1975 (11) TMI 127 - SC - VAT and Sales Tax

Whether the appellant-company is a dealer within the meaning of section 2(b) of the Central Sales Tax Act 1956-hereinafter referred to as the Central Act liable to pay sales tax thereunder? Held that - Appeal dismissed. As it was the appellant-company which carried on the business of selling cement although it was acting as selling agents of the Corporation. The Corporation was not the dealer which effected the sales but it was the company which did so.

Summary

Issues:
- Determination of whether the appellant-company is a dealer under section 2(b) of the Central Sales Tax Act, 1956, liable to pay sales tax.

Detailed Analysis:
The appellant, a cement manufacturer, filed a return showing taxable turnover and paid sales tax without contesting liability. The company acted as a selling agent for the State Trading Corporation, making inter-State sales and collecting sales tax. The appellant claimed it was not a dealer and not liable for sales tax, arguing the Corporation was responsible. However, the Court found the appellant's argument lacked substance as it had collected and paid sales tax voluntarily. The key issue was determining the liable party for sales tax on inter-State cement sales during the period in question. If the appellant was the dealer making the sales, it was liable under the Central Act; otherwise, it was not.

The Court examined the primary facts and business conduct based on the agreement with the Corporation. The appellant was appointed as a selling agent, sold cement directly to customers, and collected sales tax. The Court noted the lack of privity between customers and the Corporation, with the appellant issuing invoices and transferring property in goods to buyers. The agreement empowered the appellant to collect sales tax and handle sales contracts, indicating it was not a mere agent but a principal in sales transactions. The Court highlighted relevant clauses of the agreement, emphasizing the appellant's active role in sales and tax collection.

The Court analyzed the definition of "dealer" under the Central Act, emphasizing that the appellant, by transferring property and collecting sale price directly from customers, qualified as a dealer. Unlike State Acts that include various agents, the Central Act's dealer definition covers agents acting as principals in transactions. Referring to legal definitions of mercantile agents and del credere agents, the Court clarified the appellant's position as a selling principal. Citing a Madras High Court decision, the Court affirmed that commission agents conducting sales transactions can be classified as dealers under sales tax laws.

The Court addressed the appellant's argument regarding the definition of "place of business" under the Central Act, concluding that the appellant, not the Corporation, conducted the business of selling cement. Despite acting as the Corporation's agent, the appellant was deemed the dealer responsible for sales tax. Ultimately, the Court dismissed the appeal, finding no merit in the appellant's contentions and upholding the lower courts' decisions.