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TMI Blog1972 (8) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... e Pench Valley Coal Co. Ltd. v. The State of M.P. and Others). 2.. All these petitions are directed against the assessment of sales tax. Eight of these petitions, namely, No. 182 of 1967, No. 183 of 1967, No. 184 of 1967, No. 187 of 1967, No. 263 of 1967, No. 428 of 1967, No. 387 of 1967 and No. 388 of 1967 have been filed by the Pench Valley Coal Co. Ltd., while the others, namely, M.P. No. 469 of 1967, No. 262 of 1967, No. 189 of 1967, No. 188 of 1967, No. 186 of 1967 and No. 185 of 1967 have been filed by the Amalgamated Coalfields Ltd. Both the companies are incorporated under the Indian Companies Act and have their registered offices at Calcutta in the State of West Bengal. They are engaged in winning and trading in coal from coal mines at Parasia in the district of Chhindwara within the State of Madhya Pradesh. Both of them are registered dealers under the Madhya Pradesh General Sales Tax Act (hereinafter referred to as the "M.P. Act") and were formerly registered dealers under the C.P. and Berar Sales Tax Act, 1947 (hereinafter referred to as the "C.P. Act"). 3.. The companies carried on business in coal during the years 1954-55 to 1960-61 and in the course of busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s within the State they were entitled to a deduction from taxable turnover under section 2(r)(iv) of the M.P. Act and under section 2(j)(a)(ii) of the C.P. Act was neither considered nor decided by this court. After the decision of these petitions, the Deputy Commissioner decided the appeals preferred by the companies on 29th April, 1966. The appeals were allowed in part in pursuance of the decision of this court in the petitions filed by the companies so far as the inter-State sales were concerned. In respect of the intra-State sales, the Deputy Commissioner held that the companies were not entitled to deduction from the taxable turnover on the basis of the declarations furnished by the del credere agents and remanded the cases to the assessing authority for a fresh assessment in pursuance of the observation made in the order, vide order dated 29th April, 1966, in Sales Tax Appeals Nos. 81-A of 63-64, 82-A of 63-64, 83-A of 63-64, 75-A of 64-65, 36-A of 64-65, 128-A of 64-65 and 129-A of 64-65 (annexure B in M.P. No. 182 of 1967). A similar order was passed by the Deputy Commissioner of Sales Tax in respect of the appeals filed by the Amalgamated Coalfields Limited, namely, Sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7., their Lordships considered at length the applicability of the rule of res judicata to writ petitions and made the following observations in paragraph 19, which are pertinent: "We hold that if a writ petition filed by a party under article 226 is considered on the merits as a contested matter and is dismissed the decision thus pronounced would continue to bind the parties unless it is otherwise modified or reversed by appeal or other appropriate proceedings permissible under the Constitution..........If a writ petition is dismissed in limine and an order is pronounced in that behalf, whether or not the dismissal would constitute a bar would depend upon the nature of the order. If the order is on the merits it would be a bar; if the order shows that the dismissal was for the reasons that the petitioner was guilty of laches or that he had an alternative remedy it would not be a bar, except in cases which we have already indicated. If the petition is dismissed in limine without passing a speaking order then such dismissal cannot be treated as creating a bar of res judicata." 10.. In Devilal v. Sales Tax Officer, Ratlam, and Others[1965] 16 S.T.C. 303 (S.C.); A.I.R. 1965 S.C. 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation the rule of res judicata would not be applicable. We, therefore, hold that the claim of the petitioners is not barred by res judicata. It would be here pertinent to mention that the Deputy Commissioner of Sales Tax also proceeded on this view and, therefore, examined the contention of the petitioners in regard to the deduction on merits. 13.. The next objection raised by the learned Advocate-General is that the petitioners are not entitled to any relief because they have not expressly challenged the order of the Deputy Commissioner of Sales Tax. According to him, the proper remedy of the petitioners was to file an appeal against the said order. It was further urged that the order of the Assistant Commissioner of Sales Tax dated 19th December, 1966, having been passed in pursuance of the order of the Deputy Commissioner of Sales Tax, which has not been challenged, it is not open to the petitioners to challenge the order of the Assistant Commissioner of Sales Tax. It was also urged that since the petitioners have already filed an appeal against the order dated 19th December, 1966, they are not entitled to seek any remedy in these petitions because the same point cannot be sim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... colliery, it issued a letter of consent to the buyer and the Deputy Coal Controller (Distribution) who issued priority sanction. The sanction was accorded on the condition that the coal will be consumed for the purpose stated and that it will not be used for any other purpose. On the basis of the contract of sales the colliery loaded the wagon supplied for each consumer affixing a label indicating its destination, etc. The railway receipt was handed over by railway to the colliery. It was left to the colliery to send the railway receipt to the consumer or to the del credere agent or to a bank for delivery to the consignee on payment. The sale transactions in question were effected through del credere agents who were registered dealers. 