2010 (5) TMI 776 - HC - VAT and Sales Tax

Whether, on the facts and in the circumstances of the case, the Trade Tax Tribunal is legally justified to hold that the opposite partydealer is a commission agent despite the dealer has failed to submit any evidence or contract to prove it? Whether, on the facts and in the circumstances of the case, the Trade Tax Tribunal is legally justified to hold that the inward freight is not part of the turnover, on the basis that it was separately charged in the bills, without verifying as to whether the dealer had paid freight in own account or not? Held that - The questions of law raised in these revisions are answered in favour of the Revenue and against the assessee and it is held that in the absence of any positive evidence to establish that the assessee was working on commission, the freight even if charged separately is not liable to be excluded from his turnover.

Summary

Issues:
1. Whether the Trade Tax Tribunal was justified in holding the dealer as a commission agent without concrete evidence?
2. Whether the Trade Tax Tribunal was justified in excluding inward freight from turnover without verifying if the dealer acted as a commission agent?

Analysis:
1. The case involves revisions against Tribunal orders stating that inward freight is not part of the turnover as the dealer is not a commission agent. The dealer imports coal for brick-kiln owners and pays freight separately, claiming to act as a commission agent. The assessing authority rejected this, considering the dealer's purchase as its own and including freight in turnover. The Tribunal excluded freight, reducing tax liability. The Revenue argued lack of evidence to prove commission agency, supported by past judgments. The Tribunal's assumption of commission agency without concrete proof was deemed unsustainable.

2. The Tribunal's decision to exclude freight from turnover was based on separate billing but failed to address the absence of evidence proving the dealer's role as a commission agent. Past cases highlighted the necessity of substantial proof for commission agency claims. The Tribunal's conclusion was criticized for not overturning the assessing authority's findings. Lack of evidence showing purchases on behalf of brick-kiln owners led to the rejection of the dealer's commission agent status. The Tribunal's decision was considered flawed for assuming commission agency without substantial proof.

In conclusion, the High Court ruled in favor of the Revenue, emphasizing the need for concrete evidence to establish commission agency. The Court rejected the argument to exclude freight based on the dealer's role, stating that without proof of commission agency, freight is part of turnover. The Court also dismissed the attempt to introduce new arguments not raised before lower authorities. The Tribunal's orders excluding freight were set aside, confirming the first appellate authorities' decisions for the relevant assessment years.