2011 (6) TMI 701 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Entitlement to Form F under the Central Sales Tax Act, 1956.
2. Registration requirements under Section 7(2) of the CST Act and Rule 4(2) of the CST Rules.
3. Nature of the relationship between the petitioner and the principal-whether it is a contract of sale or contract of agency.
4. Authority of the revenue to deny issuance of Form F.
5. Legal precedents and their applicability to the case.

Issue-Wise Detailed Analysis:

1. Entitlement to Form F under the Central Sales Tax Act, 1956:
The petitioner sought quashing of the order dated November 27, 2010, which denied issuance of Form F. The petitioner, a registered dealer under the CST Act, argued that as a consignment agent, it was entitled to Form F for stock transfers from its principal, Mahabir Chemicals, which was registered in another state.

2. Registration Requirements under Section 7(2) of the CST Act and Rule 4(2) of the CST Rules:
The respondents contended that the petitioner was not entitled to Form F as the principal had not obtained separate registration under Section 7(2) of the CST Act. The petitioner argued that the principal, already registered in its own state, need not register again in Tripura where the goods were sold through an agent.

3. Nature of the Relationship between the Petitioner and the Principal-Contract of Sale or Agency:
The respondents argued that the petitioner was purchasing goods from the principal, thus constituting a sale rather than an agency relationship. The appointment letter required the petitioner to make full payment in advance and sell goods at the principal's invoice rate, earning a commission. The court examined the appointment letter and concluded that the relationship was one of agency, not sale, as the petitioner acted as a consignment agent and the advance payment did not alter this relationship.

4. Authority of the Revenue to Deny Issuance of Form F:
The court held that the revenue authority did not have the power to refuse Form F to a registered agent under the CST Act. The court emphasized that the petitioner was registered under the CST Act and the State Act, and thus entitled to Form F. The revenue authority's refusal was deemed unfair and unreasonable.

5. Legal Precedents and Their Applicability to the Case:
The court referred to several precedents:
- Commissioner of Income-tax, Bombay v. S.K.F. Ball Bearing Co. Ltd.: This case supported the petitioner's argument that advance payments did not change the nature of the agency relationship.
- Gordon Woodroffe and Co. (Madras) Ltd. v. Shaik M.A. Majid and Co.: The court distinguished between contracts of sale and agency, emphasizing that the nature of the relationship depended on the terms of the agreement.
- Sri Tirumala Venkateswara Timber and Bamboo Firm v. Commercial Tax Officer: Highlighted the distinction between sale and agency contracts, which the court found relevant to the petitioner's case.
- Assam Company (India) Ltd. v. Commissioner of Taxes, Assam: The court noted that the facts of this case were different and thus not directly applicable.

Conclusion:
The court concluded that the petitioner, being a registered dealer and consignment agent, was entitled to Form F. The revenue authority's refusal to issue Form F was found to be unjustified. The court directed the respondents to issue Form F to the petitioner, emphasizing that the principal's registration in another state sufficed, and the petitioner's advance payments did not alter the agency nature of the relationship. The court also noted that the revenue authority could ask for security if there were concerns about misuse of Form F.