Sarkar, J.— These three appeals arise out of a common judgment passed by the High Court of Kerala in three revision petitions made to it under Section l5B(l) of the General Sales Tax Act (Kerala) (Act 11 of 1125 M.E). These revision petitions related respectively to the assessment orders for the years 1953-54, 1954-55 and 1957-58.
2. The respondent, a firm of traders, claimed in the assessment to Sales Tax for the aforesaid years exemption of certain sales of kerosene by it under a licence granted under Section 9 of the Act. That claim gave rise to these appeals. Section 9 so far as relevant, is in these terms:
“Government may on application ... „ license any person under this section who for an agreed commission........... sells on behalf of known principals specified in his accounts in respect of each transaction and may exempt from the tax ... Such of his transactions as are carried out in accordance with the terms and conditions of his licence.”
3. It appears that during the relevant years the respondent had obtained the kerosene under an agreement, with Caltex (India) Ltd. made on June 1, 1952. This is not in dispute. The respondent contended that under this agreement it was appointed agent of Caltex (India) Ltd. for sale of kerosene on commission and on that basis claimed exemption under Section 9. The appellant State said that the agreement was one for sale of kerosene to the respondent. It is agreed that if under that agreement the respondent had purchased the kerosene from Caltex (India) Ltd., as an owner, then the sales by it of the kerosene could not have been on behalf of Caltex (India) Ltd., as its agent and it would not be entitled to exemption under Section 9.
4. The first question, therefore, to which, the authorities below addressed themselves, apparently with the consent of the respondent, was whether under the agreement of June 1, 1952 the respondent was a purchaser of the kerosene from Caltex (India) Ltd. The first authority, the Sales Tax Officer, held on an interpretation of the agreement that the respondent was a purchaser of the kerosene from Caltex (India) Ltd. On appeal by the respondent the appellate Commissioner also took the same view. The respondent then appealed to the Sales Tax Appellate Tribunal which confined the opinion of the authorities below it.
5. The respondent thereafter moved the High Court of Kerala by the aforesaid revision petitions. It raised the following three questions for the decision of the High Court:
“(1) Whether on a true construction of the agreement dated 1-6-1952 between the assessee and Caltex (India) Limited, the kerosene supplied by Caltex (India) Ltd., to and sold by the petitioner was as purchaser or as Commission Agents.
(2) Whether the respondent is precluded from levying and collecting sales tax on the disputed turnover on account of the fact that a licence under Section 9 of the Sales Tax Act was granted to the petitioners.
(3) Is the order of the sales tax Appellate Tribunal, Kerala, Triven-drum in the above matter sustainable in view of the failure of the Tribunal to decide Question (2) above?”
The High Court observed as follows:
“It is clear that, should we answer the first, question in petitioner's favour, a finding would be necessary on whether he has observed the terms of his licence under Section 9; for, it is not disputed, that to obtain the benefit under the Section, a dealer must not only show his being an agent, but also having observed the terms of the licence. In these circumstances, the cases have to be remanded; adjudications of the other questions become unnecessary. Nor it should be disputed that should the petitioner be really a purchaser, any erroneous view earlier entertained by the taxing department when renewing the licences, would not preclude the State from cancelling them, after it had been correctly apprised of the correct position. The decisive issue in these petitions, therefore, is whether the agreement, on a fair reading of all its terms, be really one of agency; which, in other words, means the necessity to decide how far the Taxing Authorities and the Appellate Tribunal have correctly held it to be of sale.”
6. The High Court, therefore, answered the second and third questions against the respondent and the respondent has not appealed from that decision. The present appeal is by the State of Kerala against the High Court's answer to the first question which went in favour of the respondent. On that question the High Court held that the vesting of ownership in goods in agents for the purposes of carrying on the agencies in respect of them would not be fatal to their being treated as agents and in that view of the matter came to the conclusion that the respondent was an agent. It, therefore, remanded the case to the Appellate Tribunal to determine the terms of the licence and whether the respondent had sold the kerosene in accordance with the terms of the licence.
