1976 (2) TMI 53 - Tri - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the transactions were intra-state or inter-state.
2. The status of the assessee as a commission agent or a principal.

Issue-wise Detailed Analysis:

1. Whether the transactions were intra-state or inter-state:

The primary issue in these appeals was to determine the nature of the transactions, specifically whether they were intra-state or inter-state. The assessee, a registered dealer, argued that the transactions involving the sale of caustic soda and liquid chlorine to M/s. Titagarh Paper Mills Ltd., Chowdwar, were inter-state in nature. The assessee claimed that it acted merely as a commission agent for the transactions, which were conducted in the course of inter-state trade and commerce, thus exempting them under Section 6(2)(B) of the Central Sales Tax Act.

The assessing officer, however, concluded that the transactions were intra-state. He found no privity of contract between the selling dealers in Andhra Pradesh, West Bengal, and Gujarat and M/s. Titagarh Paper Mills Ltd., Chowdwar. The officer determined that the assessee purchased the goods on its own account and resold them to M/s. Titagarh Paper Mills Ltd., thus making the sales taxable under the Orissa Sales Tax Act.

Upon appeal, the Assistant Commissioner of Sales Tax held that the transactions were indeed inter-state. The Commissioner found that the sales took place directly between the selling dealers outside Orissa and M/s. Titagarh Paper Mills Ltd., Chowdwar, with the assessee acting as a broker without taking delivery of the goods within Orissa. The transactions involved movement of goods from one state to another, satisfying the conditions of Section 3 of the Central Sales Tax Act.

In the second appeal, the Tribunal scrutinized the documents and correspondences to determine the true nature of the transactions. The Tribunal found that the goods were transported directly to M/s. Titagarh Paper Mills Ltd., Chowdwar, without the assessee taking delivery in Orissa. The Tribunal concluded that the transactions met the criteria of inter-state trade under Section 3 of the Central Sales Tax Act, as they occasioned movement of goods from one state to another and involved transfer of documents.

2. The status of the assessee as a commission agent or a principal:

The second issue was to determine whether the assessee acted as a commission agent or a principal in these transactions. The assessee claimed to have acted as a commission agent, earning a commission on the net price of the goods supplied to M/s. Titagarh Paper Mills Ltd., Chowdwar.

The Tribunal examined various correspondences and agreements between the assessee and M/s. Titagarh Paper Mills Ltd., Chowdwar. The documents showed that the assessee was to receive a commission on the net price of the goods. The Tribunal referred to the principles laid down in the case of State of Orissa vs. Sriram Avattar Aggarwalla and Co., which discussed the status of commission agents.

The Tribunal concluded that the assessee acted as a pure and simple commission agent. Although some documents referred to the assessee as a purchaser, the overall facts and circumstances indicated that the assessee arranged for the supply of goods from selling dealers outside Orissa to M/s. Titagarh Paper Mills Ltd., Chowdwar, earning a commission for its services.

Conclusion:

Based on the findings, the Tribunal held that the transactions were in the course of inter-state trade and commerce and that the assessee acted as a commission agent. Consequently, the appeals by the State of Orissa were dismissed, and the orders passed by the Assistant Commissioner of Sales Tax were confirmed.