1973 (8) TMI 137 - HC - VAT and Sales Tax

Issues Involved: Jurisdiction of the Sales Tax Officer, Definition of 'dealer', Transfer of stock as sale, Liability of non-resident principal, Validity of notice under section 12(5) of the Orissa Sales Tax Act.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Sales Tax Officer:
The petitioner argued that the Sales Tax Officer had no jurisdiction to make the assessments as the petitioner was a non-resident principal with an agent in the State of Orissa. The court clarified that "residence" has no bearing on whether a person is a "dealer" under section 2(c) of the Act. The court stated, "Whether 'resident' or 'non-resident', a person becomes a 'dealer' when he carries on the business of selling, purchasing or supplying goods within the State." The court referenced multiple cases, including *V.O. Vakkan and Others v. The State of Madras* and *Bombay Cycle Stores Co. Ltd. v. The State of Bombay*, affirming that a non-resident who carries on business activities within the state is liable under the Act.

2. Definition of 'Dealer':
The petitioner contended that as a non-resident principal, it should not be treated as a dealer. The court examined the definition of "dealer" in section 2(c) of the Act, which includes any person who carries on the business of purchasing or selling goods in Orissa, and noted that the explanation to this section makes the agent also liable as a dealer. The court concluded, "We, therefore, hold that the petitioner has been rightly treated by the Sales Tax Officer as a dealer under the Act and merely because the petitioner has an agent at Sambalpur, it is not open to the petitioner to dispute its liability as a dealer under the Act."

3. Transfer of Stock as Sale:
The petitioner argued that the transfer of stock by the agent to himself does not constitute a sale. The court referred to the Supreme Court's decision in *The State of Madras v. Gannon Dunkerley & Co. (Madras) Ltd.*, which outlined the necessary elements of a sale, including the transfer of title. The court found that title in the goods continued with the petitioner-company until appropriation by the agent, at which point the agent claimed commission, indicating a transfer of title. The court stated, "There was certainly a transfer of title from the petitioner as principal represented by the agent to a dealer (the agent in his independent capacity) and thus there was a sale."

4. Liability of Non-Resident Principal:
The petitioner claimed that only the agent could be liable as a dealer. The court rejected this argument, stating that both the principal and the agent could be liable under the Act. The court referenced the case of *Public Prosecutor v. K. Sankunny and Others*, indicating that a non-resident principal cannot evade tax liability if the necessary requirements for the levy of tax are fulfilled.

5. Validity of Notice under Section 12(5):
The petitioner challenged the validity of the notice issued by the Sales Tax Officer under section 12(5) of the Act. The court did not find merit in this argument and upheld the assessments made by the Sales Tax Officer.

Conclusion:
The court dismissed the writ petition, stating, "Both the contentions of the assessee must, therefore, fail." The court also noted some confusion in the orders of assessment regarding the distinction between goods transferred to the agent's personal account and those sold to third parties. The court recommended that future assessments clearly distinguish between these transactions to avoid confusion. The writ petition was dismissed with costs assessed at Rs. 100.

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