Ramakrishnan, J.:— This revision case is directed against the order of the Sales Tax Appellate Tribunal, Madras, in T.A No. 1449 of 1961. The assessee is Messrs Zackria Sons Private Limited, Government and Public Auctioneers in Madras. They were engaged by the authorities of the Women's Christian College, Madras, to auction the superstructure of a building belonging to the college called “Riverlands Bungalow”. The terms of the agreement are found in the conditions of sale announced by the auctioneers and we will presently refer to them. The auction was held on 1st November, 1959, and the highest bidder was Madar Sahib for Rs. 18,500. A bill was issued to the auction purchaser for the amount less the advance deposited on the date of auction and the auctioneers received the amount from the bidder in full. The department assessed the auctioneers on the above-said bid price as representing a sale and regarding the auctioneers as “dealers”. The appeal to the Appellate Assistant Commissioner and the further appeal to the Sales Tax Appellate Tribunal were rejected and they have come to this Court in revision.

2. The main terms of the agreement between the assessee, the firm of auctioneers, and the principal, viz., the authorities of the Women's Christian College, can be spelt out from the conditions of the auction sale, as well as from the correspondence. On 13th October, 1959, the Bursar of the College wrote to Messrs Zackria Sons Private Limited asking them to arrange to hold the auction sale on Sunday, the 1st November, 1959, at 10-30 A.M at the site. The building was to be kept open for the inspection on the previous Friday between 10 A.M and 6 P.M Further instructions relating to the auction sale were to be had from the architects, engaged by the College, Messrs Prynne, Abbott & Davis, Madras. The auction was to be in one lot to the highest bidder and the Bursar agreed to pay the auctioneers 5 per cent. commission and all advertisement expenses in connection with the sale. The auctioneers were requested to commence advertising as soon as possible. On 17th October, 1959, the auctioneers wrote to Messrs Prynne, Abbott & Davis stating that they had issued the advertisement and sent a draft of the hand-bill for approval. On 21st October, 1959, Messrs Prynne, Abbott & Davis returned the draft auction notice with a few corrections and directed the auctioneers to hold the auction in accordance with the instructions of the Bursar of the College.

3. Now we come to the notice of the auction sale. It contains the following special conditions:

(1) Intending bidders should clearly understand that only the superstructure of “Riverlands Bungalow”……for the purpose of demolition and removal of the materials is now offered for sale;

(2) The highest bid received at the auction will be taken subject to acceptance and confirmation by the architects, Messrs Prynne, Abbott & Davis, who will communicate acceptance or rejection of the highest offer received at the auction on the spot;

(3) The highest bidder shall immediately after Lis being declared the highest bid pay a deposit of 25 per cent. of the amount of his bid, and the bid shall be considered only on such deposit being made;

(4) Immediately after the highest bidder has been declared the purchaser he shall pay the balance of the purchase price within three days from the date of the auction sale; and

(5) Sales tax will have to be paid by the purchaser.

4. We have next the bid list for the auction held on 1st November, 1959. It records the successive bids ending with that of Madar Sahib, who made the highest bid and there is the signtaure of Madar Sahib. The bid is confirmed and witnessed by one R. Kiffin Peterson, Architect. Kiffin Peterson is the person who entered into prior correspondence on behalf of Messrs Prynne, Abbott & Davis. He is therefore the representative of the firm which in turn represented the authorities of the College, at the auction. The bill to Madar Sahib, the highest bidder, was issued by the auctioneers. The auctioneers also wrote to the Principal of the College stating that Madar Sahib might be permitted to remove the superstructure as he had purchased it in the auction. Messrs Prynne, Abbott & Davis then asked the auctioneers to report whether they had collected the full amount. The auctioneers replied stating that they had done so and they asked for instructions as to whether the price should be sent to Prynne, Abbott & Davis or to the Women's Christian College. Prynne, Abbott & Davis then requested the auctioneers to send a cheque made out in favour of the Principal, Women's Christian College. The auctioneers then sent to the Principal, Women's Christian College, a statement of account including their commission charges and expenses of advertisement.

