1960 (11) TMI 82 - SC - VAT and Sales Tax

Whether the respondents were carrying on such a business in respect of coal? Held that - Appeal dismissed. The position of the respondents was merely that of agents, arranging the sale to a disclosed purchaser, though guaranteeing payment to the colliery on behalf of their principal. In view of what we have said, no business of selling coal was disclosed in the instance cited before the Collector, and the order of the Tribunal was correct on the facts placed before it.

Summary

Issues Involved:
1. Whether the respondents can be called dealers under the Bombay Sales Tax Act, 1953.
2. Whether the respondents are liable for registration under the said Act.
3. Whether the supply of coal constituted two separate sales or a direct sale between the colliery and the consumer.

Detailed Analysis:

Issue 1: Whether the respondents can be called dealers under the Bombay Sales Tax Act, 1953

The respondents, acting as commission agents, applied to the Collector of Sales Tax for a determination of their status under the Act. The Collector held that they were dealers, as defined in subsection (6) of section 2 of the Act, which includes commission agents. The Tribunal, however, reversed this decision, stating that the respondents were not dealers. The Supreme Court upheld the Tribunal's decision, emphasizing that the respondents did not carry on the business of selling goods in the State of Bombay. The Court noted that the respondents were merely agents facilitating the sale from the colliery to the consumer without becoming owners of the coal themselves.

Issue 2: Whether the respondents are liable for registration under the said Act

The Collector of Sales Tax had initially required the respondents to register under the Act, considering them as dealers. The Tribunal, however, concluded that the respondents did not need to register as they were not dealers. The Supreme Court agreed with the Tribunal, stating that since the respondents were not involved in the business of selling goods but were merely acting as agents, they were not liable for registration under the Act.

Issue 3: Whether the supply of coal constituted two separate sales or a direct sale between the colliery and the consumer

The Collector had determined that the transaction involved two separate sales: one from the colliery to the respondents and another from the respondents to the consumer, Nanalal Karsandas. The Tribunal, however, found that there was only one sale, directly from the colliery to the consumer, facilitated by the respondents. The Supreme Court upheld the Tribunal's view, stating that the respondents acted as agents arranging the sale to a disclosed purchaser, without any privity of contract between the colliery and the respondents. The Court emphasized that the respondents never became owners of the coal, as the sale was directly from the colliery to the consumer.

Conclusion:

The Supreme Court dismissed the appeal by the State of Bombay, affirming the Tribunal's decision that the respondents were not dealers under the Bombay Sales Tax Act, 1953, and were not liable for registration. The Court also confirmed that the transaction involved a direct sale from the colliery to the consumer, with the respondents acting merely as agents. The appeal was dismissed with costs.