1989 (3) TMI 366 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of the Central Sales Tax Act regarding the liability of an assessee acting as a guarantor and commission agent for payment of goods.

Analysis:
The case involved revisions under section 11 of the U.P. Sales Tax Act, where the assessee, a sole proprietorship concern, acted as a guarantor for payment of goods and received commission for services rendered. The Sales Tax Officer imposed Central sales tax on the assessee, considering all sales to be made by the assessee. The Assistant Commissioner and the Tribunal upheld the decision, concluding that the assessee was a "dealer" as defined under the Central Sales Tax Act and liable to pay tax under section 3(b). The Tribunal's decision was based on fresh materials placed by the assessee.

Upon appeal to the High Court, the counsel for the assessee argued that the assessee was merely a guarantor and commission agent, and no property passed to the assessee as the District Magistrate was the owner. The counsel referred to specific findings by the Tribunal regarding the role of the District Magistrate and the assessee as a commission agent. The counsel also cited relevant provisions of the Central Sales Tax Act, emphasizing the requirement of property transfer during inter-State trade for taxation.

The counsel relied on the Supreme Court decisions in Tata Iron and Steel Co. Ltd. v. Sarkar and State of Bombay v. Ratilal Vadilal & Bros., where similar scenarios were considered, and the Court ruled in favor of the commission agent. The High Court agreed with the counsel's arguments, stating that no tax could be imposed under section 3(b) of the Central Sales Tax Act as property did not transfer to the assessee during the movement of goods. Consequently, the High Court allowed the revisions, quashed the Tribunal's order, and directed the parties to bear their own costs. The High Court's decision was communicated to the Tribunal as required under section 11(8) of the Act.