GOVERDHAN HATHIBHAI AND CO Vs. PPELLATE ASSISTANT COMMISSIONER OF AGRICULTURAL INCOME-TAX AND SALES TAX TRIVANDRUM

JUDGEMENT

(1.) This batch of three revision petitions, seeks to vacate the petitioner having been charged tax on sales of kerosene oil, in the assessment years 1953-54, 1954-55 and 1957-58. The claim for the exemption from the tax on the aforesaid sales, had been made on the basis of the dealer's being only the agent, and having earlier registered as such; but the claim had been rejected on the ground of the sales not being on behalf of Caltex India, Ltd., because of the petitioner's having bought the oil from the aforesaid concern earlier. The petitioner has, for the assessment year 1953-54, claimed exemption on Rs. 8,45,905-9-6 out of the total turnover of Rs. 17,63,726-11-0, on the ground of the amount representing, sales of kerosene as commission agent for Caltex India Ltd. As regards the next assessment year 1954-55, the amount asked to be exempted is Rs. 7,49,804 nP 84; and so far as the assessment year 1957-58 is concerned, Rs. 4,17,151 nP. 33 has been requested to be excluded for the same reason. The written agreement, which the petitioner asserts to be of agent, is dated June 1, 1952; but mentions the document to be kerosene sales agreement. It is not disputed that the petitioner's licence under S.9 of the General Sales Tax Act, No. XI of 1125, had been renewed for all the three assessment years, and which Section, omitting the unnecessary proviso, reads thus:--

(2.) 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 license under S.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 license. In these circumstances, the cases have to be remanded ; and 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 licenses, would not preclude the State from cancelling them, after it had been correctly apprised of the correct position. The decisive issue in these revision 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.

(3.) The agreement contains 42 clauses, and these can be grouped under two heads. The first should cover the rights and liabilities of the parties, so long as the agreement continues; and the other, after it had been terminated. Coming to the first head, clause 2 provides for the quantity of the oil to be purchased, whose minimum for each month would be required by the company and must be ordered; clause 5 is about the company's right to change the prices, not only of what is sold to the petitioner, but what is to be sold by him; clause 8 casts the duty on the petitioner not to represent his being the selling agent of the company; clause 9 reserves the right of the company to sell directly; clause 15 makes the property of the company to be in trust for the company; clause 17 enables the company to fix the prise at which the petitioner is to sell the oil and clause 19 enables the company to insure the property as well as the stock of kersone with the petitioner. The liabilities under the agreement are to be found in clause 4, that makes the purchaser liable to pay for all the kerosene purchased on the dates of the commodity being shipped; in clause 7 that fixes the area, wherein the oil purchased must be sold; in clause 10 that provides for payment of packages to be refunded on returnable receptacles being sent back in sound condition: and in clause 12 that lays the loss or damage or deterioration during the voyage, on the petitioner. Further clause 13 provides for petitioner's taking safeguards against contamination of the oil sold and not to adulterate; clause 14 requires him to furnish facilities for the storage of purchased kerosene; and clause 18 casts the responsibility of due care for the protection of the company's properties. In addition, clause 20 makes expenses incidental to storage, to be of the petitioner, and clause 22 provides him indemnifying the company against third party's claims. Correct reports in writing of all sales effected by the petitioner, irrespective of whether they be on cash or credit, must be, under clause 25, submitted to the company's office in Madras; clause 26 requires sales accounts being kept; and under clause 28 all accounts, on termination of the agreement, must be settled.