5. Without going at great length into the law bearing upon sales by auctioneers in a public auction of goods or chattels, and the liabilities inter se which arise between the vendor and the auctioneer and the purchaser on the one hand and the auctioneer and the purchaser on the other, a subject on which there has been a considerable volume of decisions of Courts in England as well as in India, it may be stated that so far as this particular case is concerned its facts enable a decision to be given without difficulty about the nature of the transaction. The correspondence as well as the terms of the conditions of sale make out the following: (1) Zackria Sons Private Limited were engaged by the Bursar of the Women's Christian College only for the purpose of advertising the sale and securing the most favourable bid; (2) The Bursar of the Women's Christian College constituted the architects Messrs Prynne, Abbott & Davis, Madras, as their representatives to be present at the auction with authority to accept or reject the highest offer received at the auction, on the spot, as per condition (2) of the special conditions embodied in the notice of auction; (3) when the bids were made Madar Sahib was found to be the highest bidder; (4) Kiffin Peterson, the representative of Prynne, Abbott & Davis, was present at the site and accepted the bid on behalf of the College. The above facts would clearly show that the auctioneer's part was only to advertise and hold the auction. The property in goods passed not on the fall of the hammer as usually happens where there are no special conditions, but it passed only when the representative of the College authorities who was present on the spot accepted the offer of Madar Sahib. The part played by the auctioneers in such a case is not that of an agent of the seller with dominion over the property sold and so empowered to effect a sale of the property to the highest bidder after accepting his bid by causing the hammer to fall. The Tribunal quoted the observations of the Calcutta High Court in Staynor & Co. v. Commercial Tax Officer [1951] 2 S.T.C 111, at page 113. to the following effect:

“An auctioneer has dominion and possession of the goods. It is the stroke of his hammer that completes the sale and transfers property or ownership in the goods to the bidder who purchases the goods. He is the person who is actually engaged in the business of selling the goods. The sales tax is on the transaction of sale and not on the goods. It is because of the sale that the tax is imposed. It is therefore immaterial whether the auctioneer is the owner of the goods or not. I have no hesitation in coming to the conclusion that the petitioners are dealers within the meaning of section 2(c) of the Act.”

6. The Tribunal observed:

“There is no doubt that an auctioneer would be a dealer, if he handled the goods. It is the appellants who received the money and effected delivery. The documents show that they sold in two parts, the only point is that the goods were not in their show room, that would make no difference.”

7. But in the present case, the auctioneers did not handle the goods. They played the part only of an advertiser as well as a crier who brought the highest bidder into contact with the representative of the principal, namely, Prynne, Abbott & Davis, and then the latter by accepting the bid completed the sale. No doubt the auctioneers billed the buyer for the price and received the money. But the correspondence shows that for that purpose they acted only under special instructions from the seller. The circumstance that they received the sale price from the buyer under special instructions from the seller would not show that they became the seller's agent either for accepting the bid or for effecting the transfer of the property in the goods. Both these were done in this case by the seller's agent, Messrs Prynne, Abbott & Davis, and hot by the auctioneers. So far as effecting delivery is concerned, the correspondence shows that Madar Sahib went to the Principal of the Women's Christian College with an authorisation letter which, in the context, was nothing more than a letter of identification issued by the auctioneers and then he was permitted by the authorities of the Women's Christian College to remove the materials. There is, therefore, no question of the auctioneers effecting delivery of the property.

8. Learned counsel appearing for the petitioner-assessee pointed out that the decision of the Calcutta High Court in Staynor & Co. v. Commercial Tax Officer has been referred to and differed from in a subsequent decision of the same High Court reported in Chowringhee Sales Bureau Limited v. State of West Bengal [1961] 12 S.T.C 535.. The learned single Judge of the Calcutta High Court on the latter case, relied to a great extent on the view taken in Benton v. Campbell, Parker and Co., Ltd. [1925] 2 K.B 410., which dealt with the question of the auctioneers' liability when it was found subsequent to the sale, that the principal had no title to the goods sold. The plaintiff in that case purchased in auction a Ford Car belonging to the principal, Saxton Rubber Company, and then resold the car to one Trean. It was later found that the car belonged to one Bellingham, who had let it on hire-purchase to the Saxton Rubber Company on the terms that it should remain his property until all the instalments had been paid. When the car was sold in auction, some instalments remained unpaid. Bellingham finding the car in Trean's possession recovered it. Trean sued the plaintiff and on settlement the plaintiff had to pay £ 40, and costs to Trean. The plaintiff then brought the suit against the auctioneers claiming damages. The main question decided was that the auctioneer who sells goods not as owner but as auctioneer only, though not naming his principal, does not, without more, warrant the title to the goods sold; he does no more than engage that he is in fact instructed and authorised by his principal to sell, but he does not guarantee the validity of the bill of sale, nor the title of his employee to the goods. In the course of the judgment the King's Bench Division referred to some of the main principles involved in auction sales by auctioneers whether for disclosed or undisclosed principals and observed: (at page 415)

