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TMI Blog2020 (3) TMI 143X X X X Extracts X X X X X X X X Extracts X X X X ..... edere Agent stands established and therefore, the petitioner was a dealer within the meaning of the respective enactments - Whereas in Explanation (1-B) to Section 2(n) of TNGST Act, 1959, transfer of property involved in the purchase, sale, supply or distribution of goods through a factor, broker, commission agent or arhati, del credere agent or an auctioneer or any other mercantile agent, by whatever name called, whether for cash or for deferred payment or other valuable consideration, shall be deemed to be a purchase or sale, as the case may be, by such factor , broker, commission agent or arhati, del credere agent, auctioneer or any other mercantile agent, by whatever name called, for the purposes of this Act. From a cumulative reading of the definition of sale in Section 2(n) of the TNGST Act, 1959 only in the case of ascertained goods within the state of Tamil Nadu at the time of sale will be liable to tax in the hands of a Del credere agent. In this case, it is the contention of the petitioner that the goods were transferred by their principal namely Reliance Industries Ltd directly from the State of Gujarat. This would require verification on facts - The question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned counsel for the petitioner relied on the decision of the Hon'ble Supreme Court in Peninsular Traders and Another Vs. Deputy Commissioner of Sales Tax (Law), Kerala, (1998) 108 STC (SC). In paragraph 7, the Hon'ble Supreme Court observed as under:- 7. The overall effect the agreement produced on our mind is that it is an agreement of agency and that there is no transfer of the said chemicals from the company to the firm. As is clear from several clauses in the agreement, particularly Clauses (6) and (10), a running account was to be maintained by the company of its dealings with the firm and that the value of the said chemicals was to be debited to the firm's account only when sold by the firm. Clause (4), when it required payment to be made of the quantity lifted by the firm by the end of the month or be charged interest at the rate of 9%, therefore, suggests that the firm's account would be debited only in the event that payment for all the chemicals lifted delivery during the month had not been sold by the month-end. There is nothing in it which indicates that the property in the unsold chemicals would pass to the firm at the month-end. Clause (5) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re fact that the word agent or agency was used or the words buyer and seller were used to describe the status of the parties concerned is not sufficient to lead to the irresistible inference that the parties did in fact intend that the said status would be conferred. 13.He further submits that the mere formal description of a person as an agent or buyer is not conclusive unless the context shows that the parties clearly intended to treat a buyer as a buyer and not as an agent. 14.Learned counsel for the respondent further submits that whether there was an intra or an inter-state sale is a mixed question of fact and therefore the present writ petition was liable to be dismissed. 15.In this connection, he places reliance on the decision of the Hon'ble Supreme Court in Zunaid Enterprises and Others Vs. State of Madhya Pradesh and Others, (2012) 4 SCC 211. 16.I have considered the arguments advanced on behalf of the petitioner and the respondent. Though the petitioner had an alternate remedy, as mentioned above, I do not see any point in relegating the petitioner to file an appeal at this distant point of time. Therefore, these writ petitions are ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l whether disclosed or not ; (iv) every local branch of a firm or company situated outside the State; (iii) an auctioneer who carries on the business of selling or auctioning goods belonging to any principal, whether disclosed or not and whether the offer of the intending purchaser is accepted by him or by the principal or a nominee of the principal Every person who acts as an agent, in any State of a dealer residing outside that State and buys, sells, supplies, or distribute goods in the State or acts on behalf of such a dealer, as:- (v) a person engaged in the business of transfer otherwise than in pursuance of a contract of property in any goods for cash, deferred payment or other valuable consideration; (i) a mercantile agent, or (vi) a person engaged in the business of transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract; (ii) an agent for handling of goods or documents of title relating to goods, or viii) a person engaged in the business of transfer of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed period) for cash, deferred payment or other valuable consideration; (v) a supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration; (iv) a transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration; (v) a supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration; (v) a supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration; (vi) a supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating) where such supply or service is for cash, deferred payment or other valuable consideration, and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making (such) the tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the time the contract of sale or purchase is made; and (ii) in the case of unascertained or future goods, at the time of their appropriation to the contract of sale or purchase by the seller or by the purchaser, whether the assent of the other party is prior or subsequent to such appropriation. Explanation (3)(b):Where there is single contract of sale or purchase of goods, situated at more places than one, the provisions of clause (a) shall apply as if there were separate contracts in respect of the goods at each of such places. 