TMI Blog1955 (12) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... es Ltd., of the second part, the Rohtas Industries Ltd., of the third part and the Dalmia Cement Ltd., of the fourth part on the one hand and the petitioners on the other, they were the sole and exclusive sales managers for the sale of the cement produced by the above referred companies during the period of that agreement from 1st January, 1944, for a period of ten years. It appears that in 1948 the Dalmia group, that is, the Rohtas Industries Ltd., and the Dalmia Cement Ltd., retired from the agreement leaving the Associated Cement Cos., and Patiala Cement Co., to continue the arrangement under the original agreement.. After the Hyderabad General Sales Tax Act was promulgated in 1950, the Sales Tax Authorities held the petitioners to be dealers under the provisions of the said Act on a construction of the aforesaid agreement and made two assessments for sales tax one on the Associated Cement Companies and the other on the petitioners, that having regard to the fact that Dalmia group retired from the agreement and probably because of the levy of two sales taxes, the whole matter was considered by the Associated Cement Companies and the Patiala Cement Co., on the one hand and the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only one return as sales managers of the Associated Cement Cos., and not two returns. The petitioners again explained to the Sales Tax Authorities by their letter of 27th January, 1955, that there could be no question of two sales and two returns and two taxes and invited their attention to the judgment of the Madras High Court delivered on 14th April, 1954, in the case of Tata Iron and Steel Co., Ltd. v. State of Madras(1), as supporting their view that although they had taken by way of deposit a further amount which was collected not as sales tax, con- tending that even if the tax was so collected, they were not bound to pay the same to the Sales Tax Officer as there was only one sale in the matter and no double tax was leviable or payable. But in spite of their contention it is stated that the Sales Tax Officer made an ex parte best judgment assessment for the period 1st June, 1954, to 31st December, 1954, on the very sales on which the Associated Cement Companies Ltd., had made returns and paid tax, that the petitioners have paid the tax under protest and filed an appeal to the Deputy Appellate Commissioner, that in spite of the Associated Cement Companies paying the tax for s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made the subject-matter of levy of sales tax with respect to the transactions which they enter on behalf of the Associated Cement Companies Ltd. A perusal of clauses (1) and (2) of the agreement dated 21st April, 1954, clearly inclined us to the view that the petitioners were merely sales managers acting for the Associated Cement Companies Ltd., and could not be made liable for second sales tax on the transactions entered into by them on behalf of the Associated Cement Companies Ltd. Clauses (1) and (2) are in the following terms: "Clause (1). Each of the said companies does hereby appoint the Cement Marketing Company of India Limited to be its sole and exclusive sales manager. The sales manager shall be entitled to enter into con- tracts for sale, submit bills for sales of cement to be made by the companies, receive payment of the same and do all acts and things that may be necessary to manage effectively on behalf of the companies all contracts of sales of cement effected as aforesaid. Clause (2). All contracts for sale of cement entered into by either of the companies direct or through or in the name of its sales manager aforesaid prior to the commencement of this agreement whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a registered dealer is empowered to collect from purchasers under section 8B(1) of the Madras General Sales Tax Act of 1939 is only what is lawfully leviable as tax under the Act and, therefore, what is collected without legal authority cannot be claimed by the Government. In that case the Tata Iron and Steel Co., with its head office at Jamshedpur and a branch at Madras was a registered dealer under section 8-A of the Madras General Sales Tax Act and when final assessment was made against that company for the year 1947-48, it claimed exemption from payment of sales tax on a turnover of Rs. 52,59,112-15-0 on the ground that though goods of that value were sold by the company to the consumers in the taxable territory of Madras, the sales themselves had been effected at Jamshedpur, outside the taxable territory. It was common ground that as the law stood in the assessment area a turnover of these sales did not fall within the purview of the charging section. (1) [1954] 5 S.T.C. 462. (3) [1954] 5 S.T.C. 382. (2) [1954] 5 S.T.C. 58. Though this was so the assessee had collected from the purchasers amounts equivalent to tax that would have been payable had the sale transaction been held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onferred on the registered dealer by section 8B(1) to make any collections, the expression ' so collected by him' would only apply to the collection referred to in the earlier part of section 8B(2), the collection of any amount 'by way of (1) [1953] 4 S.T.C. 133; A.I.R. 1953 S.C. 252. tax under this Act.' In both cases, the interpretation 'by way of tax lawfully leviable under this Act' would fit in with the obligations imposed by section 8B(2) though we realise the anomalous position of an unregistered dealer on whom no rights were conferred but on whom only obligations were imposed." In the Travancore case of K.J. Mathews(1), Subramania Iyer, J., did not consider this matter because he assumed that the liability to pay to the State the tax collected by the petitioner was obvious and he said that it was gratifying to note that the learned counsel for the petitioner did not find his way in disputing that liability. This observa- tion would clearly show that the actual point involved was not fully considered and at any rate we do not have the advantage of knowing the reasons which impelled the learned Judge to hold why the liability to pay to the State an unauthorised collection b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hem amounts collected by the petitioners from the customers conditionally on the said amounts being refunded to them if their appeals to the Sales Tax Authorities succeed. As orders and notices asked to be vacated in para 29(a) of the petition, viz., orders of 28th January, 1955, 18th February, 1955, 16th March, 1955 and 26th May, 1955, and also notices of demand dated as aforesaid issued by the first respondent to the petitioner have already been quashed by the appellate authority under the Sales Tax Act, we see no necessity to expressly quash the aforesaid orders and notices; but if it is necessary, these orders and notices are deemed to have been and are hereby quashed by the issue of writ of certiorari. It follows from our decision that as the applicant is not liable to pay tax as a dealer other than the tax payable as a sales manager on behalf of the Associated Cement Companies Ltd., the demand by the department for payment of sales tax on the applicant as a dealer under the circumstances is illegal and respondents 1 and 2 are directed not to demand from the applicant any sales tax on account of sale of cement by the applicant which he makes on behalf of the Associated Cem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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