TMI Blog2013 (1) TMI 711X X X X Extracts X X X X X X X X Extracts X X X X ..... s the goods to the authorized dealer of the company or supply the goods to the buyer and for the aforesaid purpose it takes commission of three per cent. It means that the agent, M/s. Rahul Pharma, used to deliver the goods not as its own property but as the property of the principal, who continues to be the owner of the goods and therefore liable to account for the sale proceeds. It is not a "sale" as interpreted by the honourable Supreme Court, hence, the petitioner is not liable to pay tax. Petition of the petitioner is disposed of with the directions that the delivery of the agent of the petitioner to the buyer or to the authorized distributor shall not be taxed under the provisions of the VAT Act by treating it as an independent sale. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods to the buyers, then also it comes under the definition of sale and it is also taxable under the Provisons of the VAT Act. The Petitoner Pleaded that it amount to double taxation. Definition of section 2(u) of the VAT Act defines sale , which is as under: (u) 'Sale' with all its grammatical variations and cognate expressions means any transfer of property in goods for cash or deferred payment or for other valuable consideration and includes,- (i) a transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration; (ii) a transfer of property in goods whether as goods or in some other form, involved in the execution of works contract; (ii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen the goods are transferred from the seller to a buying agent and from the buying agent to his principal; As per the definition of sale given under section 2(u) of the VAT Act, it means any transfer of property in goods for cash or deferred payment or for other valuable consideration. In accordance with the aforesaid provisions, for the purpose of sale, there must be transfer of property under any circumstances. However, Explanation (c) of section 2(u) of the VAT Act prescribes that there would be two independent sales or purchases when the goods are transferred from a principal to his selling agent and from the selling agent to the purchaser. In the present case interpretation of this Explanation is necessary. The honourable Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y clause (2)(i) of Explanation III where the agent has sold the goods at one rate and passed on the sale proceeds to its principal at another rate. The second situation is where the agent has purchased the goods at one rate and has passed them on to the principal at another rate. The third situation is where the agent has not accounted to his principal for the entire collections or deductions made by him in the sales or purchases effected by him on behalf of his principal, and the fourth is where it appears that the agent has acted for a fictitious or non-existent principal. It was contended on behalf of the appellant that the State Legislature was not competent to convert by a legal fiction a mere entrustment of goods for sale into a sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration and that as a result of the transaction the title to the property must actually pass in the goods. As we have already pointed out, the third Explanation to section 2(1)(n) of the Act must be interpreted to mean that where there is in reality a transfer of property in the goods by the principal to the agent and by the agent in his turn to the buyer, there are two transactions of sale. It is therefore impossible to accept the contention put forward on behalf of the appellant that the Explanation has converted what, in fact, is not a sale into a sale for the purpose of assessment to sales tax. It was contended on behalf of the appellant that in an even items Nos. 2 to 11 of the notice related to goods which the appellant had s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rashtra reported in [2000] 119 STC 182 (SC). In the present case, M/s. Rahul Pharma is an agent of the petitionercompany, which is clear from the agreement (annexure P/1). It only supplies the goods to the authorized dealer of the company or supply the goods to the buyer and for the aforesaid purpose it takes commission of three per cent. It means that the agent, M/s. Rahul Pharma, used to deliver the goods not as its own property but as the property of the principal, who continues to be the owner of the goods and therefore liable to account for the sale proceeds. It is not a sale as interpreted by the honourable Supreme Court, hence, the petitioner is not liable to pay tax. When the agent delivers the goods to distributor or buyer on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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