STATE OF BOMBAY Vs. UNITED COAL CO

JUDGEMENT

(1.) This is a reference under the Sales Tax Act at the instance of the State of Bombay. The relevant facts are these. The respondents to this Reference are the United Coal Co. A firm known as C.P. Syndicate Ltd. owned coal mines in Madhya Pradesh and they had appointed Byramji Mining Combine Ltd., Nagpur, as their sole selling agents. By a letter dated 20th March, 1950, the said Byramji Mining Combine Ltd. appointed the respondents as sole sub-agents for the sale of Damua Kalichhappar steam and slack coal for a period of one year from the first of July, 1950, for the territory of Gujarat. Now, certain mills in this Gujarat area situated at Kalol, Kadi and Petlad in the Bombay State had appointed the Kathiawar Coal Distributing Co. as their buying agents for coal. This company instructed the respondents to send to the respective mills coal required by them. This coal was despatched from the collieries direct to the mills; but the railway receipts were sent to the respondents together with the bills for the price of the coal. The respondents in their turn forwarded the receipts together with their own invoices to the Kathiawar Coal Distributing Co. and the latter company in its turn forwarded the receipts to the mills with their own invoices. The mills paid the amount of the invoices to the Kathiawar Coal Distributing Co. and this amount came back to the respondents and was by them paid ultimately to the C.P. Syndicate. In this transaction both the respondents and the Kathiawar Coal Distributing Co., charged the mills annas 8 per ton for their services. The Sales Tax Authorities held that the respondents had sold coal to the Kathiawar Coal Distributing Co., and assessed them to sales tax on that footing and also imposed a penalty under sub-section (3-A) of section 12 of the Bombay Sales Tax Act, 1946. It is against this order that the respondents went in revision to the Sales Tax Tribunal; and the Sales Tax Tribunal set aside the order holding that there was no sale by the respondents to the Kathiawar Coal Distributing Co. Arising out of this order the Tribunal has referred to this Court three questions which are as follows :-

(2.) Turning then to the first question, the ground on which the Tribunal took the view that there was no transaction of sale between the respondents and the Kathiawar Coal Distributing Co., is to be found under the provisions of the Colliery Control Order, 1945. The Tribunal took the view and, in our opinion, rightly that if the transaction that took place could have been carried out lawfully by all the parties concerned within the law, they should hold that it had been so carried out and they should not attribute to the parties a desire to carry out the transaction except in accordance with the law. It is from this point of view that the Tribunal considered the relevant provisions of the Colliery Control Order. Now, section 4 of that Order provides for the fixation of price at which coal may be sold. Section 6(1) provides that a colliery owner shall deliver the coal to the consumer at the price fixed and no commission or other charge shall be paid except when a broker is employed and the brokerage shall also not exceed six annas per ton to be paid by the owner to the broker. Then section 6(2) provides :-

(3.) Having regard to these provisions of the Colliery Control Order, the Tribunal took the view that the respondents were del credere agents for the consignors and they were not the sellers of the coal to the Kathiawar Coal Distributing Co. Now, it appears to us that this finding of the Tribunal is well-founded. Section 12E of the Order clearly provides that no person shall acquire or purchase or agree to acquire or purchase any coal from a colliery except under general or special authority of Government. Therefore, the respondents could not have purchased the coal from the colliery in order to be able to sell it to the Kathiawar Coal Distributing Co., because it is not alleged that the respondents had general or special authority of the Central Government to purchase coal from the colliery. Again in their turn, even assuming that the respondents had purchased the coal from the colliery or they were agents for the colliery owners, they could not lawfully sell the coal to the Kathiawar Coal Distributing Co., which did not possess any authority general or special from the Central Government, to purchase the coal. Therefore, if the transaction is sought to have been put through by the respective parties concerned, it cannot be looked upon as a sale by the respondents to the Kathiawar Coal Distributing Co. Obviously the respondents are in this transaction del credere agents, because the bills were drawn on them by the colliery; the colliery looked to them for the payment of the bills, whether the Kathiawar Coal Distributing Co., paid the amount or not, and the railway receipts were actually sent to the respondents. This makes the transaction a transaction that was lawfully carried out, because between the respondents and the Kathiawar Coal Distributing Co., they have shared between them in terms of section 8(3) the brokerage of one rupee per ton of coal each taking eight annas. In our opinion, the Tribunal was right in the conclusion they arrived at and our answer to the first question will be in the negative.