1958 (4) TMI 102 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the plaintiff, acting as commission agents, could be deemed to be and assessed as dealers.
2. Whether the sales took place within the State of Madras.
3. Whether the turnover in respect of tea and rubber could be assessed as agricultural produce.
4. Whether sales of tea intended for and delivered outside the State of Madras were exempt from taxation.

Detailed Analysis:

1. Whether the plaintiff, acting as commission agents, could be deemed to be and assessed as dealers:
The court held that the plaintiffs, though acting as commission agents, were dealers within the meaning of the Madras General Sales Tax Act, 1939. The court referenced Section 2(b) of the Act, which defines a dealer, and concluded that the plaintiffs fit this definition despite their role as commission agents.

2. Whether the sales took place within the State of Madras:
The court found that the sales to foreign buyers took place at Madras. This was crucial in determining the applicability of the Madras General Sales Tax Act. The court emphasized that the property in the goods passed to the buyer at Madras, which was a significant factor in the assessment.

3. Whether the turnover in respect of tea and rubber could be assessed as agricultural produce:
The court examined Section 2(i) of the Madras General Sales Tax Act, which excludes the proceeds of sale of agricultural produce grown by the seller from the turnover. The court acknowledged that rubber is agricultural produce, but noted that an amendment to the Act by Act XXV of 1947 excluded tea from this definition effective January 1, 1948. The court held that the plaintiff, acting as a commission agent for non-resident principals, could not claim the exemption for agricultural produce as the produce was grown on the lands of the non-resident principals and not on the plaintiff's land.

4. Whether sales of tea intended for and delivered outside the State of Madras were exempt from taxation:
The court considered Section 5(v) of the Madras General Sales Tax Act, which exempts the sale of tea grown by the seller or on land in which the seller has an interest if the sale is for delivery outside the State and delivery is actually so made. The court held that to claim this exemption, two conditions must be met: the tea must be grown by the seller or on land in which the seller has an interest, and the sale must be for delivery outside the State with actual delivery being made outside the State. The court found that the plaintiff did not satisfy these conditions as the tea was grown by non-resident principals and there was no evidence of actual delivery outside the State.

The court noted the importance of distinguishing between actual and constructive delivery. The court referenced legal precedents and statutory interpretations to conclude that actual delivery requires physical or manual delivery of the goods, not merely symbolic delivery through documents like bills of lading.

Conclusion:
The court declared that the appellant was entitled to exemptions under Section 2(i) for the sale of rubber and tea prior to January 1, 1948. However, the court found that the appellant did not provide sufficient evidence to prove actual delivery outside the State for the exemption under Section 5(v). Consequently, the suits were remanded to the Original Side for fresh disposal with an opportunity for the parties to present further evidence on the question of delivery. The assessment for the year 1950-51 was dismissed, and there was no order as to costs.