COMMISSIONER OF COMMERCIAL TAXES Vs. MEGHRAJ SANCHIALAL

JUDGEMENT

(1.) THESE six reference cases, constituting a batch, arise from the demand of purchase tax under the Bihar Sales Tax Act, 1959 on certain transactions of chillies.

(2.) THE chillies were sold and supplied by the cultivators and chilli growers and they finally went to parties outside the State of Bihar. The dealers against whom the demand of purchase tax is raised by the department (M/s Megraj Sanchialal in Tax Case Nos. 65 to 69 of 1982) and (M/s Narain Co. in batch case No. 24/82) appear to stand in the middle of the transaction. The department maintains that each transaction comprised of two distinctly separate incidents of sale and purchase; in the first instance the dealer purchased the chillies from the growers and in the second phase of the transaction he sold them to a party outside the State. So far as the second sale (by the dealer to party outside the State) is concerned, it being an inter -State sale was exempt from tax under the Bihar Sales Tax Act. But on the first sale of the chillies the dealer was liable to pay purchase tax under the provisions of the Act. According to the dealers they had neither purchased the chillies from the growers nor sold them to the parties outside the State, the incident of sale was only one, between the grower sellers and the outside parties. The dealers had merely brought about the sale acting only as an agent at once of the grower sellers and the outside buyers; for selling the chillies for the grower sellers and for purchasing them on behalf of the outside buyers, the dealers had charged certain commission from both the principals, namely, the grower sellers and the outside buyers.

(3.) IN the case of M/s Megraj Sanchialal the Assessing Officer had initially agreed with the dealer's contention and had accepted the turnover in question as representing inter -State sale not liable to tax under the Bihar Sales Tax Act, 1959. Subsequently, however, he revised the earlier orders under section 18(1) of the Act holding that those amounts were price of the chillies purchased by the dealer over which he was liable to pay purchase tax under the Bihar Act. Separate though similar orders were passed by the Assessing Officer, relating to different assessment periods and in respect of the different branches of the dealer and as a consequence the dealer filed a number of analogous appeals before the Additional Dy. Commissioner of Sales Tax, Purnea. The Appellate authority affirmed the assessment orders and dismissed the dealer's appeal. The dealer then filed five revision application relating to different assessment periods and in respect of its different branches before the Commercial Taxes Tribunal, Bihar, Patna. Those revisions were allowed by the tribunal by judgment and order dated September 8, 1978. In its judgment the tribunal upheld the dealer's case and found that there was a single sale and purchase transaction between the principal seller (the grower) and the principal buyer (the buyer outside the State) where in the dealer had acted both as the agent of the selling principal and the purchasing principal. The tribunal also held that sale had occasioned the movement of the goods from this State to another State and hence it was an inter -State sale within the meaning of section 3(a) of the Central Sales Tax Act and was therefore exempt from payment of tax under the Bihar Sales Tax Act, 1959.