1984 (9) TMI 264 - HC - VAT and Sales Tax

Summary

Issues:
Application under section 44(2)(b) of the M.P. General Sales Tax Act for a reference to answer questions of law arising from Tribunal's order on sales tax liability exemption through commission agents.

Analysis:
The applicant sought a direction to the Board of Revenue to make a reference regarding questions of law arising from the Tribunal's order. The applicant had made sales through commission agents and claimed exemption based on a practice where the principal is exempted from tax if the agent undertakes tax payment responsibility. The assessing authority did not grant exemption for sales made through a specific agent, leading to the Tribunal's decision that without evidence of the agent being assessed to tax, exemption cannot be claimed. The questions of law raised were whether the assessee could be taxed for sales made through a registered dealer agent without evidence of tax payment by the agent, and whether it was necessary for the assessee to provide such evidence.

The Government Advocate argued that the Tribunal's decision was based on the lack of evidence showing the agent had been taxed for the transactions. While acknowledging the prevailing practice based on Commissioner's instructions, it was emphasized that the case was decided on the absence of proof of the agent's tax assessment. The Advocate conceded that the assessee's prayer for exemption based on the agent's tax payment was rejected. The practice of exempting principals when agents pay tax was recognized, as seen in the Commissioner of Sales Tax v. Ramswaroop Banwarilal case, indicating the need to determine whether the Board should deviate from this practice and require the assessee to prove the agent's tax payment.

The Court allowed the application, directing the Tribunal to refer and answer the questions of law regarding the liability of the assessee to be taxed for sales through a registered dealer agent without evidence of tax payment by the agent. The decision highlighted the importance of determining whether the assessee needed to provide evidence of the agent's tax payment, considering the prevailing practice and legal requirements. The parties were directed to bear their own costs in this matter.