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TMI Blog1957 (7) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... ong with the petition. The salient features in the terms of the agreement are as follows: The petitioner agreed to serve as an agent of the Government of Orissa for the purchase of paddy and rice in the district of Puri. His responsibilities as an agent were as follows: (i) The purchase of foodgrains in the area of operation allotted to him by the Collector on behalf of the Government; (ii) taking custody, packing, transport to depot and safe storage of foodgrains so purchased by the agent or of foodgrains compulsorily purchased in the district and made over to the agent; and (iii) subsequent disposal of the food- grains purchased by the agent or of foodgrains compulsorily purchased in the district and made over to the agent in accordance w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Collector. According to him, he was merely an agent to the Government even in respect of the purchase of gunny bags from other persons and there was no "transfer of property" in gunny bags from him to the Government so as to constitute "sale". Hence, while sub- mitting his bill for payment to the Collector, he included the actual cost price of the gunny bags plus the sales tax which he had paid when he purchased them from other persons. The Sales Tax Authorities, however, thought that the agency between the petitioner and the Government did not include the purchase of gunny bags and that it was an independent transaction. Hence, when he supplied gunny bags to the Government and charged for their price there was a separate transaction of "sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd buyer would exist between the petitioner and the Government so far as the supply of gunny bags is concerned, when in respect of the supply of foodgrains the relation- ship of agent and principal admittedly existed between the two. There is no express provision in the agreement to indicate a distinct jural relationship between the two in respect of these two transactions. On the other hand, it was expressly stated that as agent the petitioner was responsible for taking custody, packing, transport to depot and safe storage of foodgrains. Packing of foodgrains was obviously to be done in gunny bags. Again, the quality of gunny bags used for such packing was required to be in accordance with the standard prescribed by the Government. On a fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is- tinguishable because there rice was sold in gunny bags to the Government. In a later Hyderabad case, Nizam Sugar Factory Ltd. v. Com- missioner of Sales Tax [1957] 8 S.T.C. 61., where sugar was sold in gunny bags to the Government sales tax was held to be payable in respect of the sale of the gunny bags also even for the period when no sales tax was payable for sugar as an exempted commodity. 6.. There are, however, two decisions where though there was no relationship of buyer and seller in respect of the main commodity, sales tax was held to be payable in respect of the packing materials. In A.S. Krishna and Co., Ltd. v. The State of Andhra[1956] 7 S.T.C. 26. , the assessees redried in their plant raw tobacco given to them by their cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e primary relationship between the petitioner and the Government was one of agent and principal for the supply of foodgrains and the supply of gunny bags was ancillary to the supply of foodgrains and necessary for such supply in the ordinary course of business. Hence, as there was no relationship of buyer and seller between the two in respect of the foodgrains it is difficult to imagine how such a relationship could exist in respect of the gunny bags in which such foodgrains were supplied. 8.. I would, therefore, allow this petition, set aside the order of the Sales Tax Authorities and direct that no sales tax shall be levied in respect of the supply of gunny bags. The order for payment of penalty for failure to register as a dealer is also ..... X X X X Extracts X X X X X X X X Extracts X X X X
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