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TMI Blog1970 (9) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... ssistant Commissioner of Commercial Taxes who rejected the appeal of the petitioner and upheld the assessment order of the Commercial Tax Officer. Thereafter the dealer filed a revision petition before the Commissioner of Commercial Taxes. That petition was heard by the Additional Commissioner of Commercial Taxes and rejected by his order dated the 18th November, 1959. Not content with this the dealer then filed a revision petition before the Board of Revenue, West Bengal, which also rejected the revision petition of the dealer and upheld the order of the Additional Commissioner of Commercial Taxes. Attempt to make the Board refer to this court certain questions of law having failed, the dealer came up to this court and got an order for reference on the question set out above. The whole case of the dealer can be set out at this stage to appreciate the contention raised in this reference. The contentions and the relevant facts are set out in the dealer's application for revision under section 20(3) of the Bengal Finance (Sales Tax) Act, 1941, and appear at pages 19 and 20 of the printed paper-book. These facts and contentions on behalf of the dealer are as follows: The dealers c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion. But what are the services in that scheme of things contended for by the dealer and as mentioned above? The dealer's contention quoting its language from the revision petition is, "the petitioners merely acted as middlemen and had never any property or lien or control over the consignment of goods". The basic fallacy of Mr. Banerjee's argument on middlemen's role lies in this outstanding fact. On the basis of those arguments Mr. Banerjee for the dealers contends that these transactions do not attract West Bengal sales tax and the levy of sales tax therefore was illegal in this case. It is also contended that these transactions are neither "sales" nor "turnover" of the dealer on which the tax could be imposed. Lastly it is contended that the petitioner is not a dealer at all because its only business consisted in acting as middlemen or brokers in respect of the coal or coke under the Colliery Control Order. That in brief is the whole case of the dealer in the present reference. Mr. Banerjee's sheet anchor is the authority of the State of Bombay v. Ratilal Vadilal Bros.[1961] 12 S.T.C. 18 (S.C.). That was a case under the Bombay Sales Tax Act and was also a case under the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Coal Co. Ltd. There was no such letter for construction before the Supreme Court in State of Bombay v. Ratilal Vadilal[1961] 12 S.T.C. 18 (S.C.). The language of the letter in the instant reference before us is significant in many ways and we shall presently discuss it at the appropriate stage. The second point of difference is that this whole contention of the dealer on this reference comes only as a side-wind and as an afterthought in these proceedings. This case was never made at the initial stages and certainly not before the Commercial Tax Officer. In fact, we shall presently show that the case made before the Commercial Tax Officer was in direct contradiction to the case now represented by the contentions put forward before us. Here in the facts and circumstances of this case the outstanding points are as follows: The dealer in its return before the Commercial Tax Officer itself admits that it is a registered dealer with a registration certificate. It has never mentioned in the return that apart from its capacity as registered dealer it was acting as middleman in any of these transactions submitted in the return. A glance at the return shows that it disclosed the past ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance (Sales Tax) Act, 1941, and specially in ground No. 1, the dealer did not mention this fact or this ground but repeated the previous contention before the Commercial Tax Officer by saying: "The said transactions worth Rs. 3,00,933-10-0 are really sales in Behar by the petitioner in the course of inter-State trade, and the Commercial Tax Officer had no authority and jurisdiction to add the same to West Bengal turnover. " (see page 12 of the printed paper-book). Now, that action is significant. Here, the language shows that this was an admission by the dealer that the dealer made the sale in Behar. The exemption claimed by the dealer was only on the ground that it was an inter-State sale and not on any other ground that it represented the transaction of a middleman not liable to sales tax at all. These facts are plainly contradictory to the case now put forward by the dealer. It was only before the Additional Commissioner, Commercial Taxes, that we get a hint of this particular contention where the Additional Commissioner of Commercial Taxes in his order of 18th November, 1959, observed: "Before me, the petitioner took a new stand as well and urged that the company acted on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich positively prohibits a sale by a middleman but also even assuming that in terms of the Colliery Control Order, a middleman is not to be treated as a seller, still I do not see any reason why he should not be held as a dealer for the purposes of the Bengal Finance (Sales Tax) Act, 1941, if he satisfied the conditions laid down in the same..... In my opinion, in the circumstances noted above, the petitioner satisfied the conditions laid down in the State Act and is a dealer for the purposes of such transactions which were nothing but the petitioner's sales." In taking that view, the Additional Commissioner of Commercial Taxes can be supported by the recent decision of the Supreme Court in The State of Rajasthan v. Karam Chand Thappar[1969] 23 S.T.C. 210 (S.C.)., where the Supreme Court made the following observations at pages 226-227: "The price chargeable was fixed under the Colliery Control Order. The effect of the Control Order was only to superimpose upon the agreement between the parties the rate fixed under the Order. But on that account it cannot be said that the relation between the supplier and the person to whom the coal was supplied was not contractual. The contrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re there was no sale and the assessees were not liable to pay sales tax on the amount received from them from the State of Madras for sugar supply. The reason for Mr. Banerjee's drawing our attention to the New India Sugar Mills' case(4) was that he was trying to say that the Supreme Court was holding a sale under the Sugar Control Order to be not a sale and yet in other Supreme Court cases, as in Karam Chand Thappar's case(2), a sale under the Colliery Control Order was a sale and he also made reference to the Indian Steel Wire Products Ltd. v. State of Madras[1968] 21 S.T.C. 138 (S.C.)