1969 (4) TMI 92 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of U.P. Sales Tax Act regarding liability to pay sales tax as a commission agent.
2. Application of Notification No. S.T.1365/X-990-1956 dated 1st April 1960 on turnover of khandsari sugar.
3. Definition of "dealer" and "turnover" under the Act.
4. Analysis of the effect of the notification on the liability of commission agents.
5. Comparison with provisions in other taxing statutes regarding representative assessees.
6. Distinction between tax liability on the first sale and sale by the manufacturer.

Detailed Analysis:
1. The case involved a dispute regarding the liability of an assessee, acting as a commission agent, to pay sales tax on the turnover of khandsari sugar sold on behalf of principals. The assessee contended that being a commission agent, he was not liable to pay sales tax, which was rejected by the Sales Tax Officer and higher authorities.

2. The notification dated 1st April 1960 superseded previous notifications and declared that turnover of khandsari sugar manufactured inside the State would be liable to tax only at the point of sale by the manufacturer. The dispute centered around the interpretation and application of this notification on the turnover of khandsari sugar sold by the commission agent.

3. The Act defined a "dealer" as any person carrying on the business of buying or selling goods in Uttar Pradesh, including commission agents. The turnover was defined as the aggregate amount for which goods are sold directly or through another on account of the dealer. This definition formed the basis for determining tax liability under the Act.

4. The judgment analyzed the effect of the notification on the liability of commission agents, emphasizing that the tax on khandsari sugar manufactured inside the State was to be levied only at the point of sale by the manufacturer. The commission agent's liability was distinct from that of the principal, and the notification did not provide for taxing the commission agent for such sales.

5. A comparison was drawn with provisions in other taxing statutes, such as the Income-tax Act, regarding representative assessees. It was highlighted that the U.P. Sales Tax Act did not have similar provisions for commission agents to be treated as representative assessees, indicating that the commission agent's liability was personal and distinct from the principal's liability.

6. The judgment clarified the distinction between tax liability on the first sale and the sale by the manufacturer, emphasizing that the notification aimed to tax the sale by the manufacturer, even if it was not the first sale in certain cases. A precedent from the Andhra Pradesh High Court was distinguished based on the differing tax points for jaggery and khandsari sugar sales.

In conclusion, the judgment favored the assessee, ruling that the sale of khandsari sugar by the commission agent was not liable to tax under the notification, which specified taxation at the point of sale by the manufacturer. The analysis provided a comprehensive interpretation of the U.P. Sales Tax Act and the implications of the notification on the tax liability of commission agents in such transactions.