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TMI Blog2011 (7) TMI 1066X X X X Extracts X X X X X X X X Extracts X X X X ..... turnover. We, therefore, cannot accept the contention of the petitioner that the conditions provided in Explanation 5 to section 2(xxi) are not satisfied. In view of the findings above, we dismiss the S. T. Revision cases. - S.T. Rev. Nos. 247, S.T. Rev. Nos. 248 of 2005 - - - Dated:- 18-7-2011 - RAMACHANDRAN NAIR C.N. AND GOPINATHAN P.S. JJ. A.M. Shaffique, Senior Advocate, E.K. Nandakumar, A.K. Jayasankar Nambiar and Smt. Priya Mahesh for the petitioner Mohammed Rafeeq, Government Pleader, for the respondent JUDGMENT The connected revision cases are .filed by the petitioner challenging the common order of the Tribunal sustaining sales tax assessment on the, purchase, of coco, by the petitioner-company for the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to pay the agent the entire cost incurred by them until delivery of the goods at the stockyard of the company in the various centres and besides reimbursement of the cost, the company also pays certain amount which is termed as commission in, the 'agreement, The assessing officer found that the transaction the company has with the agents is outright purchase and the bifurcation of the price is only an arrangement between the parties to avoid payment of tax on the actual purchase cost incurred by the company. The assessing officer, first appellate .authority as well as the Tribunal after examining the terms of the agreement and the accounts came to the conclusion that the agency agreement-is .only 4 device to avoid payment of tax on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eans issue form No. 25 to the dealers from whom they purchased and after making sales to the company, they obtained form 25 issued by the company and on production of the same, the agents got sales tax exemption. Rule 32(14) is as follows: Every dealer in goods taxable at the point of last purchase in the State shall, if he is not liable to tax on such goods by reason of his not being the last purchaser in the State, obtain a declaration in form 25 from the person to whom he has sold the goods. A blank book of declaration of form 25, shall be obtained from the assessing authority, on payment of a fee at the rate of Seventy rupees per book of 50 forms. Every purchaser shall issue such a declaration to the seller. The declaration so o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the agent and the company takes over the responsibility over the goods only on delivery at the stockyard of the company. So much so, whatever is the arrangement made between the company and their agents for bifurcation of price, such as purchase cost paid to farmers/dealers, freight and cost incurred and margin paid by way of commission, the whole transaction is purchase by the company and the entire cost reimbursed by the petitioner to the agents, in our view, happens to be the purchase cost which is nothing but purchase turnover of the goods. In our view, the assessing officer was lenient in favour of the petitioner because he has only estimated 15 per cent of the reimbursements over and above purchase cost reimbursed as part of taxable t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of his principal; or (iv) to have acted for the fictitious or non-existent principal. We do not think the above statutory provision is in conflict with contract of agency covered by the Indian Contract Act. The fundamental condition of agency arrangement is that the principal will take the loss and consequences for bona fide acts done by the agent in the course of purchase or sale made by the agent on behalf of the principal. In this case admittedly the agent purchased the goods with his funds and at his own cost and risk and transports it to the godown of the petitioner and only after the petitioner accepts the goods and takes over possession, the goods become the petitioner's property. We do not know how ..... X X X X Extracts X X X X X X X X Extracts X X X X
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