1968 (3) TMI 101 - HC - VAT and Sales Tax

Issues Involved:
1. Whether the agent of the non-resident supplier was covered by the explanation to the definition of the word 'dealer' in section 2(b) of the Madras General Sales Tax Act, 1939.
2. Whether the property in the goods purchased by the assessee passed within the State of Madras.
3. Whether the sale was effected by a dealer resident within the State of Madras.
4. Whether such sale took place after the goods were imported within the State of Madras.

Issue-wise Detailed Analysis:

1. Whether the agent of the non-resident supplier was covered by the explanation to the definition of the word 'dealer' in section 2(b) of the Madras General Sales Tax Act, 1939:

The court examined whether the agent of the non-resident supplier was a dealer as defined in section 2(b) of the Act. The petitioner argued that the agents, branch offices, or del credere agents of non-resident principals acted as dealers. The Joint Commercial Tax Officer's report initially denied this, stating it had not been proven. However, the court found that the agent in question satisfied the material ingredients constituting the content of the explanation to the definition of the word "dealer" in section 2(b). The court criticized the reporting officer's investigation for violating principles of natural justice and concluded that the agent was indeed a dealer under the Act.

2. Whether the property in the goods purchased by the assessee passed within the State of Madras:

The court determined that the property in the goods purchased by the assessee did pass within the State of Madras. This conclusion was based on the evidence that the goods were consigned by the non-resident dealer to self, and the local agent, a resident in Madras, took control over the goods by dealing with the railway receipt. The court found that the agent was integral to the transaction, and the property transfer occurred within Madras.

3. Whether the sale was effected by a dealer resident within the State of Madras:

The court found that the sale was indeed effected by a dealer resident within the State of Madras. The petitioner claimed that the local agents were residents and acted as dealers, which the court upheld. The court noted that the local agent booked the order, got it confirmed, received the railway receipt, and transferred it to the assessee after payment, thus constituting the first sale in relation to the goods.

4. Whether such sale took place after the goods were imported within the State of Madras:

The court concluded that the sale took place after the goods were imported into the State of Madras. The goods were imported and consigned by the non-resident dealer to self, with the local agent handling the railway receipt and selling the goods to the assessee. The court emphasized that the movement of goods terminated when the assessee took delivery, and the local agent's role was pivotal in this process.

Conclusion:

The court set aside the orders of the Sales Tax Appellate Tribunal, determining that:
- The agent of the non-resident supplier was covered by the explanation to the definition of the word "dealer" in section 2(b).
- The property in the goods purchased by the assessee passed within the State of Madras.
- The sale was effected by a dealer resident within the State of Madras.
- The sale took place after the goods were imported within the State of Madras.

The court allowed the petitions with costs, concluding that the sales by the assessee were second sales and not subject to additional tax under the Madras General Sales Tax Act, 1939.

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