TMI Blog2002 (11) TMI 748X X X X Extracts X X X X X X X X Extracts X X X X ..... d to as 'the Universal Radiators'). The case of the petitioner is that the petitioner, a partnership firm, is a dealer carrying on business in non-ferrous metals. According to the petitioner, it was appointed as a buying agent by the Universal Radiators and therefore the transactions effected between the petitioner and the Universal Radiators were not on principal to principal basis and did not attract the levy of sales-tax as there were no sales by the petitioner in favour of the Universal Radiators, but the goods were transferred in the capacity of agent to principal. 2. The assessing officer, viz., the Commercial Tax Officer, did not agree with the submissions made on behalf of the petitioner and held that the relationship between the petitioner and the Universal Radiators was one of principal to principal and therefore there were sales by the petitioner in favour of the Universal Radiators as the goods dealt with by the petitioner were multi-point goods. The order of assessment was confirmed by the Appellate Assistant Commissioner. The Tamil Nadu Sales-tax Appellate Tribunal, however, took a different view and held that under the agreement dated 20.6.1984 the petitioner acted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution of India this Court is not entitled to act as an appellate Court and the finding of fact reached by the Tribunal as a result of appreciation of evidence cannot be reopened or questioned. 5. Learned counsel for the petitioner submitted that there is an error in law which is apparent on the face of record and it can be corrected in the writ proceedings. Learned counsel further submitted that the Special Tribunal has committed an error in law by holding that there existed principal to principal relationship. He submitted that the facts of the case prove that the inference drawn by the Special Tribunal is incorrect and the assumption of the Special Tribunal does not alter the petitioner's status of an agent as the petitioner has acted on behalf of the undisclosed principal. His submission was that the Special Tribunal has committed a serious error in posing a wrong question as if the claim of the petitioner was that the petitioner is not a dealer under the provisions of the TNGST Act. His submission was that the petitioner was acting as an agent for the undisclosed principal and the petitioner has established the agency. Learned counsel submitted that the reasonings of the Spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Radiators or there was a relationship of principal to principal has to be considered on the basis of the agreement entered into between the parties. The agreement was entered into on 20.6.1984 and it is not disputed by the respondents that the agreement is a genuine agreement. It is also relevant to mention here and it is also not disputed by the learned counsel for the petitioner that the nomenclature given in the agreement describing the the petitioner as a procurement agent is not conclusive. We have gone through the entire agreement. The relevant clauses in the agreement are clauses 1,3,4,5,6,7,9,10 and 12 and the clauses read as under:- "1. The party of the First Part hereby appoints the Party of the Second Part as Procurement Agent on Non-Exclusive Basis and the Party of the Second Part accepts such appointment. 3. It is open to the party of the Second Part to undertake Procurement Agency for any other party for the 'said goods' on same or other terms without reference to the party of the First Part. 4. The party of the First Part will periodically intimate their requirements for the said goods and given authorisation for purchase of the said goods at its cost at the mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to purchase goods at the price as it thinks fit. In other words, the petitioner is given complete freedom to select the goods, to select the seller, to determine the price, to fix the terms of sales and to purchase goods at the price as it thinks fit to be the market price. Though the petitioner has to inform the Universal Radiators about the market rate and the condition of the goods, the goods purchased, till they were handed over to the Universal Radiators, would remain in the responsibility and custody of the petitioner as under the agreement, the petitioner is responsible for handling, collection, storage, transport and delivery to the Universal Radiators. In other words, the goods would be in the custody of the petitioner and if any loss occurs or if the goods are stolen, it would be the sole responsibility of the petitioner. In other words, only on delivery of goods to the Universal Radiators, the property in goods would be transferred to the Universal Radiators. Moreover, the petitioner has to employ its own funds to purchase the goods, and only later it is entitled to get reimbursement. Though the earlier part of clause-7 of the agreement says that the goods purchased wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the principal. We are of the opinion that there is no relationship of principal and agent as the petitioner has purchased the goods by investing its own money and later on transferred the same to the Universal Radiators as the petitioner's own goods. The endorsement on the invoice were made only after the goods have been purchased. The mere fact that in some transactions there was refund of over payment or there was some reinvestment by certain short fall, as noticed by the Sales Tax Appellate Tribunal is not sufficient to hold that there exists principal and agent relationship between the petitioner and the Universal Radiators. 11. As far as the decision of this Court relied upon by the learned counsel for the petitioner in the case of K.P.SITARAM CO. v. STATE OF MADRAS (16 STC 436) is concerned, this Court was considering the case of a principal and agent and the materials produced clearly showed that the dealer had acted for the principal in placing orders. Though it is open to an agent to place orders anticipating ratification and confirmation of the orders by the ultimate buyer, a reading of the agreement does not show that the petitioner has acted as an agent for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GENCIES v. DEPUTY COMMISSIONER OF AGRICULTURAL INCOME-TAX AND SALES TAX, ERNAKULAM (70 STC 107), where the question is whether a contract is one of agency or of sale, the question has 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 the document and the surrounding circumstances and having regard to the course of dealings between the parties. The Supreme Court also held that the mere fact that the word 'agent' or 'agency' is used or the words 'buyer' and seller' are used to describe the status of the parties concerned is not sufficient to lead to the irresistible inference that the parties did in fact intend that the said status would be conferred. Though it is stated that the agreement contains some of the ingredients of agency, the predominant intention as appears from the agreement is that the petitioner has not acted as an agent, but there is only the principal to principal relationship. 14. We are of the view that the terms of the agreement and the intention of the parties clearly show that the relationship between the petitioner and the Universal Radiators is on principal to princip ..... X X X X Extracts X X X X X X X X Extracts X X X X
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