1959 (7) TMI 46 - HC - VAT and Sales Tax

Summary

Issues:
Assessment of sales tax on transactions involving financing in charcoal sales.
Interpretation of the definition of "dealer" under the C.P. and Berar Sales Tax Act.
Determining whether the assessee had dominion over the goods in question.

Analysis:
The judgment by the High Court of Madhya Pradesh pertains to a reference by the Board of Revenue under section 23(1) of the C.P. and Berar Sales Tax Act, 1947. The primary issues referred for judgment were whether the assessee was a del credere or financing commission agent and not a dealer in charcoal sales, and whether the assessee had dominion over the goods due to financing transactions. The assessment period in question was from 1st November, 1948, to 21st October, 1949, concerning transactions by Motilal Hazarimal of Narasingpur related to financing buyers and sellers in the coal business.

During the assessment proceedings, the Sales Tax Commissioner initially ruled that the transactions did not amount to sales as the property in the goods did not vest in the assessee, leading to their exclusion from assessment. However, the successor of the Sales Tax Commissioner later called for a fresh assessment, considering the declarations filed by the assessee from Bombay merchants regarding charcoal purchases for household use. The Board of Revenue, on appeal, concurred with the previous Sales Tax Commissioner's view that the assessee did not have dominion over the goods through financing, leading to the quashing of the successor's order.

The crux of the matter revolved around the definition of "dealer" and "sale" under the C.P. and Berar Sales Tax Act. The definition of a "dealer" includes any person carrying on the business of selling or supplying goods, while a "sale" involves a transfer of property in goods for valuable consideration. The Board of Revenue, after examining the assessee's account books, concluded that the transactions were merely financing arrangements with buyers and sellers, where the assessee did not directly engage in selling or supplying goods. Consequently, the transactions were rightfully deemed not to constitute sales by a dealer under the Act.

In conclusion, the High Court determined that the assessee was a financing commission agent and not a dealer in charcoal sales. Additionally, it was held that the assessee did not have dominion over the goods in question due to the financing arrangements. The costs were ordered to be paid by the State of Madhya Pradesh, with a specified hearing fee.

Judgment:
The High Court of Madhya Pradesh answered the reference questions accordingly, affirming that the assessee was not a dealer in charcoal sales but a financing commission agent, and that the assessee did not have dominion over the goods in question.