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19. The word "agent" is not defined in the Act, and the definition in Section 182, Contract Act, may therefore be adopted. "Agent" according to that section is a person employed to do any act for another or to represent another in dealings with third persons. The person for whom such act is done, or who so is represented, is called the "principal." So that from this definition it is obvious that there is no rule restricting the meaning of the word "agent" merely to one instance of his acting for another, viz., where he acts as a "conduit pipe" in bringing the seller and buyer together. He may represent another in the matter of sale and he may equally represent a principal in the matter of purchase. The two may not be connected and may not form part of the same transaction of a sale and purchase brought about by the agent between two persons. From this discussion, it follows that a commission agent who sells or buys on behalf of the principal is not a "dealer" and is not liable to taxation in respect of the purchases and sales effected by him on behalf of the principal at his instance and that such transactions do not constitute his turnover.

44. The expression 'dealer' has many shades of meaning varying with the context. The player who deals the cards at a cardtable and the trader who buys and sells merchandise are both dealers in the etymological sense. The word 'dealer' is used in combination with other words, e.g., watch dealer, horse dealer, corn dealer, cloth dealer, etc. In common parlance, "dealer" means a trader who buys and sells goods. We are not concerned with the etymological sense but with the statutory definition of ''dealer" in Section 2 (b) of the Act which contains no reference to agents, either of known or unknown principals, but merely defines "dealer" as a person who carries on the business of buying or selling goods. The definition does not point to the person who physically handles or delivers the goods in the course of the buying and selling operations as the "dealer". The business contemplated is the business of the person who buys goods or whose goods are sold and he may conduct the business personally or through an agent. If he employs an agent the business is still the business of the principal and not of the agent. The learned Judge, if I may say so with respect, has paraphrased the definition of "dealer" in Section 2 (b) of the Act by importing into it the phraseology employed in Section 8. I am of the opinion that a commission agent or any other agent who buys and sells goods on behalf of his principal as a mere agent, was never caught in the net of taxation by Section 3 and therefore did not require to be set free by Section 8. Section 8 is not a charging section but an exempting section and it is not permissible to infer or imply a liability to tax from Section 8 when Section 3, the charging section, does not impose the burden. I am also unable with great respect, to understand why a broker or commission agent who gets a commission or brokerage both from the buyer and the seller of the goods at the same time and in respect of the same transaction should lose the benefit of Section 8, as suggested by the learned Judge, even if such a broker or commission agent were liable to be treated as a "dealer" which, I have held he is not, a brokerage or commission taken from the seller and buyer of goods with the knowledge of both is nonetheless an "agreed commission." Mack J. who was also a party to the above decision with Govinda Menon J. rested his conclusion entirely on an interpretation of Section 8 of the Act, the implication being that commission agents would be chargeable to sales tax but for the exemption in Section 8. The learned Judge observed :

"The language of Section 8 appears to us plain and to present no difficulty. Nor is any nice question of breach of contract or agency involved, the point for determination being merely whether within the scope of Section 8 there is a liability to pay sales tax. The section clearly exempts from sales tax in the first place a commission agent who buys for a known principal specified in his accounts for an agreed commission or brokerage."

The learned Judge apparently assumed that Section 8 was both a charging and exempting provision, while in fact Section 3 is the only charging section and Section 8 is merely an exempting provision. In In re Narasingamuthu Chettiar, I.L.R. (1949) Mad. 357 : (A. I. R. (36) 1949 Mad. 116 : 50 Cr.L.J. 118) Govinda Menon J. sitting as a single Judge observed that where "even though the ownership in the articles did not vest in such a person (the agent) he purported to have possession of the same and transferred such possession to the purchaser for consideration which the purchaser pays only on the business that the seller was the owner himself, in such cases the transaction will be the selling of the goods and the person who effects the same is a dealer." Evidently the learned Judge had in his mind the common case of a mercantile agent in possession of the principal's goods selling them and realising the price. This passage in the judgment was relied upon by the appellant to support his contention that an agent for sale would be a "dealer" within Section 2 (b) chargeable under Section 3 of the Act. If I enter a cloth shop and purchase dhoties and pay for them, I may deal only with the shop boy. He takes the price in cash and delivers the goods. I may not know who the owner of the goods is or the owner may never attend the shop. But I do know that the shop boy is not the owner of the goods though he has the owner's authority to sell and deliver the goods and collect the price. The goods are in the custody of the shop boy, he has authority to sell the goods, he sells and delivers the goods, and he takes the price. He is not in my opinion a "dealer" as defined in Section 2 (b) but is merely an agent of the dealer. The business is not that of the shop boy but of the owner of the goods which are sold by the shop boy. I fail to see what the belief of the purchaser as regards the position of the person actually selling and delivering the goods, whether he is the owner or an agent, has got to do with the determination of the question as to who is the "dealer" within the Act. With due deference to the learned Judge, I am unable to accept his observations as an authority for the position that an agent who is merely in possession of the goods or who is entrusted by the owner with goods for sale and who sells them, is a "dealer" who would be chargeable to tax under Section 3, unless he gets himself exempted by taking out a licence and conforming to the conditions imposed in Section 8 of the Act. If in a case like this you treat the agent as a dealer, is it to be said that the principal is not a dealer? Or is it to be said there are two dealers or two different sellers in respect of a single sale ? Such a result could not have been contemplated by the Legislature. Chandrasekhara Aiyar J. in the Public Prosecutor v. Narasimha Reddi, 1947-2 M. L. J. 220 : (A.I.R. (35) 1948 Mad. 102 : 49 Cr. L. J. 45) held in a brief judgment that a broker or commission agent who did not buy or sell goods on his own account was not a "dealer" within Section 2 (b) of the Act. I am in respectful agreement with this conclusion.

46. It is true that the respondents have taken out licences under Section 8 in respect of their commission agency business. In accordance with the custom of the groundnut trade at Adoni they charged a small brokerage from buyers as well as sellers of groundnuts for whom they acted as commission agents. It is also true that they charged a small sum as rusum or mahimai for charity and establishment expenses in addition to the commission proper of a quarter-anna in the rupee. Those amounts are also shown in their accounts and in my opinion, they really form part of the commission they collected though distributed under separate beads. There is no provision in the Act or the rules fixing the maximum brokerage permissible and it is left to be settled by contract between the broker or commission agent and his principal or by the usage of the trade. It may be that it is a vicious practice for brokers to charge brokerage both from the buyer and the seller of goods in respect of one and the same transaction. But it is a matter of notoriety that the practice is deeply rooted in many places and in several trades. The licence issued to the plaintiffs in this case, which we have perused, does not prevent such a mode of earning brokerage or commission. Apparently, under the impression that the licences prevented such levy of double commission, the plaintiffs alleged in the plaint that they were commission, agents for the sellers though, in fact, they collected a commission both from the buyer and the seller of groundnuts. Indeed the Government did not dispute the right of the plaintiffs to collect this double commission in the written statement filed in the case. There is no transgression of the terms of the licence issued to the plaintiffs, and even if there was any, it would not have the effect of reducing the commission agents to the position of "dealers" as defined in the Act and making them chargeable under Section 3 (1) of the Act.