1972 (4) TMI 90 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether despatches of goods by rail to different places in West Bengal, with endorsements by a commission agent, constitute sales liable to be taxed under the Central Sales Tax Act in Orissa.
2. Whether the sale is in the course of inter-State trade.
3. Whether the assessment should be made by the sales tax authorities in Orissa.
4. Whether the commission agent effected the sale on behalf of the dealer or on his own behalf.
5. Whether the dealer or the commission agent is liable to pay tax under the Central Sales Tax Act.

Analysis:

Issue 1:
The case involved despatches of goods by rail to West Bengal with endorsements by a commission agent, raising the question of whether these transactions constitute sales liable to be taxed under the Central Sales Tax Act in Orissa. The Tribunal annulled the assessments, leading to a reference to the High Court.

Issue 2:
The judgment analyzed Section 3 of the Act, determining that the sale of goods to ultimate purchasers in West Bengal was in the course of inter-State trade as it involved the transfer of documents of title during the movement of goods from Orissa to West Bengal. The movement of goods commenced in Orissa, making it the appropriate State for tax levy and collection.

Issue 3:
The legal dispute centered on whether the commission agent acted as a mere agent or as a principal vis-a-vis the purchasers. The judgment highlighted the need to examine the commission agreement to determine the nature of the transaction between the commission agent and the purchasers.

Issue 4:
The judgment referred to legal precedents and laid down a test to ascertain whether the commission agent acted as a principal or agent based on the authority to sell in his own name and pass a valid title. The Tribunal was directed to probe further into the agreement between the dealer and the commission agent to determine the liability for the inter-State sale.

Conclusion:
The High Court concluded that the opposite party could be liable for tax on the inter-State sale, emphasizing the necessity for a detailed examination of the commission agreement to establish the true character of the sale transaction. The references were allowed, with each party bearing their own costs.

Judgment:
The references were answered in the negative, indicating that the opposite party may be liable for tax on the inter-State sale, pending further investigation into the nature of the transaction between the commission agent and the purchasers.