Law:

Section:

JUDGMENT: The Judgment of the Court was delivered by Ramaswami, J. The appellant is a partnership firm carrying business in bamboos, timber and firewood at Gokavaram in the State of Andhra Pradesh. The firm had been registered as a dealer under the Andhra Pradesh General Sales Tax Act (No. VI of 1957), hereinafter referred to as the 'Act'. For the assessment year 1962-63, the appellant submitted a return showing a gross turnover of Rs. 13,89,130.70 P and claimed exemption on a turnover of Rs. 13,68,174.39 P which according to the appellant represented the amount of sales effected by its commission agents and sales of firewood. By a notice dated November 28, 1963, the Commercial Tax Officer, Rajahmundry called upon the appellant to show cause as to why it should not be assessed for the year 1962-63 on a turnover of Rs. 13,89,130.70 P at 2 per cent. Eleven items were comprised in the notice. Item No 1, relating to a turnover of Rs. 96,527.10 P was under the firewood account. It was alleged by the appellant that it paid the single point tax at 2 per cent to the Forest Department on the amounts for which the forest goods were taken in auction. As regards items 2 to 11 the appellant claimed exemption on the ground that its agents, Messrs. Kusuma Arjayya and Batlanki Veera Venkayya, Rajahmundry, paid the tax. The case of the appellant was that L1 Sup. C.I./68-16 it sent goods for sale to its commission agents and under the contract of agency the commission agents were empowered to pay sales-tax and had paid the same directly to the Sales Tax Department. In accordance with the usual commercial practice the commission agents collected Dharmam on the sales conducted by them and appropriated those collections for charitable purposes. The commission agents furnished accounts to the appellant but in these accounts the amounts collected towards sales-tax and Dharmam were not specifically shown as it was understood between the parties that the amounts collected towards sales tax would be remitted to the Sales Tax Department and the amounts collected towards Dharmam would be credited to the charity account of the commission agents and suitably utilised by -them. Aggrieved by…

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