MAKHANLAL Vs. STATE OF RAJASTHAN

JUDGEMENT

(1.) THE above mentioned two revision petitions will be disposed of jointly by this common order as they turn on a similar point. In both these cases, the petitioners have been assessed in respect of the turn over of oil seeds amounting to Rs. 7,91,341. 66 and Rs. 6,50,957. 56 respectively on the ground that the assessees purchased the oil seeds in their own names and subsequently transferred them to outside dealers. THE assessees met the consideration and did not disclose the names of the outside dealers to the sellers. Moreover, they charged the sales-tax amount in the bills prepared for the outside dealers. For these reasons, the S. T. O. , Alwar, held these transactions to be in the nature of interstate sales and assessed the petitioners accordingly. On behalf of the petitioners, it was contended that they were not interstate sales. In fact, the oil seeds had been purchased by the petitioners in Rajasthan for their principals who carried on their business outside the State. It was, therefore urged that they could not be considered to be inter state sales. As regards the charging of the sales-tax in the bills, prepared by them for the outside state dealers, it was submitted that this had been done as a measure of abundant caution. As is apparent from the order in the second case, the assessee had also charged commission in the bills. It was urged on behalf of the petitioner that this indicated that the relationship of agent and principal existed between the parties and, therefore, the assessees were not liable to the tax as levied on them. But the assessing authority repelled this suggestion and held that the amount of commission charged by the assessees was in fact, accretion to their profits.

(2.) IN this connection, the learned counsel for the petitioners drew my attention to Pannalal Vs. Commissioner of Sales Tax, U. P. Lucknow (Volume VII, 1956 Sales Tax Cases 722 ). IN this case also, when the assessees purchased the goods, the names of the persons for whom the goods were bought were not disclosed to the sellers, but the assessees' name was entered in their account as the purchasers who had supplied the same to their constituents and were paid commission on the goods so supplied. It was held that although the purchase of goods on behalf of the assessees' principal was a sale, the subsequent supply to the principal did not amount to a sale by the assessees to their principal. It was observed that when a commission agent agrees to work for his principal as the latter's agent and to obtain for his principal the goods which the latter wants, he undertakes a duty which he has to discharge by purchasing the goods required and supplying them to his principal. The transfer of the goods purchased by him to his customer is an act done in the discharge of his duty as an agent. Such a contract between the principal and the commission agent is not one of sale, but of agency and the transfer of property in the goods is not a sale within the meaning of the Sale of Goods Act, 1930. This authority had been cited before my learned colleague Shri Gajendra Singh in M/s. Shyamlal Radha Kishen r/o Kherli Vs. the State of Rajasthan, decided on 7-2-1964, the facts of which were also similar to the present revision petitions. The question in that case was also whether the goods despatched by the petitioners outside Rajasthan constituted sale and were thus liable to inter-state sales-tax or whether the supply of goods was made by the petitioners as agents to their principals. There was no doubt in that case as in the present cases that the goods had been purchased in Rajasthan by the petitioners as registered dealers. They, however, took the plea that this had been done in the capacity of agents and that they had only charged commission for the goods supplied and that they had debited their principal's account with the sales-tax as a measure of precaution in case they were held liable to pay the same. It was observed by the learned Member that the only point for determination was whether the two subordinate authorities had rightly determined that the despatch of goods by the petitioners outside Rajasthan constituted the sale of oil seeds, thus making the petitioners liable to interstate sales-tax or whether it was only in the nature of supply of goods by an agent to his principals in pursuance of a contract or agency. If the relationship of agent and principal could be established between the parties, the assessees would not be liable to inter state sales-tax as was held in the aforesaid case of Pannalal Babulal Vs. Commissioner of Sales Tax U. P. , Lucknow.