TMI Blog1988 (5) TMI 329X X X X Extracts X X X X X X X X Extracts X X X X ..... s an appeal against a judgment of a Division Bench of the High Court of Kerala under the provisions of the Kerala General Sales Tax Act, 1963 in Tax Reference Case No. 52 of 1971 filed pursuant to special leave granted by this Court. The appellant before us is M/s. Alwaye Agencies and the respondent is the Deputy Commissioner of Agricultural Income-tax and Sales Tax, Ernakulam. The assessee-firm was appointed as distributor by the Travancore Cochin Chemicals Ltd. (referred to hereinafter as the "said company") to effect the sale of sodium hydrosulphite manufactured by the said company in the area covered by the Kerala State under an agreement entered into on 11th February, 1967. The dispute pertains to the transactions which took place between 1st September, 1967 and 20th December, 1968, since it is undisputed that the transactions up to the former date are not taxable. It is common ground that the relations between the parties were governed throughout by the said agreement and that the parties adhered to the terms of the said agreement. In view of this it would be desirable to examine that agreement at this stage. As aforesaid, the agreement is dated 11th February, 1967. Under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee as distributor must remit 10 per cent of the full value by demand draft and retire the documents of despatch of goods sent to the assessee through bank for collection from the bank. Clause 8 further provides if the documents sent by the said company are not retired within the stipulated time, interest would be payable by the distributor on the amount due at the rate of 12 per cent per annum. The clause also makes it clear that if the second mode of payment is adopted by the assessee, consignments would be insured by the said company against transit risk and the insurance charges would have to be borne by the assessee. It may be noted at this stage that the Tribunal has found as a fact that in respect of the said transactions from 1st September, 1967 to 20th December, 1968, the invoices were prepared by the said company in the names of the consumers of goods and the goods were consigned to the destinations through public carriers booked "self". The transport bills were endorsed and handed over by the said company to the assessee. From 20th December, 1968, goods were consigned to the destination showing the assessee as consignor. But we are not concerned with the per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inee; the nominee could be the person whose orders are booked by the distributor. They pointed out that in the present case even when the goods were despatched by the said company to the address of the customers, whose orders were booked by the distributor, namely, the assessee, the documents of title were not delivered to the customers, but handed over to the distributor on receipt of price, or the documents of title were endorsed in favour of the distributor and sent through the banks to be honoured by the distributor by payment. In such cases, where there was some time-lag between the despatch of goods and the entrustment of documents of title on receiving payment through the bank, care was taken to stipulate that the risk would be covered by insurance which would be at the cost of the distributor. The Division Bench further pointed out that in the said agreement, the distributor had not been referred to as "agent" but as "distributor" and that this was also significant although not conclusive. It was on the basis of these conclusions that the High Court reversed the decision of the Tribunal and allowed the revision application. In our opinion, since both the parties have proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... really acted as purchasers of the goods which they in turn sold to the customers and did not merely act as agents of the said company. In respect of the goods in question which were despatched through public carriers, although the invoices were prepared in the names of the consumers of the goods, and the goods were consigned to the destination through public carrier booked to self, as pointed by the Tribunal, and the bills were endorsed and handed over to the assessee. When considered in the light of the agreement, these circumstances clearly show that in respect of these transactions the property in the goods despatched passed to the distributor on the bills being endorsed and handed over to the distributor. Our attention was drawn by Shri Krishnamoorthy lyer, learned counsel for the assessee (appellant), to the decision of this Court in Bhopal Sugar Industries Ltd. v. Sales Tax Officer [1977] 40 STC 42; [1977] 3 SCC 147, where the question was whether the contract was one of agency or sale. This Court held that the question will have to be determined having regard to the terms and recitals of the agreement, the intention of the parties as may be spelt out from the terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the definition of the said term under the Sale of Goods Act, explanation 5 to sub-section (21) of section 2 provides that two independent sales or purchases shall, for the purposes of that Act, be deemed to have taken place in the circumstances set out in that explanation. A perusal of the said explanation shows that such independent sales or purchases take place, inter alia, where the goods are transferred from a principal to his selling agent and from the selling agent to the purchaser. It was submitted by him that in view of this explanation, even if the appellant-firm was merely the agent of the said company in respect of the transactions in question, there were two sales which must be deemed to have taken place in respect of each of the transactions for the purposes of the said Act; one from the said company to the appellant and the other from the appellant to the respective consumer; and that the sale from the said company to the appellant was liable to be included in the taxable turnover of the assessee. In our view, it is not necessary to consider this submission, because, according to us, in view of the said agreement, considered in the light of the surrounding circums ..... X X X X Extracts X X X X X X X X Extracts X X X X
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