1970 (2) TMI 96 - HC - VAT and Sales Tax

Summary

Issues:
- Assessment of sales tax liability on the company for inter-State sales of cement.
- Determination of whether the company, acting as an agent, is liable to be assessed to tax under the Act.
- Interpretation of the definition of "dealer" under the Mysore Sales Tax Act, 1957.
- Application of legal principles regarding commission agents and their liability for tax under sales tax laws.

Analysis:
The case involved a revision petition by the Bagalkot Cement Company Ltd. challenging the assessment of sales tax liability on inter-State sales of cement for the assessment year 1961-62. The company contended that it acted as the agent of the State Trading Corporation and therefore should not be liable to tax under the Act. The Deputy Commissioner and the Sales Tax Appellate Tribunal held that the company, despite acting as an agent, was a dealer carrying on the business of selling goods and thus liable to tax under the Act. The company argued that the Act's definition of "dealer" did not include commission agents, relying on specific provisions of the Act and the Mysore Sales Tax Act, 1957.

The definition of "dealer" under the Act includes any person carrying on the business of buying or selling goods, without specifying ownership of the goods. The company cited a case from the Madras High Court regarding commission agents' liability under similar sales tax laws. The Full Bench of the Madras High Court clarified that a commission agent could be considered a dealer if they had control over the goods, authority to transfer property, and conducted transactions on behalf of the principal. The company was found to have possession of the goods, issued invoices, and collected sales tax from purchasers, indicating characteristics of a dealer as per the Act's definition.

The Tribunal's acceptance of facts from a different assessment year without proper basis was deemed incorrect. The Deputy Commissioner's findings, supported by the company's concessions regarding possession and authority over the goods, justified the company's classification as a dealer under the Act. The court, following the Madras High Court's precedent, upheld the decision that a commission agent, under specific circumstances, could be deemed a dealer for tax purposes. Consequently, the revision petition was dismissed, affirming the company's liability as a dealer under the Act for the inter-State sales of cement.