9911796707
TMI Blog1958 (4) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... (Sales Tax) Act (Ben. VI of 1941) hereinafter referred to as "the Act". The appellants carry on the business of (1) selling goods or of dealers, partly in wholesale and partly retail, of woollen and cotton fabrics and other products, (2) as well as of commission agents of woollen and cotton fabrics and in their latter capacity are and have been the agents or representatives of the British India Corporation Ltd., Proprietor, The Kanpur Woollen Mills, both at Kanpur in Uttar Pradesh, for the territory comprising West Bengal and Assam and parts of Bihar and Orissa under the terms of an agreement between themselves and their principals dated June 2, 1952, supplemented by a letter dated July 7, 1952, addressed to them by the principals. The appellants are duly registered as "dealers" in West Bengal under the provisions of the Act with respect to their aforesaid business of wholesale and retail distribution or sale of goods and their Certificate of Registration is numbered O.S. 1/1630A. On or about December 15, 1952, the appellants submitted to the 1st respondent their return for sales tax in the prescribed form for the return period ending Dewali 2009 Sambat corresponding to Oct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent a statement in connection with their agency transactions with the Kanpur Woollen Mills, Kanpur, which showed that there were three types of transactions entered into by them as selling agents of the Mills, viz., (1) The appellants booked orders on behalf of and subject to acceptance by the Mills and were entitled to get commission on the value of the invoices made out in the name of the party who placed the order, such invoices with other customary documents being sent direct to the parties by the Mills through their Bankers. (2) Orders were placed direct by the parties resident in the territories in which the appellants were selling agents and the goods were supplied directly by the Mills to those parties. There also the appellants were entitled to their commission. The appellants would be entitled to commission on the invoice value of the goods. In regard to the two former categories, the appellants did not come in the picture except for their commission and consequently no entry was made in their books of account for the value of those goods. As to the last category, the value of the invoice was accounted for in their books of account to the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... npur by Messrs. Kanpur Woollen Mills." This memorandum was submitted by the first respondent to the Assistant Commissioner (C.S.) for his opinion. On August 29, 1953, the Assistant Commissioner (C.S.) made a note that the first respondent should not have made a direct reference to him. He recorded his opinion that the appellants were accountable for all sales in respect of which the goods were delivered in West Bengal and that they were commission agents who received commission on all sales made in West Bengal by the Kanpur Woollen Mills, Kanpur, and being the commission agents of the Kanpur Mills were accountable for the transactions. He, therefore, ordered the first respondent to do the needful. The first respondent made an entry in the order sheet on September 2, 1953, stating that action was being taken accordingly. He also ordered the appellants to appear with books of account for further examination, and to produce their Agency Contract with Kanpur Mills and a list of the dealers in Calcutta who received goods direct from Kanpur. On November 21, 1952, the representative of the appellants submitted a statement to the first respondent clarifying the whole positi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 954, the first respondent recorded a note wherein he stated that on the materials placed before him he was doubtful whether the appellants could be considered as the sole agent of M/s. Kanpur Woollen Mills as per provision of Explanation 3 of section 2(c) of the Act. He requested the Assistant Commissioner (C.S.) to reconsider the matter in the context of the facts mentioned and give his "valued opinion". On September 23, 1954, the then Assistant Commissioner (C.S.) wrote that his predecessor had already advised the first respondent on this matter and if the appellants were aggrieved they might prefer a regular revision or appeal petition before the competent authority as provided under the law. The first respondent made an entry on Sep- tember 30, 1954, stating that he had seen the notes and that action was being taken accordingly. The first respondent ultimately on January 15, 1955, made the assessment order assessing these disputed transactions to sales tax on the following ground: "On inspection of the books of account, I found that the dealer was a commission agent of the Cawnpore Woollen Mills for the State of West Bengal earning commission on all sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e file of the assessee, however, shows that even though the first respondent was satisfied on the materials placed by the appellants and their representative before him that the appellants were not liable to pay sales tax in regard to these transactions, he referred the matter first for instructions and then for obtaining the "valued opinion" of his superior, the Assistant Commissioner (C.S.) and the latter expressed his opinion that the appellants were liable in respect of these transactions. All this was done behind the back of the appellants and the appellants had no opportunity of meeting the point of view which had been adopted by the Assistant Commissioner (C.S.) and the first respondent quietly followed these instructions and advice of the Assistant Commissioner (C.S.). We are really surprised at the manner in which the first respond- ent dealt with the matter of this assessment. It is clear that he did not exercise his own judgment in the matter and faithfully followed the instructions conveyed to him by the Assistant Commissioner (C.S.) without giving the appellants an opportunity to meet the points urged against them. The whole procedure was contrary to the princi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tax payable by a dealer under the Act was levied at the rate therein specified on his taxable turnover. Unless, therefore, the sales were effected by the dealer and the sale proceeds received by him such sales could not be included in his taxable turnover and he would not be liable to pay sales tax thereon. The position as it obtains in the present case is that even according to the first respondent's own showing in the assessment order the sales in question were made by the Kanpur Woollen Mills, Kanpur, in West Bengal and they were primarily the dealers in regard to such sales. The appellants were however sought to be made liable to sales tax in respect of these sales by virtue of the expanded definition of the term "dealer" given in Explanation 3 to section 2(c) of the Act. The question, there- fore, arises whether the appellants fall within the definition of "dealer" therein mentioned. Explanation 2 to section 2(c) does not apply for the simple reason that even though the appellants were the commission agents of the Mills they had not in the customary course of business authority to sell goods belonging to the principals. As a matter of fact, clause 14 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omers with them. The invoices were all made out in the names of the customers and the relevant documents were negotiated by the Mills with the customers through the Banks. The customers released those documents from the Banks on payment of the relevant drafts and the sale price of the goods was thus received by the Mills through those Banks. At no time whatever was there any handling of the goods or the receipt of the sale price thereof by the appellants in regard to the goods in question and under those circumstances the sale price thereof could not be included in the gross turnover of the appellants. If that was the true position, the appellants were not liable to sales tax in respect of the disputed transactions, even though, perchance, they could be included within the expanded definition of "dealer" in the Explanation 3 to section 2(c) of the Act-a contention which we have already negatived. It, therefore, follows that in regard to the disputed transactions which were of the total value of Rs. 6,21,369-10-3, the appellants were not at all liable to pay sales tax thereupon and the first respondent was clearly in error in assessing the same to sales tax. The appeal will ..... X X X X Extracts X X X X X X X X Extracts X X X X
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