S.C. Manchanda, J.
1. This is a further and better statement of the case under Section 11(5) of the U.P. Sales Tax Act (hereinafter referred to as the Act). The question referred is :-
Whether any transactions between the cultivators and the purchasers in the presence of the assessee, the acts done by the assessee considered along with the acts done by the cultivators and the purchasers amount to passing of the property in the goods to the purchasers by the assessee ?
2. The material facts are these: The assessees are dealers in foodgrains, oil-seeds and cotton as commission agents. In the assessment proceedings the claim put forward was that in respect of certain transactions the assessee was not a 'dealer' within the meaning of Section 2(c) of the Act inasmuch as they had no authority to sell the goods and had acted as mere brokers bringing together the buyers and sellers and as such they were not liable to be assessed to sales tax. According to the assessees their modus operandi was that cultivators brought their goods to the assessees for finding buyers for sale and the goods were never.entrusted to them for sale. Most of such transactions were completed on the very day on which the goods were brought, but in those cases where the transactions could not be completed the owners of the goods remained at the shop of the assessees till the next day when the buyers could be found and the goods sold. On the basis of these facts it was asserted that the transactions were always completed in the presence of the sellers and the buyers. On the other hand, the Sales Tax Officer found that the purchas were issued by the assessees both to the purchaser and the seller and they realised the price of the goods from the buyer and paid the same to the seller after charging their commission and that sometimes the price was realised afterwards. It was also admitted that in some cases the assessees got banks to advance money to the purchasers against the stock pledged. The Sales Tax Officer therefore held the assessee to be a dealer and assessed it as such. The Judge (Appeals) confirmed the assessment.: The Judge (Revisions) relying on a decision of the Mysore High Court in 'Messrs Ayyanna Setty & Sons and Ors. v. State of Mysore [1961] 12 S.T.C. 731 allowed the revision, set aside the assessment order holding that. in those cases in which, sales were completed in the presence of buyers and sellers and the price was settled with the approval of the sellers, an inference will be drawn that the sellers themselves entered into those sale transactions and the applicant acted merely as a broker without having any authority to sell those goods. In allowing the revision, he directed a fresh assessment to be made in accordance with law. Hence, this reference at the instance of the Commissioner of Sales Tax.
3. The explanation to Section 2(c) of the. Sales Tax Act which defines 'dealer' reads :
A factor, a broker, a commission agent or...any other mercantile'agent by whatever name called, and whether of the same description as hereinbefore mentioned or not, who carries on the business of buying or selling goods on behalf of his principals shall be deemed to be a dealer for the purposes of this Act.
4. Subsequently; by U.P. Act 29 of 1961, the following: words were added 'or through whom the goods are sold'. As these additional words were not present in the explanation, at the relevant time it was necessary that the broker or the commission agent should be carrying on the business of buying or selling goods :on behalf of :his principals in order to fall within the definition of a 'dealer' as given: in Section 2(c) of the Act. A broker who merely brings the buyer, and seller together, but does not carry on the business of buying or selling goods, on behalf of his principals would not be a 'dealer'. :
5. The main contention of the learned Junior Standing Counsel is that as the purchas were issued, directly by the assessees both to the purchaser and the seller, that in itself was sufficient to prove that the contract of sale was by the assessees, and, therefore, they were not acting as mere brokers but were buying and selling goods on behalf of their principals. This factor alone, in our judgment, cannot be sufficient to make the assessee a dealer. What has to be established is whether the assessee had custody or possession over the goods actually or constructively and whether he had any authority to sell the goods in his own name. In Corpus Juris Secundum, Volume 12, page 8, the distinction between a 'broker' and a 'dealer' and 'other agents' is Clearly brought out :...
A broker is distinguished from an agent, in .that a broker holds himself out for employment by others, and acts as an intermediate negotiator between the parties to a transaction, and in a sense is the agent of both parties, whereas the element of exclusiveness of representation of the principal by which he is employed enters into the employment of an agent.
Every broker is in a sense an agent, but every agent' is not a broker,..Whether one is an agent or broker is a question necessarily dependent on the particular facts of each case.
