1972 (10) TMI 109 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of sales transactions under the Madras General Sales Tax Act for the years 1959-60 to 1963-64, Assessment of respondents as agents of non-resident principal, Dispute regarding sales of paper, Challenge to Tribunal's decision on taxability of transactions as local sales.

Analysis:
The judgment dealt with multiple cases where the respondents were assessed under the Madras General Sales Tax Act for transactions involving sales of paper on behalf of their non-resident principal, the Titaghur Paper Mills Company Limited. The respondents contended that they were not sellers in these transactions as the sales were directly made by the paper mills to purchasers in the State. The Tribunal held that the sales were inter-State in nature and could not be taxed locally, a decision challenged by the revenue before the court.

The court examined the facts and circumstances of the cases and agreed with the Tribunal's conclusion. It was established that the respondents were authorized selling representatives of the paper mills in the State, entitled to commission on sales. The process involved the respondents collecting orders from dealers, forwarding them to the paper mills, and distributing the manufactured paper to customers. The court noted that there was direct privity between the paper mills and purchasers in the State, with goods consigned based on earlier orders placed directly with the mills.

The court emphasized that the movement of goods from the mills to the State was in line with the direct orders placed by dealers, despite being consigned in the name of the respondents. The distinct packaging and billing by the paper mills indicated the nature of the transactions as inter-State. The court concluded that the respondents' role in taking delivery and distributing goods did not alter the inter-State nature of the transactions, as there was no discretion for the respondents to divert packages to others. Consequently, the court upheld the Tribunal's decision, dismissing the tax cases without costs.