19.The Supreme Court in Peninsular Traders and Another Vs. Deputy Commissioner of Sales Tax (Law), Kerala (Supra), was concerned with Section 2 (xxi) of the Kerala General Sales Tax Act, 1963 which defined the expression sale as follows:- xxi) Sale with all its grammatical variations and cognate expressions means every transfer (whether in pursuance of a contract or not) of the property in goods by one person to another in the course of trade or business for cash or for deferred payment or other valuable consideration, but does not include a mortgage, hypothecation, charge or pledge; Explanation (1) : - A transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred payment or other valuable consideration shall be deemed to be a sale; Explanation (3D) : - Unless otherwise expressly provided in this Act, any transfer, delivery or supply of any goods referred to in this clause shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and purchase of those goods by the person to whom such transfer, delivery or supply is made; Explanation(4) (a) The sale or purchase of goods shall be deemed, for the purposes of this Act, to have taken place in the State whether the contract of sale or purchase might have been made, if the goods are within the State. (i) In the case of specific or ascertained goods at the time the contract of sale or purchase is made; and (ii) In the case of unascertained or future goods, at the time of their appropriation to the contract of sale or purchase by the seller or by the purchaser, whether the assent of the other party is prior or subsequent to such appropriation. (b) Where there is a single contract of sale or purchase of goods situated at more places than one, the provisions of clause (a) shall apply as if there were separate contracts in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) a casual trader (c) a commission agent, a broker or a del credere agent or an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of buying, selling, supplying or distributing goods executing works contract, transferring right to use any goods or supplying by way of or as part of any service, any goods on behalf of any principal; (d) a non-resident dealer or an agent of a non-resident dealer, or a local branch of a firm or company or association or body of persons whether incorporated or not situated outside the State; (e) a person who, whether in the course of business or not, sells; (i) goods produced by him by manufacture, agriculture, horticulture or otherwise; or (ii) trees which grow spontaneously and which are agreed to be severed before sale or under the contract of sale; (f) a person who whether in the course of business or not:- (1) transfers any goods, including controlled goods whether in pursuance of a contract or not, for cash or deferred payment or other valuable consideration; (2) transfers property in goods (whether as goods or in some other form) involved in the execution of a wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pal, as soon as he receives it or pays in advance and is distinguished from other agents. 22. For deciding the dispute, it would be useful to refer few decisions of the court as there is no definition of the expression Del credere Agent in the respective Act. 23. In Gurumukh Rai Radha Krishna Vs. The State of Bihar, (1979) 25 STC 70, the Patna High court observed that a Del Credere agent as someone who, in consideration of special remuneration, undertakes that the person with whom he enters into contracts on the principal s behalf will be in a position to perform their duties. In other words, while acting as an agent on the principal s behalf, he guarantees the performance by the persons with whom he deals on behalf of his principal and makes himself liable as a surety to the extent of any default which may be committed by such persons. The liability of the Del credere agents becomes co-extensive with that of the third parties who enter into contract through him. The Del credere agent is not the agent of those third parties. 24. In Para 6, the Court further held as follows: 6. The definition of the dealer as it stood at the relevant time clearly sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contracts which he makes with them, and, therefore, if he sells at the price at which he is ordered to sell by the principal and upon the credit which he is ordered to give by the principal, then no doubt, he guarantees that the customer will pay him at that time. 10. The later view is- The liability of the del credere agent is a contingent pecuniary liability, not a liability to perform the contract; it is a pecuniary liability to make good in an event (of) default of the buyer in respect of a pecuniary liability. It does not extend to other obligations of the contract. It does not expose the del credere agent to an action to ascertain the sum due. It is limited to a contingent pecuniary liability in respect of a sum which, as between the seller and the buyer, is an ascertained sum. 11. Per Buckley L.J. in - Gabriel v. Churchill and Sim , 1914-3 KB 1212 at p. 1279 (B). 12. The petitioner is not thus a del credere agent. He has not the possession of the goods for the purpose of sale. Nor has he any of the rights of a mercantile agent. So both the petitioner and the Sales Tax authorities erroneously described it as a del credere a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. The definition of sale in Section 2(n) of TNGST Act, 1959 and Section 2(g) of the CST, 1956 are almost identical. Both the definitions are inclusive and therefore expensive. For a transaction to come within the fold of sale there should be:- a) transfer of property of goods (other than by way of mortgage, hypothecation, charge or pledge); b) by one person to another; c) in the course of business; and d) for cash, deferred payment or valuable consideration. 29. It was in the context of Explanation 5 to the definition of sale in Section 2(xxi) as extracted above, the Honourable Supreme Court in Peninsular Traders and Another Vs. eputy Commissioner of Sales Tax (Law), Kerala (supra), gave its decision. The definition of sale did not include sale by a Del credere Agent as to compare to the definition in TNGST Act, 1959. 30. Whereas in Explanation (1-B) to Section 2(n) of TNGST Act, 1959, transfer of property involved in the purchase, sale, supply or distribution of goods through a factor, broker, commission agent or arhati, del credere agent or an auctioneer or any other mercantile agent, by whatever name called, whether for cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether the assent of the other party is prior or subsequent to such appropriation. 35. Thus, from a cumulative reading of the definition of sale in Section 2(n) of the TNGST Act, 1959 only in the case of ascertained goods within the state of Tamil Nadu at the time of sale will be liable to tax in the hands of a Del credere agent. In this case, it is the contention of the petitioner that the goods were transferred by their principal namely Reliance Industries Ltd directly from the State of Gujarat. This would require verification on facts. 36. The petitioner has enclosed copies of Central Excise invoice of the manufacturer namely M/s. Reliance Industries Ltd to demonstrate that the goods were directly dispatched to different buyers in the State of Tamil Nadu and the petitioner merely acted as Del Credere agent simpliciter who paid/settled the payment to M/s. Reliance Industries. 37. The question of treating a transaction as sale by the petitioner would arise only if the goods were available in the State of Tamil Nadu when the petitioner placed purchase orders for and on behalf of the prospective buyers on the supplier in Tamil Nadu. This is a question of fact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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