7. In this appeal counsel for both sides canvassed the question of the construction of the agreement. Learned counsel for the State said that the agreement was really one of sale of the kerosene by Caltex (India) Ltd. to the respondent while learned counsel for the respondent contended that the proper interpretation of the agreement was that it constituted the respondent the agent of Caltex (India) Ltd. for the sale of kerosene on its behalf.
8. It must be conceded that the question is of difficulty and there is a lot to be said in favour of each of the contending views. It seems to us, however, that it is unnecessary in the present case to decide that question for even if we accept the view for which the respondent contends, it would not he entitled to exemption under Section 9. It has to be remembered that the question of construction arose in order only to decide whether the respondent was entitled to exemption under that section.
9. Now let us assume that the respondent is right and that under that agreement it obtained the kerosene for sale by it as agent for Caltex (India) Ltd. That alone however would not entitle it to the benefit of Section 9. No doubt, in order to get exemption the respondent has to show that its sales were actually in accordance with the terms of the licence which had been granted under the section. That investigation has not yet been made and it was not found necessary to do so in the view that the authorities took. But quite apart from that it is not any and every agent who becomes entitled to the benefit of Section 9. It is only an agent “who for an agreed commission sells on behalf of known principals specified in his account in respect of each transaction” that may claim the benefit. Now it seems clear to us that under the agreement of June 1, 1952 the respondent, even if it were the agent of Caltex (India) Ltd., could not sell on behalf of it as its principal and specify it as the principal in its account as required by Section 9 for clause 8 of the agreement prevented it from doing so. That clause is in these terms:
“The Distributors shall not have any right or authority to and shall not incur any debts or liability or enter into any contracts or transact any business whatsoever in the name of or for or on behalf of the Company, and shall not represent himself in any way to be, the agent of the Company.”
Under this clause the respondent could not sell expressly on behalf of Caltex (India) Ltd., nor could it enter in its account the sales as such. Under Section 9 the sale would have to be on behalf of known principals, that is, a principal known to the purchaser for the agent of course knew who its principal was. In view of Clause 8 the respondent could not sell by disclosing to the purchaser that it was selling for Caltex (India) Ltd. What the respondent actually did is irrelevant for if it was not an agent having the right under its agency agreement — and of course it could have no right apart from that agreement it — could not sell expressly on behalf of its principal. Under the section it has to have the right under its agency agreement to sell expressly on behalf of known principals and this it did not have. If it did not have that right, it could not get the benefit of Section 9. Therefore even if the respondent was an agent of Caltex (India) Ltd. for the sale of kerosene, it would not be entitled to the exemption under Section 9 in view of the terms of its agency agreement.
10. Learned counsel for the respondent contended that Clause 8 was only a pious declaration and that if it was held that the agreement created an agency, that clause could not be given effect to for then it would be in conflict with the creation of an agency. We are unable to accept this view. It has not been shown to us that an agency agreement cannot provide that the agent would not disclose the fact that it was acting as an agent. Therefore, it is impossible to hold that if Clause 8 is an enforceable term, it would prevent the agreement from being constructed as an agreement creating an agency. Nor do we find it possible to accept the contention that it contains a pious declaration. It is an operative part, of the contract; it is one of the bargains made and is capable of enforcement, if necessary.
11. In this view of the matter we think that the appeals must be allowed. We think it right to point but that this aspect of the matter had not struck anyone in the High Court or at any earlier stage. In our view, for the reasons earlier mentioned, this is decisive of the case. We however also think it right to point out that though we are setting aside the judgment of the High Court we express no opinion on the interpretation of the agreement of June 1, 1952 or as to the correctness of the view taken by the High Court. We find it enough to proceed on the assumption that the view for which the respondent contends that the agreement creates an agency is correct for even so, for the reasons earlier mentioned, it must be held that the respondent is not entitled to exemption under Section 9 as it is not an agent of the kind contemplated by the section. We leave the question of the proper interpretation of that agreement for decision at a later stage when the question properly arises.
12. In the result we allow the appeals and set aside the order of the High Court. We do not think this is a fit case in which to make any order as costs.