Bal Raj Tuli, J. - (1.) THE Petitioner is a firm carrying on the business of crushing cotton seeds into oil at Jullundur and is registered as a dealer under the Punjab General Sales Tax Act 1948, (hereinafter referred to as the Act). For the purposes of its business, it purchases cotton seeds from commission agents at various places in the State of Punjab and outside. For the year 1965 -66, the Petitioner -firm claimed that the purchases made by it from the commission agents could not be regarded as purchases in its hands and were, therefore, not taxable. Oil -cakes are produced by way of by product from the crushing of the oil which are sold by the Petitioner -firm in the market. The firm claimed that oil cakes were fodder and, therefore, were exempt from payment of sales tax. The Assessing Authority did not accept these contentions of the Petitioner -firm and passed the assessment order on June 26, 1969. Without filing an appeal under the Act, the Petitioner -firm has filed the present petition challenging that order.
(2.) WRITTEN statement has been filed by the Excise and Taxation Officer, Jullundur, who made the assessment. The first point of law argued by the learned Counsel for the Petitioner is that the purchases made by the Petitioner -firm from the commission agents cannot be termed purchases and, therefore, the firm is not liable to pay any purchase tax thereon. The value of the purchases of oil seeds made from commission agents was Rs. 17,02,208.97 in that assessment year. The argument of the learned Counsel is that there was no contract of purchase or sale between the commission agents and the Petitioner -firm and the goods passed from the commission agents to the Petitioner -firm under a contract of agency and not under a contract of sale. The commission agents had purchased the oil seeds from third parties without disclosing that the purchases were being made by the commission agents for and on behalf of the Petitioner -firm. On these facts, it is pleaded that the commission agents were the purchasers liable to pay purchase tax and not the Petitioner -firm. Reliance is placed on a judgment of the Allahabad High Court in Panna Lal Babu Lal v. Commissioner of Sales Tax, U.P., Lucknow, (1956) 7 S.T.C. 722, wherein the learned Judges observed: A commission agent when he agrees to work for his principal as the latter's agent and to obtain for his principal the goods which the latter wants, undertakes a duty which he has to discharge by purchasing the goods required and supplying them to his principal. The transfer of the goods purchased by him to his customer is an act done in the discharge of his duty as an agent. The contract between the principal and the commission agent is not, in our opinion, one of sale but of agency, and the transfer of the property in the goods is not a sale within the meaning of the Sale of Goods Act. In that case, the Assessee was a firm of commission agents which purchased goods and supplied them to their constituents and were paid commission on the goods so supplied. The firm was assessed to a tax on the turnover of the goods supplied to its constituents. On behalf of the Assessee -firm it was pleaded that in supplying the goods to their principals they only acted as their agents and not as sellers of the goods to them. This contention was accepted by the High Court. In my opinion, this judgment is of no assistance to the Petitioner -firm. Under Section 5(3) of the Act, purchase tax is payable in respect of the declared goods (oil seed including cotton seeds are declared goods) at the stage of purchase of such goods by the last dealer liable to pay tax under this Act. In Niamat Rai Milkh Raj Ahuja, v. State of Punjab and Anr., (1968) 21 S.T.C. 365, it was held by a Division Bench of this Court that: It is thus apparent that the last purchase by a dealer liable to pay tax under this Act will be the purchase by the dealer who himself consumes it or sells it to a consumer or to a dealer in the course of inter -State trade or commerce so that as long as the goods remain with him in the condition he purchased them, he does not become liable to pay the tax. Every dealer will thus be able to know whether he is liable to pay the tax under the Act or not and the stage having been prescribed, no machinery is required to be prescribed to ascertain that stage. It is not denied by the Petitioner -firm that the oil seeds were consumed by it in its factory by crushing them into oil and oil cakes. The firm is a registered dealer engaged in the business of manufacture of oil from cotton seeds and other oil seeds. It thus acted as the consumer of those goods and thus made the last purchase thereof in the State. If the commission agents are taken to have acted as agents for the Petitioner -firm, then the purchaser of oil seeds from third parties was not the commission agent but the Petitioner because the agent acted for and on behalf of the principal. The agent in such a case could only be considered as the storer of those goods on behalf of the Petitioner -firm till they were actually supplied to it. Viewed in that light the Petitioner -firm made the last purchase of those oil seeds and was, therefore, liable to pay the purchase tax.
(3.) THE second way of looking at the matter is that the commission agents purchased goods in the market and supplied them to the Petitioner -firm in accordance with its orders. It is not claimed that the commission agents were acting only On behalf of the Petitioner -firm. They carried on their business of commission agents on behalf of their constituents who placed orders with them for the supply of cotton seeds or other oil seeds and goods. They purchased those goods in bulk in the market and supplied them to their constituents according to their orders. The supply of the goods to the Petitioner firm by the commission agents squarely falls within the definition of 'purchase' as given in Section 2(ff) of the Act which is as under: 2(ff). 'purchase' with all its grammatical variations or cognate expressions, means the acquisition of goods specified in Schedule 'C' for cash or deferred payment or other valuable consideration otherwise than under a mortgage, hypothecation, charge or pledge. All the ingredients mentioned in this definition of "purchase" exist in the transaction between the commission agents and the Petitioner -firm. The Petitioner -firm acquired cotton seeds and other oil seeds from the commission agents by transfer of those goods in consideration of a price which had already been paid in advance or was paid after the goods were supplied or partly before and partly after. The goods were not supplied under a mortgage, hypothecation, charge or pledge. From that point of view, the transfer of goods by the commission agents to the Petitioner -firm for a consideration amounted to purchase by the Petitioner -firm and this being the last purchase by a dealer in the State, the Petitioner -firm has been rightly held liable to pay the purchase tax on those purchases.;