9911796707
TMI Blog1999 (2) TMI 655X X X X Extracts X X X X X X X X Extracts X X X X ..... to M/s. Universal Radiators Limited, Coimbatore, as procurement agent and in that process for the services rendered as per the agreement the firm got commission of 5.5 per cent and besides the same it collected incidental charges such as cooly paid, freight charges from stockyard of Hindustan Copper Limited to the godown of the assessee and the said amounts were also reimbursed from M/s. Universal Radiators Limited, Coimbatore. To put it in a nutshell under the terms and conditions of the agreement Tvl. Parikh Metal Corporation, Madras, was only a procurement agent of M/s. Universal Radiators Limited, Coimbatore and supplied the goods and hence claimed the abovesaid exemption on a turnover of Rs. 19,41,608.61 on the value of the goods supplied to M/s. Universal Radiators Limited. But the assessing authority namely, Commercial Tax Officer, Peddunaickenpet, South Circle, Madras-1, disagreed the claim of the assessee that he was a procurement agent and held that the assessee is a commission agent engaged in the sale or purchase or in the taxable event under the Act, is a dealer as per section 2(g) of the Tamil Nadu General Sales Tax Act, 1959 and hence the purchases as well as sales e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods, and hence the second transaction has to be also eligible to tax (multi-point tax at 5 per cent). So it is claimed by the Revenue that the Tribunal has erred in holding that the assessee is an agent only for commission. The very same points were urged before us during the arguments. 5.. Now the point for consideration is whether the common order of the Appellate Tribunal by upholding that the turnover of Rs. 19,41,609 is exempted from tax, surcharge, additional sales tax is in accordance with the law. 6.. The genuineness of the agreement dated June 20, 1984, in between M/s. Universal Radiators Limited, Coimbatore and M/s. Parikh Metal Corporation, Mint Street, Madras, is not in dispute. In such circumstances it is claimed by M/s. Parikh Metal Corporation, Madras, that it is only a procurement agent of M/s. Universal Radiators Limited, Coimbatore and it is not a dealer as defined under section 2(g) of the Tamil Nadu General Sales Tax Act, 1959. Hereinafter, M/s. Parikh Metal Corporation, Madras, will be called as assessee , M/s. Universal Radiators Limited, Coimbatore, will be called as ultimate buyer and M/s. Hindustan Copper Limited will be called as seller for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods on same or other terms without reference to the ultimate buyer. So unless the right of disposal of goods is with the assessee, there is no possibility of dealing with other parties in the same nature of transactions. As per the clauses 4 and 5, the ultimate buyer would periodically intimate their requirements for their said goods and also authorise the assessee for purchase of the said goods at the most advantageous price with reference to the market rate prevailing at that time which of course by intimating periodically about the prevailing market rates and conditions to the ultimate buyer. So as per clauses 4 and 5, by considering the prevailing market rates and conditions of the said goods the assessee could fix the most advantageous price for the said goods which means the discretion to fix the price of the goods was with the assessee only and not with the ultimate buyer by taking into consideration of the prevailing market rates and conditions. It is also admitted fact that neither the ultimate buyer, and the seller knew each other nor there is any privity of contract in between themselves. Of course this could be based upon the clause 6 of the agreement wherein it is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued cheques for each and every transactions to M/s. Hindustan Copper Limited, and thereafter only the assessee sent the goods to Coimbatore and thereby after the first transaction was completed the second transaction commenced by way of sale. Further even as per the finding of the assessing authority and the first appellate authority it could be seen that the assessee purchased the goods from the seller with his own capital and kept it in the godown and thereafter only in the subsequent days despatched the same to the ultimate buyer in Coimbatore who paid the sale price, etc., only after the receipt of the goods at Coimbatore which was nothing but sale by the assessee to the ultimate buyer. So it is the specific finding of the first appellate authority that the appellant utilised his own fund for purchase of goods namely the brass sheets from the seller and so also the first appellate authority in an emphatic manner has clearly stated that there is not even a single instance of funds provided for by the said ultimate buyers, namely, M/s. Universal Radiators Ltd., Coimbatore. It is also significant to point out that all the invoices are only in the name of the assessee and only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we have to state that out of his own fund by fixing the prices considering the market rates and conditions purchased goods from the seller and got delivery of the goods in its godown and thereafter only passed on or sold the goods to the ultimate buyer, and after receipt of the goods-the ultimate buyer paid the consideration, i.e., the ultimate buyer paid the price and other expenses only after getting delivery of the goods at Coimbatore. It is pertinent to point out that even while mentioning the 5.5 per cent of the cost of purchase would be paid to the assessee it is stated in clause 12, the assessee is entitled to a remuneration calculated at 5.5 per cent of the cost of the purchase of the said goods. So even as per clause 12 of the agreement, it may be a commission of 5.5 per cent in the point of view of the seller but it could be only construed as a profit for the assessee. It is also pertinent to point out that there is no clause to mention that in the event of loss whether the assessee should have the right to indemnify. So there cannot be any element of procurement agency. Considering all these aspects it could be seen that the assessee not only got delivery of the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n only after receipt of the goods. So the goods was purchased by the assessee from the seller who passed on to the assessee at its inception and thereafter the said goods was sold to the ultimate buyer or to third parties and thereby the other goods which were not passed on to the ultimate buyer were only with the assessee as an owner. So the facts of the cited case entirely different from the facts of this case and hence not applicable to the facts of this case. 11.. In this context, we have to point out that in one another Supreme Court decision in Bagal Kot Cement Co. v. State of Mysore reported in [1976] 37 STC 73, it has been held that the assessee effected the sale as a dealer and therefore liable to pay tax, and while rendering such principle, their Lordships relied upon a Full Bench decision of our Madras High Court in Kandula Radhakrishna Rao v. Province of Madras represented by the Collector of West Godavari, reported in [1952] 3 STC 121; AIR 1952 Mad. 718. The relevant portion of the Full Bench decision has been extracted in the Supreme Court decision [1976] 37 STC 73 at pages 76 and 77 as follows: In the judgment under appeal the High Court repelled the stand of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods purchased by the assessee and subsequently despatched to the M/s. Universal Radiators Ltd., Coimbatore alone were considered on the wrong footing as if the assessee was a sole agent of the ultimate buyer. Perhaps if the decisions reported in [1976] 37 STC 73 (Bagal Kot Cement Co. v. State of Mysore) and the Full Bench decision of the Madras High Court in [1952] 3 STC 121 (Kandula Radhakrishna Rao v. Province of Madras) had been brought to the notice of the Appellate Tribunal, the result would have been otherwise. Bearing all these facts in mind, we could very well interfere with the common order of the Tribunal as it erred in arriving at a conclusion as a procurement agency only, without properly appreciating the clauses in the agreement, but actually as per the available materials the assessee had right to dispose of the goods, and further there are two transactions out of which the second one is also liable to tax and thereby we could interfere within the findings of the Appellate Tribunal. Hence the order of the Tribunal is hereby set aside and the order of first appellate authority which confirmed the order of the assessing authority is restored. Hence the assessee is liab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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