2009 (5) TMI 873 - HC - VAT and Sales Tax

Furnish form 25 in respect of the transactions covered by the bills produced as exhibits P2 and P3 series, pertaining to the sale of black pepper for the years 1986-87 and 1987-88 Held that - The stipulations in exhibit P1, particularly under paragraph Nos. 6, 8 and elsewhere as to the conditions incorporated and the liability fixed on the supplier, show that the transactions between the petitioner and the first respondent would never come to an end on effecting the supply. Showing the name of the first respondent as shipper in the relevant records and proceedings was only for the purpose of facilitating the transactions in an effective and result-oriented manner, which cannot be reckoned as the basis to arrive at a conclusion to the contrary. Exhibit P1 contract executed between the parties was only for the purpose of facilitating sale on payment of commission , which could never be regarded as a sale , so as to shift the liability to the shoulders of the first respondent and to compel them to issue Form 25 declaration, more so, at this belated stage. W.P. dismissed.

Summary

Issues:
- Interpretation of Rule 32(14) of the Kerala General Sales Tax Rules, 1963 regarding the issuance of Form 25 declaration.
- Determination of the nature of the transaction between the petitioner and the first respondent - sale or intermediary/commission arrangement.
- Evaluation of the petitioner's entitlement to Form 25 declaration for transactions involving the sale of black pepper for the years 1986-87 and 1987-88.

Interpretation of Rule 32(14) of the Kerala General Sales Tax Rules, 1963:
The petitioner sought a direction for the first respondent to furnish Form 25 declaration for transactions related to the sale of black pepper. Rule 32(14) mandates that a dealer, not liable to tax due to not being the last purchaser, must obtain a declaration in Form 25 from the buyer and submit it to the assessing authority. The petitioner's delayed request, after a decade, raised questions about the timeliness and necessity of the petition. The court emphasized adherence to the rule's procedural requirements and refrained from delving into factual disputes without rebuttal evidence.

Nature of Transaction - Sale or Intermediary/Commission Arrangement:
The dispute centered on whether the transaction between the petitioner and the first respondent constituted a sale or an intermediary/commission arrangement. The first respondent contended that they acted as an intermediary, with the petitioner directly selling goods to foreign buyers. The court analyzed the terms of the contract (exhibit P1) and highlighted clauses indicating the first respondent's role as a facilitator, not the actual exporter. The payment of a nominal service charge further supported the characterization of the transaction as an intermediary arrangement rather than a sale.

Entitlement to Form 25 Declaration for Black Pepper Transactions:
The court scrutinized the contents of exhibit P1 and rejected the petitioner's claim that the transaction was a sale. The contractual terms, including indemnification obligations and commission payment, pointed towards an intermediary/commission arrangement. The court emphasized that the petitioner's delay in seeking Form 25 declaration undermined their claim. Ultimately, the court found no grounds for interference, leading to the dismissal of the writ petition.

In conclusion, the judgment focused on the interpretation of the relevant tax rule, the nature of the transaction between the parties, and the petitioner's entitlement to Form 25 declaration. The court's analysis highlighted the contractual terms, the first respondent's role as an intermediary, and the procedural requirements under the tax rule. The dismissal of the writ petition underscored the court's adherence to legal principles and the lack of a valid basis for intervention in the matter.