6. Then again at page 10 of the Corpus Juris Secundum we find 'a 'broker' is strictly speaking, a middleman or intermediate negotiator between the parties ; and his duty is merely to bring the principals together to negotiate with each other for the purpose of making a contract or to find and produce a purchaser or seller able, ready and willing to accept his client's terms or to effect a transaction with his client upon any terms satisfactory to both; or, if so authorised, to make the contract for them. When acting in such capacity, the is, as explained, a common agent of both of the parties to the transaction and is not in a fiduciary relation of an agent to his principal, but must favour neither the one nor the other of the parties between whom he effects a transaction.
7. It is clear that no single factor can be determinative of the question whether a person is a mere broker or a buyer or seller on behalf of another. The issuing of purchas by the assessees to both the purchaser and the seller may only mean that they are acting as broker for both the parties inasmuch as they are bringing the purchaser and seller together and purchas are issued by them only for convenience and record. In any event, the issuing of purchas cannot possibly override the other factors which point clearly to the relationship of broker and client and not that of a buyer and seller on behalf of others. Those factors are, that the goods are brought by the sellers themselves, and sold in their presence and at the price stipulated by them on the same day or the latest on the next day. The property in the goods, at least, with regard to such sales never passed to the assessee. It is only in respect of such transactions that the Judge (Revisions) has directed to be excluded as not being purchases and sales for and on behalf of any one. It is, therefore, not necessary to consider whether in respect of the sales which were not effected on the same day or the next day, the property in those goods passed to the assessee or not. In respect of all other transactions including those where advances were obtained from banks for the sellers by pledging the stock the assessee has been held to be a dealer. The view taken by the Judge (Revisions) is a reasonable one. Nor can it be said that he has misdirected himself in directing that the assessee should not be held to be a dealer in respect of those transactions which have been completed between the buyers and sellers on the same day and the price settled with the approval of the sellers.
8. The view that we are taking is supported by a decision of the Mysore High Court in Ayyanna Setty & Sons v. State of Mysore [1961] 12 S.T.C. 731 where the facts were more or less similar to those obtaining in the present case. It was there held, that commission agents who are merely brokers who bring the buyers and sellers together and establish privity of contract between them are not dealers within the meaning of the Act and are therefore not liable to sales tax. The facts there were that the ryots brought their goods to the shop of the assessee and unloaded them. The prospective buyers were then sent for or they came of their own accord. The goods were inspected by the purchasers and the prices fixed after discussion between the parties; after settlement of price, the goods were weighed and the assessees issued purchas to both the ryots and the purchasers made out in their own name. The prices collected from the purchasers by the assessees either the same day or later were paid over to the ryot. The assessee got a commission from both the purchasers and the ryot. The contention that the manner in which the broker maintained accounts or prepared the purchas or that the fact that the broker makes himself responsible for the payment of the price to the ryot was negatived as being merely incidental and unsubstantial and the crux of the matter was the presence of the purchaser and seller who settled the price face to face albeit, with the assistance of the broker. We are in respectful agreement with the view expressed by the Mysore High Court.
9. The learned Junior Standing Counsel relied upon the decision of the Andhra Pradesh High Court in Anakapalli Co-operative Marketing Society v. State of Andhra Pradesh [1966] 18 S.T.C. 328 the decision in Thakur Das Hukum Chand v. Commissioner of Sales Tax [1963] 14 S.T.C. 646, 649 and Sarju Pd. Pritam Lal v. Judge, Revisions, Sales Tax [1963] 14 S.T.C. 884,888. These cases, however, are distinguishable and do not assist the department. The Andhra Pradesh case on which strongest reliance was placed only needs to be considered. In that case it was found as a fact that the assessee-society maintained two sets of accounts, one a regular account and the other a clandestine account, and it used to sell jaggery in the open auction at higher prices than those fixed under the Food Control Order. In the peculiar facts found in that case it was held that the society was a dealer and the transactions were sales within the meaning of the Act. In that case the facts found were that the assessee recorded transactions carried on by it as a commission agent as if it purchased goods from sellers and sold them as its own goods to buyers, paid sellers the price of the goods and received from the buyers their price. Selling of goods was not simultaneous with receiving them. On these facts the Judge (Revisions) had held that they were dealers, and the only question was whether there was material to support that finding. The High Court held that the facts found could legally support the finding given by the authorities below that the assessee bought and then sold the goods and was not merely bringing buyers into contact with sellers and arranging transactions between them. For the reasons given above, the question referred is answered in the negative and against the department. The reference is answered accordingly. The department will pay the costs of this reference which we assess at Rs. 100. Counsel's fee is also assessed at Rs. 100.