Judgment:
ORDER
M.P. Chandrakantaraj Urs, J.
1. The assessee was assessed for the years 1974-75 and 1975-76 by the Commercial Tax Officer, Channapatna on the return filed by him. He claimed exemption in respect of certain turnover to be his turnover as a commission agent having acted as agent of the agriculturists who produced groundnuts which he passed on later to the registered dealers. But on verification of his books of accounts at the time of assessment, the Commercial Tax Officer, Channapatna found that he had actually made purchases of groundnut from the unregistered dealers or agriculturists and thereafter again sold such purchased groundnuts to other registered dealers and in his bill of sale, showed 2 per cent as commission. Therefore, he claimed that he was a commission agent and not a first purchaser. That contention was rejected and such turnover which was actually against the payment to the agriculturists or unregistered dealers, was brought to tax holding the assessee as the first purchaser in the State. Aggrieved by that order, assessee filed an appeal to the Deputy Commissioner of Commercial Taxes (Appeals), Bangalore Division, Bangalore. The Deputy Commissioner passed order dated 28th October, 1977, allowed the appeals in so far as they related to the turnover of tax in respect of which assessee had claimed that he acted as only commission agent. That order of the Deputy Commissioner was revised by the Commissioner of Commercial Taxes in Karnataka by his order dated 14th April, 1980. That came to be challenged in this Court in Sales Tax Appeal Nos. 11 and 12 of 1980. We may, at this point, state a particular feature in the order of the Deputy Commissioner of Commercial Taxes, i.e., while for the year 1974-75 he exempted partly the turnover, for 1975-76, he allowed the exemption totally. This Court in Sales Tax Appeal Nos. 11 and 12 of 1980 disposed of on 19th January, 1984, remanded the matter solely on the ground that the adjournment motion made by the assessee before the Commissioner resulting in refusal of such adjournment had prevented him from adducing material in support of the cause shown by him against the revision. Before doing so, their Lordships observed as follows :
'6. The point for decision in these appeals is whether the assessee made purchases on his own account and subsequently sold the same or whether he acted as a commission agent on behalf of the agriculturists principals. Though there is a mention of the commission of 2 per cent in the bills issued by the appellant, it is not sufficient to hold that the transactions were on behalf of the agriculturists. If assessee was really a commission agent and the said goods were sold subsequently for and on behalf of the agriculturists/principals, then such a transaction would not be exigible to tax under the Act. But, if the assessee had made purchases himself and sold the very same goods subsequently, he becomes the first purchaser liable to tax under the Act. For this purpose, the assessee has to establish that the goods in respect of which he acted as commission agent were sold subsequently.
It is seen that the assessee moved for adjournment of the case when it was posted for final disposal before the Commissioner on the ground that the writ petitions, challenging his jurisdiction under section 22-A in similar cases, were pending in this Court. The Commissioner did not grant the adjournment sought. We think that the cause shown by the appellant ought to have been accepted by a granting adjournment for some time, if not till the disposal of such writ petitions. The counsel for the assessee now submits that he would produce before the Commissioner the relevant material to prove that the assessee himself did not purchase the goods. In the circumstances, we feel it is necessary to remand the case to the Commissioner for a fresh disposal after hearing the appellant.'
2. The position after the remand is no different. Whatever material the assessee produced did not dislodge the fact that he had paid full consideration to the unregistered dealers and took possession of the groundnut so purchased. It was only thereafter that he negotiated fresh sales to registered dealers and in his bill of sale, claimed 2 per cent commission against such sales. That, as observed by this Court, would make the assesses-appellant before us the first purchaser in respect of those transactions where he had paid full value of the commodity, i.e., the groundnut which he purchased from the unregistered dealers or agriculturists. The Commercial Tax Officer had correctly pointed out that sale through a commission agent must necessarily have three persons involved in it : the seller, the middleman and the purchaser. But, if in spite of those purchases made from unregistered dealers or agriculturists, there was no middleman other than the assessee himself who paid the consideration which Mr. Katageri before has contended was only advance, then the middleman really did not exist in those transactions and therefore, they must be held to be sales from agriculturists or unregistered dealers in favour of the assessee.
3. Mere form of bill of sale or method of accounting cannot alter the nature and correctness of the transaction between agriculturists and the assessee in respect of such turnover for which he had paid the cost or price of groundnut on his own account. Therefore, he was the first purchaser and the Commissioner had come to the correct conclusion that he was not eligible to the exemption as held by the assessing authority.
4. Therefore, total exemption given by the Deputy Commissioner of Commercial Taxes was correctly set aside by the Commissioner in the suo motu revision.
5. Therefore, there is no merit in the appeal. It is dismissed.
6. In the view we have taken in S.T.A. No. 24 of 1986, S.T.A. No. 7 of 1987 also stands dismissed for the same reasons.
7. Appeal dismissed.