1960 (7) TMI 53 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether paragraphs 2 and 4 of the agreement relate to different types of transactions.
2. Whether the assessee could be assessed as a dealer within the meaning of section 2(c) of the M.P. Sales Tax Act in respect of transactions under paragraph 4.

Detailed Analysis:

Issue 1: Whether paragraphs 2 and 4 of the agreement relate to different types of transactions.
The court examined the agreement dated 10th September 1952, between the assessee and Gulf Oil (India) Limited. Clause 2 of the agreement stated that the company would sell products to the distributor, who would then sell them to customers on his own responsibility. The selling price was to be mutually agreed upon, with a cap of 20% over the company's selling price if no agreement was reached.

Clause 4 required the distributor to countersign customer orders, indicating his acceptance and responsibility for payment to the company. Invoices were made out in the name of the distributor, and railway receipts or bills of lading were sent to the distributor.

The court concluded that clauses 2 and 4 did not relate to different types of transactions. Clause 2 governed all sales, while clause 4 detailed the procedure for order acceptance and execution, reinforcing the distributor's role as a buyer who sold goods to his customers.

Issue 2: Whether the assessee could be assessed as a dealer within the meaning of section 2(c) of the M.P. Sales Tax Act in respect of transactions under paragraph 4.
Section 2(c) defines a "dealer" as any person who carries on the business of selling or supplying goods, whether as principal or agent. The court found that the assessee acted as a buyer from Gulf Oil and sold goods to his customers, making him a dealer under the Act. The court emphasized that the distributor was responsible for the payment to the company and for the correctness of the orders, indicating that the transactions were not direct sales by the company to customers but sales by the distributor to his customers.

The court rejected the contention that the assessee was a guarantee-broker, noting that the distributor filed suits against customers for recovery of dues and was liable for payment to the company. The court distinguished this case from others cited by the Board of Revenue, noting that those cases involved different factual circumstances and legal provisions.

The court concluded that the Board of Revenue had erred in determining that the assessee was a guarantee-broker. The court's final answers to the questions referred were:
1. Clauses 2 and 4 of the agreement do not relate to different types of transactions.
2. The assessee is a dealer within the meaning of section 2(c) of the M.P. Sales Tax Act, 1947, in respect of the transactions under clause 4.

The reference was answered accordingly, with no order as to costs.