MANCHANDA, J. - (1.) THIS is a further and better statement of the case under section 11(5) of the U.P. Sales Tax Act (hereinafter referred to as the Act). The question referred is :- "Whether any transactions between the cultivators and the purchasers in the presence of the assessee, the acts done by the assessee considered along with the acts done by the cultivators and the purchasers amount to passing of the property in the goods to the purchasers by the assessee ?"
(2.) THE material facts are these : The assessees are dealers in foodgrains, oil-seeds and cotton as commission agents. In the assessment proceedings the claim put forward was that in respect of certain transactions the assessee was not a "dealer" within the meaning of section 2(c) of the Act inasmuch as they had no authority to sell the goods and had acted as mere brokers bringing together the buyers and sellers and as such they were not liable to be assessed to sales tax. According to the assessees their modus operandi was that cultivators brought their goods to the assessees for finding buyers for sale and the goods were never entrusted to them for sale. Most of such transactions were completed on the very day on which the goods were brought, but in those cases where the transactions could not be completed the owners of the goods remained at the shop of the assessees till the next day when the buyers could be found and the goods sold. On the basis of these facts it was asserted that the transactions were always completed in the presence of the sellers and the buyers. On the other hand, the Sales Tax Officer found that the purchas were issued by the assessees both to the purchaser and the seller and they realised the price of the goods from the buyer and paid the same to the seller after charging their commission and that sometimes the price was realised afterwards. It was also admitted that in some cases the assessees got banks to advance money to the purchasers against the stock pledged. The Sales Tax Officer therefore held the assessee to be a dealer and assessed it as such. The Judge (Appeals) confirmed the assessment. The Judge (Revisions) relying on a decision of the Mysore High Court in Messrs Ayyanna Setty and Sons and Others v. State of Mysore ([1961] 12 S.T.C. 731), allowed the revision, set aside the assessment order holding that in those cases in which sales were completed in the presence of buyers and sellers and the price was settled with the approval of the sellers, an inference will be drawn that the sellers themselves entered into those sale transactions and the applicant acted merely as a broker without having any authority to sell those goods. In allowing the revision, he directed a fresh assessment to be made in accordance with law. Hence, this reference at the instance of the Commissioner of Sales Tax. The explanation to section 2(c) of the Sales Tax Act which defines "dealer" reads : "A factor, a broker, a commission agent or ..... any other mercantile agent by whatever name called, and whether of the same description as hereinbefore mentioned or not, who carries on the business of buying or selling goods on behalf of his principals shall be deemed to be a dealer for the purposes of this Act."
(3.) SUBSEQUENTLY , by U.P. Act 29 of 1961, the following words were added "or through whom the goods are sold". As these additional words were not present in the explanation at the relevant time it was necessary that the broker or the commission agent should be carrying on the business of buying or selling goods on behalf of his principals in order to fall within the definition of a "dealer" as given in section 2(c) of the Act. A broker who merely brings the buyer and seller together but does not carry on the business of buying or selling goods on behalf of his principals would not be a "dealer".;