Decided on November 26,1971



NARASIMHAM,C.J. - (1.)THE petitioners in all these cases are resident-dealers who sold goods through their local commission agents, and have submitted certificates in respect of the said turnover to the effect that the tax due on the sales effected on their behalf has paid by the commission agents. To the extent of the tax due under section 5 of the Andhra Pradesh General Sales Tax Act (hereinafter to be referred to as the Act), they have been exempted from paying the tax in view of the certificates. But, in respect of the additional tax on the turnover payable under section 5-A of the Act at the rate of 1/4th paisa on every rupee of the turnover of Rs. 3,00,000 or more, the petitioners, who are the principals, have been assessed.
(2.)THE petitioners have contended before the taxing authorities, as also before the Tribunal, that their agents only are liable, and not they, the principals, in view of the express provisions of section 11 of the Act. Their plea having been rejected by the taxing authorities and the Tribunal, they have raised this question in these revision petitions, which is common to all these petitions filed under section 22 (1) of the Act.
Thus, the only question of law which arises for our consideration is whether in view of section 11 of the Act, additional tax payable under section 5-A in respect of sales effected by an agent on behalf of the principal can be assessed or levied against the principal ? Before we scrutinise section 11 of the Act in this regard, we would clarify the settled position of law that the additional tax on turnover under section 5-A of the Act is of the same character as the tax under section 5 : vide Addepalli Surya Ramachandra Rao and Co. v. The State of Andhra Pradesh and Others ([1969] 24 S. T. C. 133 ). A further point which needs mention is that the principals are primarily liable to tax on their turnover, and section 11 of the Act is only a convenient mode of collection of tax : vide Irri Veera Raju and Others v. Commercial Tax Officer, Tadepalligudem, and Another ([1967] 20 S. T. C. 501 ). We would now peruse section 11, which is in the following terms :

" Section 11. Liability of resident principal and his agent to pay tax.- The tax or penalty due under this Act, in respect of a transaction of sale or purchase effected by any agent on behalf of a principal who is a resident of the State shall be assessed or levied and collected from the agents, in every case where such principal would be otherwise liable to pay such tax or penalty in respect of that transaction. Where the agent has paid the tax or penalty in respect of such transaction he may, without prejudice to his other rights to recover from his principal such tax or penalty, retain out of the moneys payable to the principal, a sum equal to the amount of tax or penalty so paid by him : Provided that the tax or penalty assessed or levied on or due from the agent, may be recovered by the assessing authority from the principal, instead of from the agent. Explanation.- For the purposes of this section the expression 'agent' shall have the meaning assigned to the expression 'dealer' in sub-clause (iv) of clause (e) of sub-section (1) of section 2. "

(3.)THE learned counsel, Sri G. V. R. Mohan Rao, relies on the express language of the section and in particular the use of word "shall" and seeks to interpret the section as mandatory. He would therefore say that the tax shall be assessed or levied and collected from the agent only. No doubt, prima facie it appears so, but there are other consideration bearing on the question of interpretation of this provision - whether it is mandatory or directory only. There are numerous cases where the word "shall" has been construed as merely directory. Lord Esher, M. R. , observed that the word "'shall' is not always obligatory. It may be directory" : vide In re Lord Thurlow; Ex parte Official Receiver ([1895] 1 Q B. 724 at 729 (A. I. R. 1961 S. C. 1480 at 1485 ). This rule of interpretation has been adopted by the Supreme Court in M/s. Sainik Motors v. State of Rajasthan (A. I. R. 1961 S. C. 1480 ). It is not so interpreted if the context or the intention otherwise demands. The same rule of interpretation is evident from Raza Buland Sugar Co. Ltd. , Rampur v. The Municipal Board, Rampur (A. I. R. 1965 S. C. 895 ). This is what occurs at page 899 :
" The question whether a particular provision of a statute which on the face of it appears mandatory - inasmuch as it uses the word 'shall' as in the present case - or is merely directory cannot be resolved by laying down any general rule and depends upon the facts of each case and for that purpose the object of the statute in making the provision is the determining factor. The purpose for which the provision has been made and its nature, the intention of the Legislature in making the provision, the serious general inconvenience of injustice to persons resulting from whether the provision is read one way or the other, the relation of the particular provision to other provisions dealing with the same subject and other considerations which may arise on the facts of a particular case including the language of the provision, have all to be taken into account in arriving at the conclusion whether a particular provision is mandatory or directory. "


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