1978 (6) TMI 161 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Relationship between the applicant and M/s. V.D. Swami & Co. Pvt. Ltd. under the agreement dated 1st January, 1964.
2. Whether the despatches outside West Bengal made by the applicant against orders secured by M/s. V.D. Swami & Co. Pvt. Ltd. were sales within the meaning of the Sale of Goods Act and the Central Sales Tax Act.

Issue-wise Detailed Analysis:

1. Relationship between the Applicant and M/s. V.D. Swami & Co. Pvt. Ltd.:

The primary issue revolves around the interpretation of the agreement dated 1st January, 1964, between the applicant and M/s. V.D. Swami & Co. Pvt. Ltd. The applicant, M/s. Ascu Hickson Limited, contended that the relationship was that of a principal and agent, while the Commercial Tax Officers and the Assistant Commissioner of Commercial Taxes argued it was that of a vendor and vendee.

The agreement specified that M/s. V.D. Swami & Co. Pvt. Ltd. would act as the sole selling agent for the applicant, responsible for selling products and services, forwarding orders with an advance payment, and issuing invoices on behalf of the manufacturer. The agent was also responsible for collecting payments and enforcing claims against defaulting purchasers.

The Tribunal upheld the Assistant Commissioner's decision, interpreting the agreement as establishing a vendor-purchaser relationship, relying on the Supreme Court's decision in Rohtas Industries Ltd. v. State of Bihar. However, the applicant's counsel argued that the case was more aligned with the Supreme Court's ruling in Hafiz Din Mohammad Haji Abdulla v. State of Maharashtra, where the relationship was deemed principal and agent.

Upon reviewing the agreement, the High Court found that the terms and conditions were more consistent with a principal-agent relationship. The clauses indicated control by the manufacturer over prices, invoicing, and collection of sale proceeds, with the agent acting on behalf of the manufacturer. The Court concluded that the relationship between the applicant and M/s. V.D. Swami & Co. Pvt. Ltd. was indeed that of a principal and agent, answering question No. (1) in the negative and in favor of the assessee.

2. Despatches Outside West Bengal:

The second issue questioned whether the despatches outside West Bengal made by the applicant against orders secured by M/s. V.D. Swami & Co. Pvt. Ltd. constituted sales under the Sale of Goods Act and the Central Sales Tax Act.

The High Court declined to answer this question for several reasons:
- The question as framed was unintelligible.
- It was neither mooted nor argued before the Tribunal.
- The Tribunal referred the question suo motu, and it was not requested by the appellant.

Conclusion:

The reference was disposed of accordingly, with the High Court holding that the relationship between the applicant and M/s. V.D. Swami & Co. Pvt. Ltd. was that of a principal and agent. The applicant was entitled to the costs of the reference.