9911796707
TMI Blog1968 (3) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the former. Varying rates of commission (as it is called in the agreement itself) ranging from 21 per cent to 61 per cent were paid by the petitioner to Alladin Co. on its sales. The petitioner claimed before the assessing authority that these amounts were liable to be deducted from his total turnover under section 2(s)(ii) and rule 6(1)(a) contending that the amounts so paid to Alladin Co. were in the nature of discount. The assessing authority as well as the first appellate authority and the Sales Tax Appellate Tribunal in second appeal did not uphold this claim of the petitioner. They unanimously held that they were not discounts within the meaning of the said provisions. According to them, the amounts paid to Alladin Co. were in the nature of commission. Aggrieved by the rejection of its claim, the petitioner has filed these three tax revision cases. Though other deductions were claimed before the lower authorities, these revision cases are confined only to the amounts paid by the petitioner to Alladin Co. In order to appreciate the contention of the petitioner it is necessary to understand the scope of section 2(s)(ii) and rule 6(1)(a). They are in the followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perty in goods involved in the execution of a works contract or in the supply or distribution of goods by a society (including a co-operative society), club, firm or association to its members, but does not include a mortgage, hypothe cation or pledge of, or a charge on, goods." The explanations to that definition are not material for the present discussion. We have already noticed that section 2(s) defined the word "turnover" as the total amount set out in the bill of sale as the consideration for the sale or purchase of goods. It is thus clear that the existence of a sale is essential in order to enable a dealer to claim deduction of a discount from his total turnover. Now, the question is whether the transactions between the petitioner and Alladin Co. were sales. The petitioner contends that they were so. On the other hand, the department contends that they were not sales and that the relationship between the petitioner and Alladin Co. was only that of a principal and agent and that what was paid to the latter was commission. According to the department the petitioner did not sell its fertilizers to Alladin Co. On the other hand, Alladin Co. was selling fertilizers m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se (vi) a minimum business of 5 thousand tons per annum. This is another circumstance which is consistent with a relationship of agency, rather than with outright sale. As per clause (vii) as and when the goods are consigned by the petitioner, the sole selling agent has to take delivery by paying the full value. Payment of full value on the delivery of goods need not necessarily be repugnant to the idea of agency. The receipt of goods on payment of full value for them is equally consistent with a relationship of agency. But, more significant is clause (viii) whereunder the sole selling agent has undertaken to deposit Rs. 10,000 as security and to furnish guarantees for the prompt payment of all the dues. Equally meaningful is clause (ix), which provides for a lien or charge upon the goods in the possession or custody of the sole selling agent for all the moneys due and payable to the petitioner. This shows that even though the sole selling agent makes the full payment of the value of the goods which he receives, the petitioner continues to have lien or charge over these goods for all amounts due and payable to it by the sole selling agent. According to clause (x), the sole selling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued to be the sole selling agent of the petitioner and excepting in a few cases detailed in the agreement, all the sales of the petitioner's goods were being made by Alladin Co. itself. There is no evidence on record that the parties entered into another agreement. It is not the case of the petitioner that there is another such agreement. At any rate there is no such written agreement. When a large and responsible manufacturing enterprise like the petitioner does its business, it is not possible to assume that it would conduct its transactions contrary to or otherwise than the terms of a solemn agreement it entered into with the sole selling agent. But, the learned counsel relies upon certain cash memos issued by the petitioner and Alladin Co. to contend that the transactions were purely sales. However, an examination of the memos would not support such an inference. As an illustrative case, we take two cash memos both dated 8th October, 1960. The first of them bears the number 139 and was issued by the petitioner. It is addressed to Alladin Co. and also to a purchaser by name Green Fester Co., Bodhan. It recites that in compliance with an order personally placed, a quant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is an appeal against the decision of the Patna High Court in Rohtas Industries Ltd. v. The State of Bihar(2)). The principle that was laid down by the Supreme Court in Rohtas Industries Ltd. v. The State of Bihar(3) and the other decisions as well is that if property in the goods passed on payment of price it is sale. The crux of the problem therefore is whether the property in the goods passed to the agent on payment of the value. It is to be noticed that even in the case in Hope Prudhomme and Co. v. Hamel and Horley Ltd.(1), the Privy Council found, in the circumstances of that case, that the relationship was one of agency and that there was no outright sale. We have already referred to the agreement in detail and also to the cash memos. that were issued by the petitioner as well as by Alladin Co., and we have found that all those would lead to only one conclusion that there was no sale by the petitioner to Alladin Co. and the relationship between them inter se was only that of agency. In view of this conclusion, the decisions cited by the learned counsel for the petitioner do not come to his aid. There is thus no force in the contentions of the learned counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
