Decided on November 25,1954

STATE Respondents


- (1.) These two appeals arise out of a suit instituted by one Immidi Satyanarayana, who is the appellant in Second Appeal No. 2100/50 and respondent in second Appeal No. 2248 of 1950 against the State of Madras for a refund of sales tax of Rs. 366-10-4 wrongfully collected from him for the year 1946-47, for a declaration that the demand of composition fees of Rs. 347 and Rs. 470 for 1944-45 and 1945-46 respectively was illegal and ultra vires, and for a further declaration that the plaintiff was not a dealer liable to be taxed under the Madras General Sales Tax Act (hereinafter called the Act). The suit was filed in the following circumstances.
(2.) The plaintiff is a manufacturer of a tonic called Gripe Tonic and also an importer of Eucalyptus oil. He does not sell these articles directly to customers, but has constituted Messrs. V.S.Narayana & Sons as his agents for the sale of the Gripe Tonic and the Eucalyptus oil on commission basis. The commercial Taxes Department assessed the plaintiff on the turnover of the Commission agents in respect of these goods on the basis that the agents became liable to be taxed for the reason that they failed to take out a licence under section 8 of the Act, and that did not exonerate the plaintiff who was the principal from payment of tax in respect of those sales. The plaintiff was also required to pay a compounding fee of Rs.347 and Rs.470 for the years 1944-45 and 1945-46 respectively for failure to submit the returns as required by section 9 of the Act, an offence punishable under section 15 with a fine which may extend to Rs. 1000 but which could be compounded under section 16 of the Act. The plaintiff denied the liability to pay the tax on the ground that he was not a dealer within the meaning of the Act, and that secondly the sales were already taxed and the taxes could not be collected twice over. For the same reasons it was contended by him that he was not liable to submit returns and therefore he could not be called upon to pay the compounding fees under section 16 of the Act. He paid the tax under protest; so far as the compounding fee was concerned, he said that he would pay it without prejudice to his rights to have this liability determined in a proper forum.
(3.) The suit was resisted by the State Government inter alia on the grounds that the plaintiff was a dealer within the meaning of the Act, and as such liable to pay the tax, and that he could not claim exemption from taxation by reason of the taxes having been collected from the agent who failed to obtain a licence under section 8 of the Act. As regards the compounding fees, the plea was that he being a dealer, it was obligatory on his part to submit the returns by virtue of section 9 of the Act.;

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