Dealer status and import sales protection applied to cement transactions; writ jurisdiction was also entertained despite an alternative remedy.
Writ jurisdiction was properly entertained despite an alternative statutory appeal because the petition raised a substantial constitutional objection under Article 286(1)(b). The petitioner, authorised not only to clear and transport but also to distribute, receive orders for, collect payment for, and account for cement sold on behalf of the State Trading Corporation, was deemed a dealer within section 2(f) of the Rajasthan Sales Tax Act. On the contractual chain and the point at which property and risk passed, the disputed cement sales were held to occur while the goods were still in the course of import into India, so the State could not levy sales tax on those transactions.
Issues: (i) whether the writ petition should be refused on the ground of availability of an alternative statutory appeal; (ii) whether the petitioner, acting as agent for the State Trading Corporation, was a "dealer" within section 2(f) of the Rajasthan Sales Tax Act; (iii) whether the disputed sales of cement were sales in the course of import into the territory of India and therefore exempt from sales tax under Article 286(1)(b) of the Constitution.
Issue (i): whether the writ petition should be refused on the ground of availability of an alternative statutory appeal.
Analysis: The existence of an alternative remedy did not bar exercise of writ jurisdiction in the facts of the case. The challenge raised a substantial constitutional objection under Article 286(1)(b), and the Court found it proper not to dismiss the petition in limine, applying the principles governing discretion in writ jurisdiction despite the availability of appeal.
Conclusion: The objection based on alternative remedy was rejected, and the writ petition was entertained.
Issue (ii): whether the petitioner, acting as agent for the State Trading Corporation, was a "dealer" within section 2(f) of the Rajasthan Sales Tax Act.
Analysis: The appointment letter showed that the petitioner was not merely a clearing or transport intermediary but was authorised to distribute and sell cement, receive orders, collect payment, maintain accounts, and carry out the selling operation on behalf of the Corporation. On the wording of the statutory explanation to section 2(f), an agent through whom an outside dealer carries on business in the State is deemed to be a dealer. The cases relied on by the petitioner were distinguished because, unlike those matters, the present petitioner was entrusted with the business of selling as well.
Conclusion: The petitioner was held to be a dealer within section 2(f) of the Rajasthan Sales Tax Act.
Issue (iii): whether the disputed sales of cement were sales in the course of import into the territory of India and therefore exempt from sales tax under Article 286(1)(b) of the Constitution.
Analysis: The Court examined the contractual chain, the movement of goods, the railway receipts, and the point at which property passed. It held that the first sale under the import arrangement occasioned the movement of goods, while the subsequent sales through the petitioner occurred while the goods were still in the course of import. The contractual terms also showed that the property and risk passed at the relevant stage before the import process was completed, bringing the transactions within the constitutional prohibition on tax on sales in the course of import.
Conclusion: The disputed transactions were held to be sales in the course of import and were not liable to sales tax under Article 286(1)(b).
Final Conclusion: The assessment could not survive to the extent it levied tax on the imported cement transactions, and the petitioner obtained relief against collection of tax on those sales.
Ratio Decidendi: An agent empowered to conduct the selling operations of an outside dealer may be deemed a dealer under the statutory explanation, but sales that transfer property while the goods are still in the course of import cannot be taxed by the State because of Article 286(1)(b) of the Constitution.
TaxTMI 
AI Drafter ✕
TaxTMI 
