Contract of sale versus agency: sale language and surrounding conduct showed dealer status and sales tax liability.

An agreement described as a sale of coal output was construed as an outright contract of sale, not an agency arrangement, because its terms used sale language and fixed delivery, payment and despatch conditions. The expression "selling commission" did not, by itself, convert the transaction into agency, especially where the surrounding commercial setting and the assessee's own conduct pointed to dealer status, including registration, use of declaration forms and prior treatment of receipts as turnover. On that construction, the assessee was a dealer and the relevant turnover was liable to tax under the Bengal Finance (Sales Tax) Act, 1941.

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Issues: Whether the agreement dated 7 April 1948 between the parties constituted an outright contract of sale or merely an agency arrangement, and whether on that construction the assessee was a dealer whose turnover was taxable under the Bengal Finance (Sales Tax) Act, 1941.

Analysis: The agreement described itself as a contract for the sale of coal output and used language such as "we will sell to you" and "for the material delivered as above we shall charge you the Government controlled selling prices". The presence of the expression "selling commission" did not by itself convert the transaction into agency, especially when the agreement also fixed the terms of delivery, payment and despatch. The Court also placed weight on the assessee's own conduct, including its status as a registered dealer, its use of declaration forms and its earlier treatment of the receipts as turnover subject to exemption claims. Reading the agreement as a whole, and in the statutory and commercial setting, the transaction was not one of mere middlemanship or brokerage.

Conclusion: The agreement was a contract of sale, not an agency agreement, and the assessee was a dealer liable to sales tax on the relevant turnover.

Final Conclusion: The reference was answered in favour of the revenue, and the Board of Revenue's view that the agreement conferred dealer status and attracted tax liability was upheld.

Ratio Decidendi: Where the contractual language and surrounding circumstances show an outright sale with transfer of the goods for price, the mere use of the word commission or the operation of a control order does not by itself establish agency; the transaction is taxable as a sale if the statutory ingredients of dealer and turnover are satisfied.

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