1956 (8) TMI 38 - HC - VAT and Sales Tax

Summary

Issues:
- Liability of consignee retailer to pay sales tax under the scheme of distribution of controlled goods, specifically textiles.

Analysis:
The judgment deals with the issue of whether a consignee retailer, operating under the distribution scheme of controlled goods, is liable to pay sales tax. The judge refers to a previous case where it was held that a consignee retail dealer is not considered a dealer under the Act and therefore not liable to pay sales tax. The judge emphasizes that the real character of the transactions should be considered, rather than the labels used by the parties involved. In the present case, the consignee retailer's role is described as that of an intermediary facilitating transactions under the directions of the Textile Control Officer. The judge dismisses the argument that there are two separate sales transactions, highlighting that the consignee retailer's actions align with the circular orders issued by the government for distribution purposes.

The judge further clarifies that even if a specific procedure was followed involving the consignee retailer, it does not change their intermediary status. The consignee retailer is not required to prove they are an agent appointed by the government; rather, they need to demonstrate that their role aligns with the distribution scheme outlined in the circular orders. The consignee retailer's function is solely for the distribution of goods, not for effecting sales, as explicitly stated in the circulars. Therefore, the consignee retailer cannot be classified as a dealer and is not subject to taxation under the Sales Tax Act. The judgment concludes by allowing the second appeal of the consignee retailer, with costs awarded in their favor and no further leave granted for appeal.