9911796707
TMI Blog1963 (5) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 1. The Zeal Pak Cement Factory, Hyderabad (hereinafter called "the Pakistan Factory") manufactured cement in Pakistan. For the export of this cement from Pakistan, the Pakistan Industrial Development Corporation (hereinafter called "the Pakistan Corporation") entered into an agreement with Messrs Milkhiram and Sons (Private) Ltd., Bombay (hereinafter called "Milkhiram and Sons Ltd."), while for the import of this cement in India the State Trading Corporation entered into an agreement with Milkhiram and Sons Ltd. on the 12th of September, 1956. This agreement is exhibit 3 on the record. Under this agreement 35,000 tons were to be delivered by Milkhiram and Sons Ltd. to the State Trading Corporation f.o.r. Khokhropar in Pakistan on the border of Rajasthan at approximately 5,000 tons per month commencing from September, 1956. Another 70,000 tons were to be delivered f.o.r. Wagh. It is with respect to the cement to be delivered f.o.r. Khokhropar that we are concerned in this case. The goods were to be sent to such places in India as were to be intimated by the buyer or his nominee from time to time. The railway receipt was sent to the State Bank of India, Karachi. Goods were to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ischarged his functions mentioned in exhibit 4 by obtaining orders from the buyers in Rajasthan under an agreement as per pro forma exhibit 5 and communicated the same along with despatching instructions as per pro forma exhibit 6 to the Pakistan Industrial Corporation, Karachi, which intimated the same to the Zeal Pak Cement Factory, the manufacturers, for arranging supply as per specimen letter exhibit 8. The manufacturers consigned the goods by rail from Hyderabad (Pakistan) to the destination in India, the railway receipt being taken in the name of the State Bank of India, Karachi, as consignee, and advice of despatch was sent by the Zeal Pak Cement Factory to the ultimate buyer in Rajasthan directly with a copy to the petitioner. The original railway receipt used to be sent by the manufacturers to the State Bank of India, Karachi, along with the invoice and the State Bank used to endorse the railway receipt in favour of the ultimate buyer in Rajasthan and forward it directly to the buyer by registered post. Upon receipt of intimation of despatch of the consignment the buyer used to take delivery of the goods from the railway generally on the strength of the manufacturer's desp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tory under the circumstances mentioned hereinbefore and the respondents be restrained from assessing, levying or recovering any tax or penalty or any other charge under the Act upon, against or from the petitioner in respect of the aforesaid sale. In the writ petition it is also mentioned that as the respondents were threatening to take coercive action for the recovery of the aforesaid amount from the petitioner, the petitioner has directly come to this Court without filing an appeal against the assessment as provided under section 13(1) of the Act as the remedy by way of an appeal was not speedy, effective or adequate remedy in view of the fact that no appeal was to be entertained unless the amount of tax was paid. The facts are not controverted by the respondents, but it is contended that the petitioner had an alternative remedy by way of an appeal and he should not be given any relief in this writ petition as the petitioner has failed to avail of the remedy by way of an appeal provided under the law. On the facts it is alleged that the petitioner was a dealer within the provisions of the Act and he had sold the cement imported by the State Trading Corporation on its behalf to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 286(1)(b) of the Constitution, the respondent had no jurisdiction to assess the petitioner to pay the sales tax on the sale of goods in the course of the import into the territory of India. As discussed hereinafter, this contention is sound and we have therefore though it proper not to dismiss the writ petition in limine. Even if we take it that there was no total lack of jurisdiction in respondent No. 1 in assessing the petitioner to pay the sales tax, we are of the opinion that on the principles enunciated in Venkateswaran's caseA.I.R. 1961 S.C. 1506., we are not inclined to dismiss the writ petition in limine. We, therefore, overrule this contention on behalf of the respondents. Before we come to the merits of the case, it is necessary to take notice of one more contention urged on behalf of the respondents. The petitioner used to inform from time to time the various dealers of cement in Rajasthan by letters about the authorisation or re-allocation of the cement and also stated therein that the supply will be arranged by it of Pakistan cement to be imported by Khokhropar by the State Trading Corporation. One of the terms and conditions of exhibit 5 is as follows: "5. Terms o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd expenditure incurred on behalf of the Corporation as well as the money received by the assessee through the sale of cement; (g) To receive for the aforesaid services a consolidated sum of Re. 1 per ton. If any extra expenditure is incurred it was to be reimbursed." It is contended by the petitioner that it is merely a del credere agent for the State Trading Corporation and in spite of the circumstances relied on by respondent No. 1 for holding it to be a dealer it cannot be said to be a dealer within the meaning of section 2(f) of the Act. The petitioner has relied on the following authorities: (i) State of Bombay v. Ratilal Vadilal and Bros.