# THE STATE OF BOMBAY v. M/S. RATILAL V ADILAL AND BROS

- **Citation:** [1961] 2 S.C.R. 367
- **Court:** Supreme Court of India
- **Decided:** 1961
- **Case number:** Civil Appeal No. 429 of 1959
- **Bench:** J. L. Kapur, M. Hiday.A.Tullar, J. C. Shah
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-state-of-bombay-v-m-s-ratilal-v-adilal-and-bros-2236
- **Pages:** 4

## Headnote

Sales Tax-' Dealer'-Meaning of-Appeal by special leaveWhenavailable-Bombay Sales Tax Act, I953 (Bom. III of I95J),
ss. 27(I), (b), (c), 3o(I), 34(I) and (z)-Constitution of India,
Art. I36.
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
Noveniber r5.
The Stale of
Bo1nbay
v.
M/s. 1-latilal
Vadilal ~ B1·os.
368
SUPREME COURT REPORTS
[1961]
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.

## Text

2 S.C.R. SUPREME COURT REPORTS
367
a.ppea.l in this Court. The compromise in question is
intended to be filed in this Court for the purpose of M/s. Swadeslii
enabling the parties to request this Court to pass an Cotton Mills Co.,
order in terms of the said compromise. The procedure Ltd., Kanpur
for obtaining such an order which has to be followed
. v.
is the procedure prescribed by the rules of this Court, P
Rka;des;wa0•1h
just as if a compromise was reached before the Triburas a_.,,.
ers
nal the procedure to be followed before it would becajendragadkar J.
the procedure prescribed by its rules. Therefore we
have no doubt that the compromise in question cannot
attract the procedure prescribed by r. 5(1).
The result is that the finding recorded by the Tribunal that the compromise in question is valid is
obviously right a.nd must be confirmed.· Since it is
found that the compromise in fact has ta.ken place
and is otherwise valid, we have no hesitation in directing that an order should be drawn in terms of the
said compromise in the present appeal.
Order accordinyly.
THE STATE OF BOMBAY
v.
M/S. RATILAL V ADILAL AND BROS.
(J. L. KAPUR, M. HIDAY.A.TULLAR
and J. C. SHAH JJ.)
Sales Tax-' Dealer'-Meaning of-Appeal by special leaveWhenavailable-Bombay Sales Tax Act, I953 (Bom. III of I95J),
ss. 27(I), (b), (c), 3o(I), 34(I) and (z)-Constitution of India,
Art. I36.
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
Noveniber r5.
The Stale of
Bo1nbay
v.
M/s. 1-latilal
Vadilal ~ B1·os.
368
SUPREME COURT REPORTS
[1961]
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.
0. 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 ].
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 Ta;K passed under s. 27 of the Bombay Sales Tax
Act, 1953.
The respondents, Ratilal V adilal & Bros., are
commission a.gents 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 ca.lied
"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.
2 S.C.R. SUPREME COURT REPORTS
369
It appears that no action was taken to ask for a
I960
reference to the High Court of Bombay under s. 34(1) n. State of
read with ss. 30(1) and (2) of the Act. We have fre.
Bombay
quently noticed that all the remedies which are open
v.
to an appellant are not first exhausted before moving
Mfs. Ratilal
this Court. Ordinarily, this Court will not allow the Vadilal & Bros.
High Court to be bypassed i~ this manner, and t~e Hiday;;:;;lah J.
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
ma.de 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. curBUB 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 a.ct and
to cha.rg~ a commission of one rupee per ton of coal.
One N analal 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, Burha.r, 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 a.mount 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 a.s mere
" middlemen " between the Colliery and Ka.rsandas.
The respondents stated that their business was a.long
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.
41
Ig6o
The State of
Bombay
v.
M /s. Ratilal
Vadilal &- Bros.
Hidayatullah j.
370
SUPREME COURT REPORTS
[1961]
"Dealer" in the Bombay Sa.Jes Tax Act, 1953,
is defined a.s 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 coal.
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 Control Order.
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 Karsandas, though through the agency of the respondents.
The respondents also, when they ma.de 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 Karsa.ndas. 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, uor 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 it.
In the result, the appeal fails and will be dismissed
with costs.
Appeal dismiBaed.