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1957 (12) TMI 18 - HC - VAT and Sales Tax
Issues Involved:
1. Liability of the plaintiffs for payment of sales tax to the State. 2. Determination of the place of sale. 3. Plaintiffs' status as agents under the Madras General Sales Tax Act. 4. Validity of the orders passed by the tax authorities. 5. Limitation on the claims. Detailed Analysis: 1. Liability of the Plaintiffs for Payment of Sales Tax to the State: The primary issue in all three appeals is whether the plaintiffs are liable to pay sales tax to the State. The plaintiffs, Messrs Sait Nagjee Purushotham and Company, Limited, argued that they were not liable for sales tax as they were merely indent agents for three Mills located in Ahmedabad, and the sales were completed in Ahmedabad, not in the State of Madras. The State contended that the sales occurred within Madras and the plaintiffs were carrying on business in the State, thus liable for sales tax. 2. Determination of the Place of Sale: The court examined the agreement (Ex. A 1) between the plaintiffs and the Mills to determine the place of sale. Key clauses from the agreement were analyzed: - Clause (6) indicated that the plaintiffs were to obtain offers and forward them to the Mills at Ahmedabad. - Clause (13) specified that delivery of goods was to be made at the Mills' premises in Ahmedabad. - Clause (20) stated that the value of goods sold would mean the sale value ex-mills, Ahmedabad. The court concluded that the sales were completed in Ahmedabad as the property in the goods passed to the buyers at the Mills' premises in Ahmedabad. Thus, no sale took place within the State of Madras. 3. Plaintiffs' Status as Agents under the Madras General Sales Tax Act: The State argued that the plaintiffs should be considered sellers under section 2(b), explanation 2, of the Madras General Sales Tax Act. The court reviewed the agreement and found that the plaintiffs were only securing offers and forwarding them to Ahmedabad, without the authority to accept offers on behalf of the Mills. Clause (4) prohibited the plaintiffs from dealing on their own account. Therefore, the court held that the plaintiffs were not carrying on the business of buying or selling goods within the State of Madras and did not fall within the definition of a seller under the Act. 4. Validity of the Orders Passed by the Tax Authorities: The plaintiffs sought a declaration that the orders passed by the Deputy Commercial Tax Officer, the Commercial Tax Officer, and the Board of Revenue were unauthorized, illegal, and ultra vires. The court agreed with the trial court's finding that the sales took place in Ahmedabad and not in Madras, thus the tax authorities' orders were not binding on the plaintiffs. 5. Limitation on the Claims: The State raised a contention regarding the limitation on the claims. However, the court found this contention to be devoid of any substance and did not affect the outcome of the case. Conclusion: The court confirmed the decrees and judgments of the learned Subordinate Judge, holding that the sales took place in Ahmedabad and the plaintiffs were not liable for sales tax in the State of Madras. The appeals were dismissed, and the plaintiffs were awarded costs for the printed papers in all three appeals, with advocate's fee awarded only in A.S. 1238 of 1953. Appeals dismissed.
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