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Issues: (i) Whether, on a true construction of the agreement dated 1 June 1952, the kerosene supplied to the petitioner was dealt with by him as purchaser or as commission agent; (ii) Whether the petitioner's claim to exemption under section 9 of the General Sales Tax Act depended upon compliance with the terms of the licence and required remand for determination of those terms.
Issue (i): Whether, on a true construction of the agreement dated 1 June 1952, the kerosene supplied to the petitioner was dealt with by him as purchaser or as commission agent.
Analysis: The true character of the arrangement had to be gathered from the whole agreement and not from its label or isolated clauses. Clauses dealing with minimum orders, price control, restricted territory, accounting obligations, insurance, storage arrangements, retention of the company's control over the stock, and the requirement to return stock on termination showed that the petitioner had no real freedom of trading and was carrying on the company's business. The fact that the petitioner bought, paid for, and bore risk in respect of the goods did not by itself make the transaction one of sale, because vesting of ownership for the purpose of carrying on the agency was not inconsistent with agency.
Conclusion: The agreement was one of agency and not a mere contract of sale, and the taxing authorities and Tribunal were wrong in treating it as a sale transaction.
Issue (ii): Whether the petitioner's claim to exemption under section 9 of the General Sales Tax Act depended upon compliance with the terms of the licence and required remand for determination of those terms.
Analysis: Exemption under section 9 was available only if the dealer acted as an agent and also complied with the terms of the licence. The record did not contain findings as to the actual terms of the licence renewed for the relevant assessment years, and that factual issue had not been determined by the taxing authorities or the Tribunal. Since the petitioner's entitlement to exemption turned on that unresolved question, further adjudication was necessary.
Conclusion: The matter had to be remanded to the Appellate Tribunal to determine the licence terms and then decide the appeals afresh.
Final Conclusion: The revision petitions succeeded to the extent that the finding of sale was set aside, but the assessment disputes were sent back for fresh determination on the petitioner's compliance with the licence conditions under section 9.
Ratio Decidendi: The legal character of a distributorship or supply arrangement must be determined from the substance of the entire contract, and ownership or purchase features are not decisive if the contract as a whole shows that the parties intended an agency.
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