1962 (12) TMI 33 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the assessees are dealers within the meaning of the explanation to the definition of 'dealer' as given in section 2(c) of the U.P. Sales Tax Act?
2. Whether the explanation is ultra vires of the Legislature?
3. Whether the assessees are not agents of ex-U.P. principals?
4. Whether the sales were inter-State sales under Article 286 of the Constitution of India?
5. Whether Tulai charges formed part of the selling price?

Detailed Analysis:

Issue 1: Definition of 'Dealer'
The court examined whether the assessees qualify as dealers under the U.P. Sales Tax Act. The definition of "dealer" includes any person "carrying on the business of buying or selling and supplying goods in the United Provinces whether for commission, remuneration or otherwise." The explanation extends this to agents of non-resident principals. The court concluded that the assessees are dealers because they carry on the business of selling goods in Uttar Pradesh, even though they do so as commission agents for non-resident principals. The court emphasized that the term "for commission, remuneration or otherwise" is broad and includes agents selling goods for commission. The court clarified that the essence of being a dealer is the business activity itself and not the ownership of the goods sold.

Issue 2: Ultra Vires of the Legislature
This issue was deemed irrelevant as the court found the explanation to the definition of "dealer" not applicable to the assessees. Therefore, the question of whether the explanation is ultra vires did not arise.

Issue 3: Agents of Ex-U.P. Principals
The court acknowledged that the assessees act as agents for principals residing outside Uttar Pradesh. However, it clarified that they sell the goods in the course of their own business of selling goods on commission, and not for carrying on the principals' businesses in Uttar Pradesh. The court distinguished between carrying on another's business as an agent and selling goods as part of one's own business.

Issue 4: Inter-State Sales
This issue was not pressed by the assessees and was answered in the negative.

Issue 5: Tulai Charges as Part of Selling Price
The court examined whether weighing dues (Tulai charges) form part of the selling price. The assessees argued that these charges are for services rendered and are separate from the sale proceeds. However, the court disagreed, stating that the dues are received on account of the sale of goods and are incidental to the sale. The court referred to Explanation 1 to the definition of "turnover," which includes any sums charged for anything done in respect of the goods sold at the time or before delivery. Therefore, the court concluded that weighing dues are part of the proceeds of sale and should be included in the turnover.

Conclusion:
1. The assessees are dealers under the definition provided in the U.P. Sales Tax Act, but not under the explanation.
2. The question of ultra vires does not arise.
3. The assessees are agents of ex-U.P. principals but operate in their own business of selling goods on commission.
4. The sales were not inter-State sales under Article 286 of the Constitution of India.
5. Tulai charges form part of the selling price and are included in the turnover.

The court ordered that copies of the judgment be sent to the Judge (Revisions), Sales Tax, U.P., and the Commissioner, Sales Tax, U.P., and that the assessees pay the costs of the reference, assessed at Rs. 100.