- (1.) This appeal by certificate arises from the decision of the High court of Madras in Writ Petition No. 637 of 1967. The petitioner before the High court is M/s. Cement Allocation Co-ordinating Organization, a selling agent of Dalmia Cement (Bharat) Ltd. That Organization will be hereinafter referred to as the 'assessee'. On 28/02/1967, the Deputy Commercial Tax Officer, Lalgudi, wrote to the assessee to show cause why its turnover relating to the price of the packing materials used in packing the cement sold should not be included in its taxable turnover. The assessee instead of showing cause against that proposal moved the High court of Madras under Article 226 of the Constitution to direct the assessing authority not to include that turnover in its taxable turnover. The High court entertained that Writ Petition. It would have been proper if the High court had directed the assessee to put forward its case before the authorities under the Madras General Sales Tax Act, 1959. Now that the High court had entertained the Writ Petition and gone into the merits of the case, it serves no useful purpose to refuse to go into the merits of case.
(2.) In its Writ Petition the assessee had definitely averred that it was functioning as the agent of Dalmia Cement (Bharat) Ltd. and its rights are the same as that of its principal. It was further alleged in the Writ Petition that when cement was sold in packages, the packing charges were separately shown in the bills issued to the buyers. On these grounds the assessee claimed that it is entitled to deduct those charges from its total turnover in view of Rule 6 (c) of the rules framed under the Madras General Sales-Tax Act, 1959. The plea of the assessee that it was the agent of Dalmia Cement (Bharat) Ltd. , during the relevant period was not denied in the return filed by the State of Tamil Nadu. It was also not denied that the assessee had shown the packing charges separately in the bills issued by it to the purchasers of cements On the basis of those admitted facts the High court came to the conclusion that the assessee is entitled to deduct from its total turnover the turnover relating to the packing charges if its principals would have been entitled to deduct the same had they sold the cement in question directly. The operative portion of the High court reads thus : "The petition is allowed but with no costs. We may, however, 589 add that the order we have made in this petition does not in any way prevent the assessing authority from examining the question, after giving a fresh notice, whether the principal himself would be disentitled to exclusion of the value of the packing materials in determining the chargeable turnover. "it is against this order that the State of Madras has come up in appeal to this court.
(3.) The charging S. under the Madras General Sales Tax Act) 1959, is S. 3. It brings-to tax all. taxable turnover of a dealer as defined in the Act. The expression 'dealer' is defined in S. 2 (g). Because of S. 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 S. 3, 4 or 5 shall be levied 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. ";