1972 (8) TMI 120 - HC - VAT and Sales Tax

Issues Involved:
1. Assessment of sales tax on coal despatched outside Madhya Pradesh and sold within the state through del credere agents.
2. Applicability of res judicata to the claims regarding deductions from taxable turnover.
3. Validity of the registration of del credere agents as dealers.
4. Entitlement of the companies to deductions from taxable turnover under specific sections of the M.P. Act and C.P. Act.
5. Proper remedy and jurisdiction for challenging the assessment orders.

Issue-wise Detailed Analysis:

1. Assessment of Sales Tax on Coal Despatched Outside Madhya Pradesh and Sold Within the State Through Del Credere Agents:

The companies engaged in coal trading claimed deductions for sales made within Madhya Pradesh through del credere agents and argued that coal despatched outside the state was not liable to sales tax under the M.P. Act. The assessing authority disallowed these claims. The court had previously upheld that no sales tax was leviable on sales outside Madhya Pradesh, but the intra-state sales deduction claims were neither considered nor decided.

2. Applicability of Res Judicata to the Claims Regarding Deductions from Taxable Turnover:

The learned Advocate-General argued that the claims regarding intra-state sales deductions were barred by res judicata due to a previous decision. However, the court found that the issue of deductions was neither considered nor decided in the prior judgment, and thus, the principle of res judicata did not apply. The court emphasized that res judicata applies only where an issue has been expressly or implicitly adjudicated.

3. Validity of the Registration of Del Credere Agents as Dealers:

The court examined whether del credere agents qualify as dealers under the M.P. Act and C.P. Act. The definitions in both Acts include commission agents, brokers, and del credere agents as dealers. The court concluded that the registration of del credere agents as dealers was valid, and thus, the declarations furnished by them should be considered.

4. Entitlement of the Companies to Deductions from Taxable Turnover under Specific Sections of the M.P. Act and C.P. Act:

The court analyzed whether the sales to registered dealers (del credere agents) qualify for deductions under section 2(r)(iv) of the M.P. Act and section 2(j)(a)(ii) of the C.P. Act. The court noted that the del credere agents must act as intermediate purchasers (pakka adtyas) for the transactions to qualify as sales. If the agents acted as principals, the companies would be entitled to deductions. The assessing authority was directed to determine the true character of the del credere agents in each case.

5. Proper Remedy and Jurisdiction for Challenging the Assessment Orders:

The court addressed objections regarding the proper remedy for the companies, noting that while an appeal against the Deputy Commissioner's order was the usual course, the existence of an alternative remedy does not bar the court's jurisdiction under Article 226 of the Constitution. The court decided to address the issue to avoid unnecessary litigation and provide an authoritative decision on the intricate legal question involved.

Conclusion:

The petitions were allowed, and the assessment orders of the Assistant Commissioner of Sales Tax were quashed. The Assistant Commissioner was directed to make fresh assessments considering the observations made by the court. The court clarified that the directions of the Deputy Commissioner regarding the invalidity of the del credere agents' registration were erroneous. No order as to costs was made, and the outstanding security deposit was ordered to be refunded to the petitioners.

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