COMMISSIONER OF SALES TAX MAHARASHTRA STATE BOMBAY Vs. RAISAHEB REKCHAND MOHTA SPINNING AND WEAVING MILLS PRIVATE LIMITED

JUDGEMENT

(1.) THE following question is referred under section 23 of the C. P. and Berar Sales Tax Act, 1947 ("the Act"), at the instance of the Commissioner of Sales Tax : " Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in holding that the impugned transactions of Rs. 2,07,769-10-3 were sales in the course of inter-State trade and commerce and should therefore be excluded from the taxable turnover of sales ?" THE period of assessment ranges between 31st October, 1951 and 18th October, 1952. At the material time, article 286 (1) (a) with explanation as it stood before the Constitution (Sixth Amendment) Act, 1956, was the law governing the subject of inter-State sale.

(2.) ARTICLE 286 read as under : " (1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place - (a) outside the State; or (b) in the course of the import of the goods into, or export of the goods out of, the territory of India. Explanation.- For the purposes of sub-clause (a), a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consumption in that State, notwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State. " The basic undisputed facts are these : During the period of assessment, the Cotton Textile (Control) Order, 1948, was in force. The erstwhile State of Madhya Pradesh was considered as a surplus zone in the matter of cloth and the State of Orissa a deficit zone. No one could purchase, sell or trade in cloth except in terms of the Cotton Textile (Control) Order, 1948 and the permit issued thereunder by the Commissioner. M/s. Umashankar and Co. and M/s. Bachraj Amelakchand were given agents "d" class licence by the Commissioner. Certain persons in Orissa appointed by the Orissa State Government were given "a" class licence. "a" class licence permitted the licence-holders to purchase the specified cloth and "d" class licence permitted the licensee to deal with specified cloth as nominees of the Commissioner. "d" class licensees could not purchase the cloth. They were agents of the Commissioner for the purposes of facilitating delivery to "a" class licensees, for rendering which services, "d" class licensees were entitled to commission of half per cent. In pursuance of such a permit issued, the two nominees had taken delivery of the specified cloth from the respondent-dealer, M/s. Raisaheb Rekchand Mohta Spinning and Weaving Mills Private Limited, Hinganghat. The permit mentions the details about the area to which the cloth is allotted together with the name of the allottee, "a" class licensees and the name of the nominees, "d" class licensees. Item No.8 in the specimen permit reads thus : "orissa Government. 1. Umashankar & Co. , Itwari, Nagpur". "d" class licensees as per terms of the licence took delivery of the goods under that permit from the respondent-dealer, paid its price and despatched the goods to the "a" class licensees in Orissa through railway. The Sales Tax Officer as well as the Assistant Commissioner held that these were intra-State sales subject to assessment under the Act. In a revision, the Tribunal set aside those orders of assessment and came to the conclusion that the sales in question were inter-State and, therefore, could not be subjected to sales tax under the State Act in view of provisions contained in article 286 (1) (a), explanation.

(3.) TO the knowledge of the dealer, "d" class licensees were not and could not legally be the purchasers of the commodity. They were merely handling agents appointed by the Commissioner solely with a view to facilitate compliance with the permit for which they were given remuneration. The "d" class licensees were thus not the agents of "a" class licensees. They were agents of the Commissioner.