VOLTAS LTD Vs. COMMISSIONER COMMERCIAL TAXES PATNA

JUDGEMENT

(1.) SOME three cornered sales of goods involving, the manufacturer at Madras or Bombay, the assessee at Jamshedpur, claiming to be acting as the agent of the manufacturer and the purchaser also at Jamshedpur give rise to the controversy as to whether the transactions were comprised of one or more incidents of sale and as to whether the sales were made in course of inter-State trade or commerce or whether those were intra-State sales and, therefore, taxable under the Bihar Sales Tax Act, 1959.

(2.) DURING the assessment period 1972-73 the assessee, according to its case, acting as an agent arranged and brought about the sales of goods manufactured by its principals (i) M/s. S. R. P. Tools Ltd. , Madras and (ii) M/s. Cooper Engineering, Bombay. The sales were made to M/s. Tata Engineering and Locomotive Company at Jamshedpur. On these sales the assessee-company collected Central sales tax from the purchaser-company and deposited the tax amount at Madras and Bombay respectively where too the assessee was registered under the provisions of the Central Sales Tax Act. Those sales amounted to a sum of Rs. 24,44,994. 07. In the assessment proceeding in this State the assessee claimed that the sales in question were made in course of inter-State trade and commerce and Central sales tax in respect of those sales had been duly deposited at Madras and Bombay respectively from where the movement of the goods had taken place and, hence, this amount was not liable to be taken into account in the assessment in this State. The assessing officer did not see eye to eye with the contention. According to the assessing officer, each of the transactions involved two incidents of sale; the first sale being inter-State in nature took place between the manufacturer and the assessee-company in terms of section 3 (i) (a) of the Act and the second inter-State sale took place between the assessee and the purchaser-company as provided under section 3 (i) (b) of the Central Sales Tax Act, 1956. The assessee was, therefore, liable to pay Central sales tax in respect of the second sale in Bihar. Against the assessment order passed by the assessing officer on June 4, 1979, the assessee preferred an appeal before the Deputy Commissioner of Commercial Taxes (Appeals), Jamshedpur Division, Jamshedpur. The appellate authority vide order, dated September 23, 1982, affirmed the findings and the assessment order passed by the assessing officer and rejected the assessee's appeal. The assessee, then, took up the matter in revision before the Commercial Taxes Tribunal, Bihar, Patna. The Tribunal by its judgment and order, dated September 23, 1982, upheld the petitioner's contention that each of the transactions in question involved only one sale and not two sales as found by the revenue authorities. It, however, held that the one sale involved in the transaction was not made in course of inter-State trade or commerce but was an intra-State sale in nature and, therefore, the entire turnover was liable to be subjected to sales tax under the Bihar Sales Tax Act, 1959.

(3.) IN order to examine the nature of the transactions the Tribunal has considered in some detail, the agreements entered into between the assessee-company and the two manufacturing companies, one at Madras and the other at Bombay. According to the assessee's case, it was the sole selling agent of the two manufacturing companies under the respective agreements separately entered into with each of them. It is an admitted position that the agreements between the assessee and the two manufacturing companies were similar in nature. The Tribunal has considered in detail the terms of the agreement, dated February 2, 1970, between the assessee and M/s. S. R. P. Tools Ltd. , Madras. By this agreement the assessee was appointed as the sole selling agent of the Madras manufacturer for a period of five years, commencing from the date of the agreement. As the sole selling agent the assessee was obliged to sell the goods manufactured by its principal at prices fixed by the principal. The assessee (as the sole selling agent) was further obliged to collect the invoice value of the goods sold through it and to send the net amount after deducting its commission, etc. , within 30 days of the sale. The assessee, the agent, was entitled to receive selling commission at the rate of 12 1/2 per cent of the net invoice value. The agreement specifically provided that notwithstanding anything to the contrary contained therein, the goods, while in the custody of the agent, would continue to be the property of the principal. It further provided that the agent would not be liable for any loss or damage which may occasion to any of the principal's goods in its custody unless the damage was caused due to its wilful negligence. While the goods were in transit or in the custody of the agent, the responsibility to provide them a cover of insurance, etc. , also lay with the principal.