(1) and (ii) Karam Chand Thapper and Bros. (Coal Sales) Ltd., Jaipur v. Sales Tax Officer, City Circle "A", Jaipur[1961] Raj. L.W. 420; I.L.R. (1961) 11 Raj. 688. On the other hand, learned Government Advocate has relied on Gilda Textile Agency, Vijayawada v. State of Andhra Pradesh[1962] 13 S.T.C. 738., and has argued that the petitioner must be deemed to be a dealer by virtue of Explanation to section 2(f) of the Act as he was an agent of the State Trading Corporation who carried on the business of selling and supplying goods in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar to the facts in Ratilal Vadilal's case[1961] 12 S.T.C. 18., and it was held that Karamchand Thapper and Bros. could not be held to be dealers within the meaning of the Act. But these cases are distinguishable from the facts and circumstances of the instant case. The important feature which takes out the case under consideration from the purview of the law enunciated in the cases relied on by the learned Advocate on behalf of the petitioner is that the petitioner was appointed as an agent even for the purpose of selling cement. In this connection we may refer to the letter of appointment (exhibit 4) which says that the petitioner was appointed as the clearing and distributing agent for the State Trading Corporation in respect of cement imported from Pakistan f.o.r. Khokhropar and that the petitioner was to distribute the cement and sell it at Rs. 102-8-0 per ton of 2240 lbs. f.o.r. It may be further mentioned that the petitioner was to maintain a regular account of all payments made and expenses incurred as well as all moneys received from the sale of the cement. The essence of the matter is that it is the petitioner who was to conduct the operation of selling also. The petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot prevail. Then, it is contended by the petitioner that in this case, sales to the various dealers in Rajasthan had taken place before the goods had entered into the territory of India and the sales must be held to be in the course of import into the territory of India. In this connection learned counsel has relied on the following circumstances which may be taken to be not disputed by the respondents: (1) The petitioner upon the receipt of the orders communicated the orders directly to the Pakistan Industrial Development Corporation stating the name of the buyer (consignee), the place of destination, the quantity etc. and directing despatch of loading advice and R.R. to the consignee; (2) The Pakistan Industrial Development Corporation communicated the same to the Pak Factory; (3) The factory sent the despatch advice to the ultimate buyer; (4) The factory took out the railway receipt in favour of the State Bank of India, Karachi, and forwarded it to that Bank as it was the Banker of the State Trading Corporation. The State Bank sent the railway receipt directly to the ultimate buyer in Rajasthan; (5) The post-card despatch advice authorised the ultimate buyer to obta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice and the railway receipt. It is to be examined what is the legal position when the goods reached Khokhropar and delivery was taken at Khokhropar. As already pointed out the railway receipts were in the name of the ultimate buyers who had also been sent despatch advice by the Pak Factory. The terms of the agreement under which the petitioner as an agent of the State Trading Corporation sold to the ultimate buyer in Rajasthan are given in exhibit 5. The following term in exhibit 5 under the heading "Delivery and Transit Risk" may be noticed"No responsibility attaches to us or to the suppliers for non-supply, delay in despatch and non-receipt of consignment, or any loss, damage or shortage in transit due to any reason whatsoever. Although our standard rates are on f.o.r. destination basis our responsibility of all kinds ceases once the goods are handed over to the carriers and railway receipt obtained. All claims for loss, damage or shortage, etc. during transit will lie with the carriers, and our payments are not to be delayed on any such account whatsoever." Under this term the risk in transit was of the ultimate buyer and even if this term be taken to be controlled by exhibi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cle 286(1)(b). It is clear from the facts of that case that the Bombay dealers were importing the cotton from Africa. It is only after the goods had been imported into India that the sale had taken place. We may quote the following observations: "The relationship between the assessee and the importer at Bombay was that of buyer and seller, both being principals, and the sale was only after the import of the goods, even where the contract to sell preceded the order to the exporter abroad to ship the goods in India........ They were not purchases in the course of import, but they were purchases effected after the import had been completed." The facts of that case are clearly distinguishable from the facts in the instant case. In the instant case, the title to the property passed to the ultimate buyers in Rajasthan from the moment the goods reached Khokhropar and the State Trading Corporation acquired title to them. As a result of the aforesaid discussion, we are of the opinion that no sales tax can be levied on the petitioner for the transactions of the sale of the cement imported from the Pak Factory by the State Trading Corporation under the agreement with Milkhiram and Sons Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