16.. The contention of the learned Advocate-General is that in these transactions, the del credere agent does not function either as a purchaser or seller and as such he is not a dealer within the meaning of clause (d) of section 2 of the M.P. Act and the corresponding definition of "dealer" in clause (c) of section 2 of the C.P. Act. He further urged that the fact that the del credere agent was registered as a dealer under the Acts is of no conseq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a registered dealer, and the goods purchased are specified in his certificate, but his duty extends no further......He cannot hold an enquiry whether the notified authority who issued the certificate of registration acted properly, or ascertain whether the purchaser, notwithstanding the declaration, was likely to use the goods for a purpose other than the purpose mentioned in the certificate in Form 'C'. There is nothing in the Act or the Rules that for infraction of the law committed by the purchasing dealer by misapplication of the goods after he purchased them, or for any fraudulent misrepresentation by him, penalty may be visited upon the selling dealer." 19.. Following the aforesaid decision, this court held in Commissioner of Sales Tax, Madhya Pradesh v. Samaj Paper Mart, Ranipura, Indore[1968] 21 S.T.C. 239., that the seller has to rely on the representations made to him. He must satisfy himself that the purchaser is the registered dealer and the goods purchased are specified in his certificate. But his duty extends no further. 20.. In view of the aforesaid decisions, the question whether the agent was entitled to be registered as dealer under the Act or not is not m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for such period which remains after deducting therefrom......... (iv) Sales to a registered dealer of goods specified in Part I of Schedule II and declared by him in the prescribed form as being intended for resale by him in the State of Madhya Pradesh or for sale in the course of inter-State trade or commerce." C.P. Act.-"2.(j) 'Turnover' means the aggregate of the amounts of sale prices and parts of sale prices received or receivable by a dealer in respect of the sale or supply of goods in the carrying out of any contract, effected or made during the prescribed period; and the expression 'taxable turnover' means that part of a dealer's turnover during such period which remains after deducting therefrom- (a) his turnover during that period on- (i) .................. (ii) sales to a registered dealer of goods declared by him in the prescribed form as being intended for resale by him by actual delivery in Madhya Pradesh for the purpose of consumption in that region or of goods specified in such dealer's certificate of registration as being intended for use by him as raw materials in the manufacture of any goods for sale by actual delivery in Madhya Pradesh for the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2) of clause 6 of the Order contemplates a del credere agent also functioning as a broker, and provides for brokerage being charged in addition to a margin over the price fixed. 24.. In the absence of a definition of the del credere agent we must construe it in the sense in which it is viewed in commercial practice. 25.. A del credere agent is one who, usually for extra remuneration, undertakes to indemnify his employer against loss arising from the failure of persons with whom he contracts to carry out their contracts (Halsbury's Laws of England, Vol. I, page 152, para 326, third edition). Thus a del credere agent is one who guarantees performance of contracts in consideration of extra remuneration. Del credere agents are, however, common in foreign commercial practice. In our country we have the system of kuchha adtyas and pakka adtyas. Pakka adtya is also not a creature of law but of custom in commercial world. Main feature of pakka adtya is that he acts as a principal in relation both to his constituent as well as to the opposite party with whom he deals on the instruction of his constituent. The position of a Pakka adtya is analogous to a del credere agent. 26.. In Ram ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n express agreement between the parties. As pointed out above, a del credere agent is very much akin to a pakka adtya and, therefore, although it is difficult to say that in every case he deals as a principal, there can be no doubt that he can as well act as a principal. 29.. In the absence of the definition of del credere agent in the Order it would be necessary to examine the facts and circumstances of each case to determine whether he acted as a pakka adtya or as a mere guarantor. If he acts as a pakka adtya it follows that he would be acting as a principal and as such would function as an intermediate purchaser with the result that two sales will be involved-one from colliery to the agent and the other from the agent to the consumer. In such a situation, there can be no doubt that the colliery would be entitled to the deduction in the taxable turnover as claimed because it is not disputed that the agent in this case was a registered dealer and the sale was on the basis of the declaration furnished by him. If he does not act as a principal and merely acts as an agent of the consumer there would be no sale to him and the declaration furnished by him that the goods were purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X
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