Buying agent arrangement defeated sales tax liability where no completed sale within the statutory territorial limit was proved.

The agreement showed that the assessee acted as a buying agent for the foreign companies, not as a principal seller. Read with the relevant clauses, the arrangement provided for purchase and shipment of tea on behalf of the principals, reimbursement of expenses and payment of commission, which negatived any intention to effect sales by the assessee. Even on the alternative footing of a sale, the material did not establish that the tea passed the ship's rail while the ships were within Cochin territorial waters, so the statutory territorial basis for sales tax was not proved. The assessment orders were therefore without jurisdiction and were quashed.

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Issues: Whether the assessee was only a buying agent of the foreign companies and, if so, whether the disputed tea transactions constituted a sale liable to sales tax under the Cochin Sales Tax Act.

Analysis: The agreement dated 3 January 1944, read as a whole, showed that the assessee was engaged to purchase tea on behalf of the foreign companies and was described in the agreement as a buying agent. Clause 3, when read with clauses 5, 6, 7, 10 and 11, did not evidence an intention that the assessee should sell goods as principal; rather, it indicated an agency arrangement with reimbursement of purchase and shipment expenses and a commission for services rendered. The Court also held that even on the alternative assumption of a sale, the materials did not support the finding that the ships were in Cochin territorial waters when the tea passed the ship's rail, and therefore the statutory territorial basis for assessment was not established.

Conclusion: The assessee was only a buying agent and there was no sale by the assessee to the foreign companies. The assessment orders were without jurisdiction and were quashed.

Ratio Decidendi: Where the governing agreement establishes a principal-agent buying arrangement and the taxing authority cannot show a completed sale within the statutory territorial conditions, sales tax liability does not arise.

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