“The auctioneer has a special property in the chattel delivered to him for sale, he has a lien on it and on the price of it, he has rights against the buyer, and liabilities to him, which do not accrue to other selling agents. These rights and liabilities do not arise from the contract of sale, Which binds only the buyer and the principal. They arise from the contract which the auctioneer makes on his own account with the buyer ………. If he is an auctioneer to whom a chattel has been delivered for sale he gives both these warranties. He undertakes to give possession against the price paid into his hands, and he undertakes that such possession will not be disturbed by his principal or himself. There may, of course, be other terms in this contract arising on the facts of the case………. But whatever its terms may be, the contract (between the auctioneer and the buyer) is entirely independent of the contract of sale. To that contract (the contract of sale), the auctioneer who sells a specific chattel as an agent is, in my opinion, no party. He has no right to enforce it and is not bound by it……. He is not the seller, nor had he undertaken to discharge the liabilities of a seller except so far as those liabilities may be included in his own contract with the buyer.”

9. After quoting in extenso some of these observations and also observations from other decisions, the learned single Judge of the Calcutta High Court in Chowringhee Sales Bureau Limited v. State of West Bengal came to the conclusion (at page 553):

“…………Where an auctioneer is selling specific chattel and/or goods for an unknown or a disclosed principal and where the buyer knows that the auctioneer is not the owner, the auctioneer cannot be considered as the seller and there is no contract of sale between him and the buyer. In such a case, the auctioneer is not even a party to the sale. Therefore, in such a transaction the auctioneer cannot be made liable to payment of sales tax and the extension of the definition of the word ‘dealer’ in Explanation 2 of section 2(c) of the Bengal Finance (Sales Tax) Act, so as to include an auctioneer is ultra vires and must be declared as void.”

10. We may point out that the definition of “dealer” in section 2(g) of the Madras General Sales Tax Act, 1959, includes an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of buying and selling, supplying or distributing goods on behalf of any principal. But it appears to us that the term “auctioneer” by itself will not be sufficient to connote the nature and full incidents of the activity in which he is engaged. These will necessarily vary with reference to the terms of the contract entered into in each particular case as pointed out in Benton v. Campbell, Parker and Co. Ltd.

“In fact, whenever the question is raised as to the extent of the contract that the auctioneer enters into when he sells goods by auction, this question must be determined, as in other cases, upon the evidence as to the conduct and declarations of the auctioneer, the nature of the subject-matter of the sale, and the surrounding circumstances.”

11. In “Benjamin on Sale”, 8th edition, at page 798, there is this observation:

“It is plain that if the auctioneer acts as a mere crier or broker for a principal, who has retained the possession of the goods, the auctioneer has no implied authority to receive payment of the price.”

12. The question, therefore, as to whether an auctioneer is a dealer within the meaning of section 2(g) of the Madras General Sales Tax Act, 1959, has to be determined not solely by reference to the fact that he describes 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. However, it is plain that for the purpose of section 2(g), the liability to tax is attracted only to the person who carries 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-sections of section 2(g) of the Act can be made liable as dealers. How far this condition exists will be a question of fact in each particular case. We wish to say, with due respect to the Judge of the Calcutta High Court, in the case in Chowringhee Sales Bureau Ltd. v. State of West Bengal that if this aspect of the matter is borne in mind, it will not be necessary to go so far as to declare Explanation 2 to section 2(g) itself as ultra vires the State Legislature in so far as it includes auctioneers.

13. We have referred in detail to the facts of this case earlier in this judgment. They clearly show that the auctioneers 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, Messrs Prynne, Abbott & Davis, who accepted the offer of the highest bidder and completed the contract. The subsequent part played by the agent in recovering the money from the highest bidder will not constitute him a dealer for the purpose of sales tax liability. We, therefore, allow the revision case and set aside the assessment on the assessee on the disputed turnover. No order as to costs.

14. Petition allowed.