1988 (8) TMI 394 - HC - VAT and Sales Tax

Issues Involved:
1. Tax liability of the respondent for the purchase of tarameera oil-seeds.
2. Justification of the Board of Revenue's decision to set aside the Deputy Commissioner's remand order.
3. Adequacy of evidence regarding tax payment by the Bharatpur principals.
4. Application of the second proviso to clause (iv) of sub-section (s) of section 2 of the Rajasthan Sales Tax Act.
5. Relevance of the Supreme Court decision in Bhawani Cotton Mills Ltd. v. State of Punjab.

Issue-wise Detailed Analysis:

1. Tax Liability of the Respondent for the Purchase of Tarameera Oil-Seeds:
The respondent, a commission agent, purchased tarameera oil-seeds valued at Rs. 4,49,663.07 during the assessment year 1974-75 without paying tax, using a declaration in form S.T. 17. The assessing authority included this transaction in the respondent's taxable turnover, asserting that the respondent sold the goods to M/s. Chhedi Lal Gaya Prasad of Bharatpur. The Deputy Commissioner, however, held that the relationship was of a commission agent and principal, thus categorizing the transaction as a "buying agency transaction" and not a sale.

2. Justification of the Board of Revenue's Decision to Set Aside the Deputy Commissioner's Remand Order:
The Board of Revenue set aside the Deputy Commissioner's order, which remanded the case for further inquiry to determine if the Bharatpur principals had paid tax on the transactions. The Board reasoned that the respondent should not be liable for tax until it was established that the tax was paid at the correct stage. However, the High Court found that the Board of Revenue was not justified in doing so, as further inquiry was essential to ascertain the tax payment by the Bharatpur principals.

3. Adequacy of Evidence Regarding Tax Payment by the Bharatpur Principals:
The Deputy Commissioner noted that there was no conclusive evidence that the Bharatpur principals had paid tax on the transactions. Despite the respondent producing books, vouchers, and an affidavit from the Bharatpur dealer, the Deputy Commissioner felt further inquiry was necessary. The High Court upheld this view, indicating that the Board of Revenue failed to provide adequate reasoning for considering the evidence conclusive.

4. Application of the Second Proviso to Clause (iv) of Sub-section (s) of Section 2 of the Rajasthan Sales Tax Act:
The respondent was held liable for tax under the second proviso to clause (iv) of sub-section (s) of section 2 of the Act because the goods were not used for the purpose mentioned in the S.T. 17 declaration, i.e., resale in Rajasthan. The High Court emphasized that the respondent could avoid this liability only by proving that the Bharatpur principals had already paid tax on the transactions. The absence of a provision similar to section 9B for purchases by a commission agent did not exempt the respondent from this liability.

5. Relevance of the Supreme Court Decision in Bhawani Cotton Mills Ltd. v. State of Punjab:
The respondent argued that under the Supreme Court's decision in Bhawani Cotton Mills Ltd., tax could only be levied at a single point, which was not prescribed by the Act or Rules. However, the High Court clarified that Rule 15 of the Rajasthan Sales Tax Rules, 1955, and a notification dated 11th April 1958, specified the point of taxation for declared goods, including oil-seeds. Therefore, the requirement of a single point for taxation was fulfilled, and tax liability arose for the transactions in question.

Conclusion:
The High Court allowed the revision, setting aside the Board of Revenue's orders and restoring the Deputy Commissioner's order for further inquiry. The respondent's liability for tax on the tarameera oil-seeds would depend on the outcome of this inquiry, specifically whether the Bharatpur principals had paid tax on the transactions. The petition was allowed with no order as to costs.

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