1991 (10) TMI 278 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Liability of the assessees as dealers under the Tamil Nadu General Sales Tax Act.
2. Interpretation of the agreement between the assessees and the Tamil Nadu Civil Supplies Corporation.
3. Determination of whether the assessees acted as agents or principals in the sale of wheat bran and other wheat products.
4. Applicability of the definition of "dealer" under Section 2(g) of the Tamil Nadu General Sales Tax Act.
5. Responsibility for remitting sales tax to the Commercial Tax Department.

Detailed Analysis:

1. Liability of the Assessees as Dealers Under the Tamil Nadu General Sales Tax Act:
The assessees were assessed to tax under the Tamil Nadu General Sales Tax Act for the sale of wheat bran and other wheat products during the assessment year 1973-74. The Commissioner for Land Revenue and Commercial Taxes reversed the order of the Appellate Assistant Commissioner, holding that the sales were liable to tax. The Board of Revenue observed that the mill had not provided proof that there was no transfer of property in the wheat products from the Corporation to the mill and concluded that the mill, even as an agent, was liable to pay tax on the sales.

2. Interpretation of the Agreement Between the Assessees and the Tamil Nadu Civil Supplies Corporation:
The agreement between the assessees and the Tamil Nadu Civil Supplies Corporation specified that the assessees would act as agents for the sale of wheat bran. The terms included holding stocks on behalf of the Corporation, selling to traders at specified prices, receiving a service charge, and remitting the sale price to the Corporation. The Board of Revenue concluded that the assessees acted as commission agents and were liable to tax as dealers.

3. Determination of Whether the Assessees Acted as Agents or Principals:
The court examined whether the assessees had a saleable interest in the goods. The agreement indicated that the assessees acted as agents, selling goods on behalf of the Corporation and remitting the sale proceeds. The court found that the assessees had the authority to transfer the property in goods to buyers, making them liable as commission agents.

4. Applicability of the Definition of "Dealer" Under Section 2(g) of the Tamil Nadu General Sales Tax Act:
The definition of "dealer" under Section 2(g) includes any person who carries on the business of buying, selling, supplying, or distributing goods on behalf of any principal. The court concluded that the assessees, acting as commission agents, fell within this definition and were liable to pay tax on the sales.

5. Responsibility for Remitting Sales Tax to the Commercial Tax Department:
The agreement and a communication from the Commissioner, Civil Supplies, indicated that the Corporation would pay the sales tax to the Commercial Tax Department. However, there was no evidence that the Corporation had paid the tax on the impugned turnover. The court held that if the Corporation had paid the tax, the Revenue could not realize taxes twice. The court suggested that the Revenue should verify whether the Corporation had realized the tax from buyers and, if so, should collect the tax from the Corporation instead of the assessees.

Conclusion:
The court dismissed the appeal, affirming the Board of Revenue's decision that the assessees were liable to pay tax on the sales as commission agents under the Tamil Nadu General Sales Tax Act. The court observed that the Revenue should verify if the Corporation had paid the tax and, if so, collect the tax from the Corporation instead of the assessees.