JUDGMENT Satish Chandra, J.
1. In both these references the following common question of law has been referred to us under Section 11(1) of the U.P. Sales Tax Act:
Whether on the facts and circumstances of the case and the material on the record, as discussed by me in my revisional order dated 6th March, 1969 and by the appellate court in its order dated 27th January, 1966, the applicant-auctioneer is a 'dealer' so as to make him liable to pay sales tax under the U.P. Sales Tax Act.
2. The assessment years involved are 1962-63 and 1963-64.
3. The assessee was an auctioneer. He conducted auctions of trees, fruit crops, unserviceable materials and household goods of certain Government departments. He was assessed on his turnover relating to the auction of trees and unserviceable materials and household properties. The assessee filed an appeal and urged that since, in view of the contract between him and the Government departments, he had no authority to sell, he was not a "dealer" as defined by the U.P. Sales Tax Act and was hence not liable to sales tax. The Judge (Appeals) accepted this contention and annulled the assessment. The Commissioner of Sales Tax felt aggrieved and filed a revision. The Judge (Revisions) held that after the amendment of the definition of the term "dealer" by the U.P. Amending Act No. 7 of 1959, an auctioneer was expressly included in the definition of the "dealer" and as such the assessee, who was admittedly an auctioneer, was a dealer as defined by the U.P. Sales Tax Act and was liable to pay sales tax. On this view he allowed the revision and restored the assessment orders for both the years.
4. The relevant facts as found by the Judge (Appeals) have not been upset by the Judge (Revisions). The facts found by the Judge (Appeals) are :
He did not sell the goods. There was no contract of sale between the buyer and the appellant. He goes to different places of his principal and makes auction. He was only paid for his services. The property as given in the assessment order belonged to the Corporation or Government and their officers could not (sic) accept the bid and he had even no right to accept these bids. The amount was directly paid to the Government or the Corporation and privity of contract was between his principal and the buyer and not with him.
5. The Judge (Appeals) remarked that the departmental representative could not challenge these facts of the case.
6. Learned counsel for the assessee has invited our attention to the contract between him and the Government departments relating to the auction. It was provided in the contract that the assessee will not close the bidding of individual items till he was allowed to do so by the technical staff of the department present on the spot. The departmental technical staff was to guide the assessee on the point whether the articles should be auctioned in lots or individually. The assessee has nothing to do with the acceptance or rejection of the bids. The agreement also provided that the money received as 25 per cent. security deposit would be directly received in the Government account and the assessee will have nothing to do with it. The assessee was to be paid a commission of 0.50 p. per cent. of the amount fetched by the articles auctioned and only after the total sale proceeds are credited to Government. It is clear that the auctions were conducted by the assessee in accordance with these terms of the contract. Under it he had no authority to accept the bids made by the intending purchasers. That could be done only by the departmental representatives and staff. On these facts it appears to us that the assessee did not bring about any sale. He only brought the intending purchasers in contact with the relevant staff of the Government and it was the Government representative who completed the sale by accepting the offered bids. The assessee had no authority, general or special, to effect a sale.
7. Clause (c) of Section 2 of the U.P. Sales Tax Act defines a "dealer" to mean a person who carries on the business of buying or selling goods in Uttar Pradesh. Under the explanation an auctioneer, who carries on the business of buying and selling goods on behalf of his principal or through whom the goods are sold or purchased shall be deemed to be a "dealer". Thus before an auctioneer can be held to be within the purview of the explanation, it shall have to be found that he was carrying on the business of buying and selling goods on behalf of his principal or that through him the goods were sold. In view of the special terms of the contract between the assessee and the Government departments, it could not be said that the assessee sold the goods on behalf of the principal or that the goods were sold through the assessee. The goods were sold by the department itself or through its own representatives. The assessee was only instrumental in bringing the best and highest offers to the departmental representatives with a view to enable them to accept or reject them. Such an auctioneer would not, in our opinion, come within the purview of the explanation so as to be termed as a "dealer".
8. In Zackria Sons Private Limited v. State of Madras [1965] 16 S.T.C. 136, the Madras High Court was faced with a similar situation. It was held that the question whether an auctioneer is a dealer has to be determined not solely by reference to the fact that he described himself as an auctioneer, but has to be considered in the light of the particular contract between him and the purchaser and the surrounding circumstances. The liability to tax is attracted only to a person who carried on the business of buying and selling, supplying or distributing the goods and this condition has to pre-exist before any of the various categories of persons (which include an auctioneer) referred to in the Sub-clauses of that section: can be made liable as dealers. Where an auctioneer functioned only as an agent to secure the most advantageous bid for the principal in the auction and thereafter it was the principal's agent who accepted the offer of the highest bidder and completed the contract, the auctioneer would not fall within the definition of dealer in Section 2(g) of the Act. In that case the auctioneer recovered the money from the highest bidder under the special instructions from the seller. It was held that this would not constitute him a dealer. In the instant case even the sale price was recovered by the Government representative direct and the assessee was not entitled to demand the money from the intending purchasers. The decision of the Madras High Court would apply to the facts of the present case. The assessee could not, in our opinion, be deemed to be a dealer as defined by the Act.
9. We would answer the question referred to us in the negative, in favour of the assessee and against the department. The assessee would be entitled to his costs which we assess at Rs. 100 for each case. The fee of the learned counsel is also assessed at the same figure.