in others, on all the sales effected by the princi- ~ pals in this territory. The appellant did business in three aifferent ways, which have been described aa three separate categories in the case. In the first IU6S G. Gilda Tutile Agency v. Sia11 of Andhra Pradesh H idayc,tullah J • 1HJ G,GaM Tutit. il1111CJ v. si.11 •f fnl'fMri PP••slt 2&0 SUPREME OOUR'I' BBPoRTB [1963] category, the appellant took delivery of the goods from the railway, stocked them in it.a own godowne, fonnd buyers and delivered the goods to the buyers. Thie category of eales was held to be within the ,1Jadras General Sa.Jes Tax Act and the appellant, liable to the tax. The appellant does not qulllltion this part of the decision. The seoond category was in which it merely booked orders and forwarded theII\ to Bombay and the principals sent the goods with the railway receipts through the bank to the purohasers in Andhra Pradesh. The connection of the appellant was not considered Auffioient to constitute it the "dealer", as defined in the Madras General Salee Tax Aot, and suoh sales were omitted from the turnover. No dispute, therefore, arises about this category. The third category related to goods sold by the outside dealers to buyers in the St&te. The appellant in these transactions, besides booking orders, received the railway receipts from the outside principal, handed them over to the buyers and sometimes oolleoted and tr&DSmitted the amounts to the out.side principal. The period involved is oovered by the Sales Tr.x Validation Act, 1956 (7 of 1956), and no ques· tion under the Constitution arises. The only question is whether the appellant comes within s. 14-A of the Madras General Sales Tax Act, and it liable to t&x Act, a.a a dealer. It may be pointed out that the appellant did !>«>* produce any correspondence between it and the JICD.lreBident principals Qr the covering letters whioh mmt have been sent along with the railway receipts. The Tribunal under the Madras General Sales Tax Aot, therefore, oame to the conclusion that the railway receipts whioh had been sent, must have been endorsed by the sellers either in favour of the appellant or in blank, to enable the appellant to claim the goods from the railway or to negotiate them. The Tribunal, before, held that the appellant ·- I • 2 S.C.R. SUPREME COURT REPORTS 251 must be deemed to be a "dealer" under s.14-A and thus liable to tax under that section. Section 14-A of the Act reads as follows : "In the case of any person carryinl? on the business of buying and sellinl? goods in the State but residing outside it (hereiuafter in this section referred to as a 'non-resident'), the provisions of this Act shall apply subject to the following modifications and additions, namely:. (i) In respect of the' business of the non· resident. his a.gent. residing in the State shall be deemed to be the dealer. (ii) The agent of anon-resident shall be assessed to tax or taxes under this Act at the rate or rates leviable thereunder in respect of the busineBS of such non-resident in which the agent is concerned, irrespective of the amount of the turn.Over of such business being less than the mini· mum specified in Section 3, sub-sec· tion (3). (iii) Without prejudice to his other rights, any agent of a non-resident who is aaseB11ed . under this Act in respect of the busine&11 of such non-resident may retain out of any moneys · payable to the non-resident by the a.gent, a sum equal to the amount of the tax or taxes 888essed on or paid by the agent. (iv) Where no tax would have been· pay. able by the non-resident in respeot of this business in the Stat.e ·by rea· llOll of ib.e turnover tboroof'beinf I• 1912 IJ. GiJU Talilt Ag111q •• Stol