1968 (7) TMI 77 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the company-principal of the assessee, acting as a sole selling and del credere agent of a sugar company, is liable for sales tax on sales made outside the State of Bihar?
2. Whether the assessee, who acted as a selling agent for the sugar company, is liable to pay sales tax on transactions where he endorsed railway receipts in favor of buyers outside Bihar?
3. Whether the transactions between the assessee and purchasers constitute sales liable for taxation under the Bihar Sales Tax Act?

Analysis:
The High Court of Patna addressed three reference cases with identical legal questions. The Commercial Taxes Tribunal, Bihar, raised a question regarding the liability of the company-principal of the assessee, who acted as a sole selling and del credere agent for a sugar company, for sales tax on sales outside Bihar. The assessee contended that since the company had already paid tax on these sales, he should not be liable. However, the Board of Revenue rejected this argument, emphasizing that the assessee was the principal seller of the goods to the purchasers, irrespective of being a commission agent (paragraph 3).

The Court examined the definition of a "dealer" under the Bihar Sales Tax Act, which includes any person selling goods for commission. It concluded that even though the assessee was selling goods on a commission basis, he qualified as a dealer under the Act. The Court highlighted that when goods were dispatched by the factories with the assessee listed as the consignee in railway receipts, it constituted delivery to the assessee until he endorsed the receipts to the purchasers, making him liable for sales tax (paragraph 4).

Regarding the argument that the company had already paid tax on these transactions, the Court held that the assessee remained liable for sales tax. It clarified that the nature of the transaction between the assessee and the purchasers was deemed a sale under the Act, regardless of the company's tax payments. The Court reframed the question to focus on the assessee's liability for sales tax on sugar dispatched from the factories outside Bihar, ultimately ruling in favor of the department and holding the assessee accountable for sales tax on the mentioned transactions (paragraph 5-7).

In conclusion, the High Court of Patna determined that the assessee, despite acting as a selling agent for the sugar company, was liable for sales tax on transactions where he endorsed railway receipts to buyers outside Bihar. The Court emphasized the legal implications of the transactions and upheld the assessee's liability under the Bihar Sales Tax Act.