., another decision of the Supreme Court, where it was held that the transactions were sales attracting liability to sales tax. Finally, Mr. Banerjee relied on the State of Bombay v. United Coal Co.[1958] 9 S.T.C. 19., a decision of the Bombay High Court saying that in the facts and circumstances of that case under the Colliery Control Order, the respondents were del credere agents for the consignors and therefore the transactions were not transactions of sale within the meaning of the Bombay Sales Tax Act. There again it would be unnecessary to discuss these authorities first, because the Bombay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m open to penalty which might result in imprisonment. We cannot assume such a conclusion. This consideration is a persuasive factor in coming to the conclusion that this letter represents an independent out and out buying and selling contract and not a contract of agency or for earning commission. Mr. Banerjee for the dealer tried to get out of this consequence by suggesting two arguments. One argument was that there is a reference in that letter to the "Government controlled selling prices" but the point is not merely control of prices by the Government. The control under the Colliery Control Order is far more extensive and goes very much beyond prices. We do not propose to set up the diverse clauses of the Colliery Control Order but a mere glance would show that the Colliery Control Order controls who is to sell and who is to purchase and who is to be allotted and what should be the quantity and provides for special authorities and licences, as for instance clause 12(e): "Clause 12(e)-No person shall acquire or purchase or agree to acquire or purchase any coal from a colliery and no colliery owner or his agent shall despatch or agree to despatch or transport any coal from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the report were "two and a half per cent. commission payable to you on the said sum after completing sale". Therefore that implied that that was a commission payable when the agent completed the sale. Agency would seem to be implied in such a situation. Secondly, the glaring and outstanding fact in the Privy Council case was that this agent is a person without the means to pay the purchase price as will be seen from the observations of Sir Ford North at pages 331-332 where the following statement of fact appears: ".....Livingstone, who was admittedly a person of no means; that Livingstone was merely employed by him as his agent to find a person or persons of means willing to buy the property from Ross on the terms contained in the letter of August 23." The Supreme Court decision in Gordon Woodroffe v. Sk. M.A. Majid Co.A.I.R. 1967 S.C. 181. was also referred in that connection where on the construction of the particular document the Supreme Court observed at page 183: "On the face of it, therefore, the contract is clearly not one of agency for sale but it reads as an agreement of sale. If the defendants were intended to be constituted as the agents for sale the terms of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iving a selling commission was only an incentive to the buyer to lift the goods quickly and within a short time in a contract which was terminable with two months' notice and on which the payment and the credit note for the commission depended on a short period of 15 days. In addition, the learned Advocate-General also has relied on the fact that the dealer having claimed exemption from the sales tax on these transactions must be deemed to have admitted liability for the sales tax or else no question of exemption under the Sales Tax Act could arise. To that Mr. Banerjee for the dealer argued that there could be no estoppel against law and even if he had by mistake taken such a course that should not be held against him. His argument would have acquired at least some force if he could bring himself within the doctrine of estoppel of law but this is not a doctrine of estoppel of law. It is a question of a particular fact. That fact is that the dealer himself is a registered dealer who had applied and used registered declaration forms and who has never pleaded non-liability on the basis of that fact at any of the primary stages or even subsequent stages, until very late his complete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall briefly refer to and notice this argument made by Mr. Banerjee. Section 2(c) of the Bengal Finance (Sales Tax) Act defines a dealer to mean "any person who carries on the business of selling goods in West Bengal and includes the Government. " On that basis, Mr. Banerjee argued first that the assessee was not carrying on the business of selling goods but was only acting as an agent. We have already come to the conclusion that the assessee in the facts and circumstances of this case was selling goods and not acting as an agent. The next submission of Mr. Banerjee was based on explanation 2 which reads as follows: "A factor, a broker, a commission agent, a del credere agent, an auctioneer or any other mercantile agent, by whatever name called, and whether of the same description as hereinbefore mentioned or not, who carries on the business of selling goods and who has, in the customary course of business, authority to sell goods belonging to the principals is a dealer." This explanation far from helping Mr. Banerjee appears to us to go against him. It shows in the first place that a dealer can be a broker or a commission agent or a del credere agent. No doubt, that would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chittar Mal Narain Das's case[1970] 26 S.T.C. 344 (S.C.); (1970) 2 S.C.W.N. 306. said that it "does not justify the view that even if the liberty of contract in relation to the fundamentals of the transactions is completely excluded, a transaction for supply of goods pursuant to directions issued under a Control Order may be regarded as a sale." That ratio is therefore based on "fundamentals of transactions". We have stated what the "fundamentals" are in this case and which leave us with no doubt that the present transaction in the instant reference is a sale and liable to tax. For the reasons stated above and the authorities discussed, we hold and we are of the opinion that the Board of Revenue was not in error of law in construing the agreement of 7th April, 1948, between the assessee and the Bengal Coal Co. Ltd. In other words, we hold that the agreement dated 7th April, 1948, represented a transaction by which the Bengal Coal Co. Ltd. sold the coal to the assessee and as such, the turnover was taxable under the Bengal Finance (Sales Tax) Act. We further hold and are of the opinion that this agreement dated 7th April, 1948, invested the assessee with the status and/or incidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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