1985 (12) TMI 350 - HC - VAT and Sales Tax

Summary

Issues:
1. Liability of principal and agent for sales tax assessment.
2. Interpretation of Section 11 of the Sales Tax Act.
3. Assessment of tax on turnover by principal or agent.
4. Legal precedents regarding assessment of commission agents.

Analysis:

Issue 1: Liability of principal and agent for sales tax assessment
The case involved a dispute regarding the liability for sales tax assessment between a principal, Tata Oil Mills Company Limited, and its commission agent, Gekayel Enterprises. The Assistant Commissioner held the principal jointly liable for the tax, which led to the petitioner filing a writ petition challenging the assessment.

Issue 2: Interpretation of Section 11 of the Sales Tax Act
The petitioner argued that under Section 11 of the Sales Tax Act, only the agent should be assessed for tax on sales made on behalf of the principal. However, the court analyzed the provisions of Section 11 and clarified that both the principal and the agent are liable to be assessed under the Act, and their liability is co-extensive.

Issue 3: Assessment of tax on turnover by principal or agent
The court highlighted that while Section 11 provides that if an agent has paid the tax, the principal shall not be taxed again for the same transaction. However, the burden of proving that the tax has been paid by the agent lies with the principal. The court also noted that an amendment to Section 11 did not change the liability of the principal and the agent.

Issue 4: Legal precedents regarding assessment of commission agents
The court referred to previous judgments, including State of Mysore v. F.D. Malladad and Bros., to support its interpretation of Section 11. These judgments emphasized that the principal can be assessed under the Act unless there is already an assessment against the commission agent for the same turnover. The court also cited G. Pampapatheppa & Sons v. Commissioner of Commercial Taxes to reinforce the principle that principals can be assessed under the Act even if commission agents are involved in transactions.

In conclusion, the court dismissed the writ petitions, upholding the assessments made against the principal for the two periods in question. The judgment reiterated the principle that both the principal and the agent can be liable for sales tax assessments under the Sales Tax Act.