Full Judgment
Govinda Bhat, C.J.
1. This is a revision petition preferred by the State under section 23(1) of the Karnataka Sales Tax Act, 1957, against the order of the Sales Tax Appellate Tribunal, Bangalore, dated 13th April, 1973, in S.T.A. No. 242 of 1970, allowing the appeal of the respondent holding that the respondent had acted as the agent of the State Government in the matter of purchases and sales of foodgrains and was therefore exempt from sales tax.
2. The assessment relates to the period from 25th October, 1965, to 12th November, 1966. During the said period, the respondent assesses acted as the agent of the Government in procuring foodgrains and distributing the same. The assessing authority in the assessment order stated that the assessee was acting as procuring and distributing agent in jawar, paddy and other foodgrains and food products on behalf of the Government of Mysore, but relying on the circular issued by the Commissioner of Commercial Taxes, dated 7th February, 1967, which granted exemption only in respect of sales made after 1st January, 1967, held that the turnover during the relevant period was not exempt. A sum of Rs. 18,861.66 was assessed as the tax payable by the assessee. That order of the Commercial Tax Officer was affirmed on appeal by the Deputy Commissioner of Commercial Taxes. In the appeal preferred by the assessee to the Sales Tax Appellate Tribunal, it was common ground that in the matter of procurement and distribution of foodgrains, the assessee acted as the agent of the State Government. This is what the Tribunal has stated in paragraph 6 of its order :
'It is clear that the distribution of foodgrains during the relevant period was done through the instrumentality of the State for the general good of the public and for that purpose the institutions or persons like the appellants acted like agents of the Government. There is no dispute about the fact that during the relevant the appellants acted as purchasing and selling agents having no volition in the matter of purchases or sales, but acting at the direction and behest of the Government.'
3. Before us, the learned Senior Government Advocates, Sri Chandrakantaraj Urs, submitted that the assessee was not the agent of the Government in the matter of procurement and sale of foodgrains. It is not open to the State to contend that the assessee was not acting as the agent of the State Government when that fact was not disputed before the Tribunal. We have to proceed on the common case submitted by the parties that there is no dispute that during the relevant period, the assessee acted as the purchasing and selling agent of the State Government.
4. The question is whether the respondent assesses is liable to be assessed to tax under section 5(1) of the Act.
5. The levy of sales tax on sale of foodgrains is made by sub-section (1) of section 5 of the Act, which states thus :
'Every dealer shall pay for each year tax on his taxable turnover at the rate of three per cent. of such turnover :
Provided that if and to the extent to which such turnover relates to gur, pulses including their dhals, flour and husks, wheat (including atta, maida, soji and bran), bread, paddy, rice (including parched rice and beaten rice and bran), ragi, jola, maize, bajra, navane, samey, and gunny bags, burdens (including batar) and hessian cloth, the tax shall be calculated at the rate of one and a half per cent. of such turnover.'
6. In order to attract the levy under the charging section, it is necessary to show that the assessee was a 'dealer'. The term 'dealer' has been defined in section 2(k) of the Act thus :
''Dealer' means any person who carries on the business of buying, selling, supplying or distributing goods, directly or otherwise, whether for cash or for deferred payment, or for commission, remuneration, or other valuable consideration, and includes -
(i) an industrial, commercial or trading undertaking of the Government of Mysore, the Central Government, a State Government of any State other than the Government of Mysore, a local authority, company, a Hindu undivided family, an Aliyasanthana family, a firm, a society, a club or an association which carries on such business. [(ii) to (v) omitted as not necessary.]
7. From the above definition, it is clear that the State of Mysore (Karnataka) does not come within the meaning of the term 'dealer'. Section 19 of the Act lends support to that view. Section 19 says :
'Notwithstanding anything contained in this Act, the Government of Mysore shall, in respect of any sale of goods effected by them, be entitled to collect by way of tax any amount which a registered dealer effecting such sale would have been entitled to collect by way of tax under this Act.'
8. What is provided by section 19 is that the State Government, when it sells goods, is entitled to collect by way of tax any amount which a registered dealer effecting such sale would have been entitled to collect. In other words, when the State Government collects any amount by way of tax, it is not levying sales tax; it is collecting, in addition to the sale price, an amount which a registered dealer effecting such sale would have been entitled to collect. In view of section 19, there can be no doubt that the State Government is not a 'dealer' under the Act. The distribution of foodgrains is also not done by any undertaking of the State Government. Therefore, when the State Government is not liable to tax under section 5(1), its agent cannot be made liable since the liability of the agent is co-extensive with that of his principal.
9. The view taken by the Tribunal that the respondent is not liable to pay tax for the relevant period is therefore right.
10. Accordingly, this revision petition fails and is dismissed with costs. Advocate's fee Rs. 100.
11. Petition dismissed.