Commercial transaction character depends on the whole arrangement: agency, not sale, where documents and conduct show import on behalf of another.

The true character of a commercial transaction must be determined from the whole arrangement and surrounding circumstances, not from isolated words in an order or debit note. Where goods were imported under the company's actual user's licence, the letter of authority stated that the respondents acted purely as agents, the goods were imported on behalf of the company, and property was never to pass to the respondents, the transaction was an agency arrangement. References to the lowest rate, the word "supply", and the form of the debit note were insufficient to override those dominant indicia. The transaction was therefore not a sale liable to sales tax under the Bombay Sales Tax Act, 1959.

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Issues: Whether, on the facts and in the circumstances of the case, the impugned transaction was a sale liable to sales tax or a transaction of agency not liable to tax under the Bombay Sales Tax Act, 1959.

Analysis: The transaction had to be judged as a whole, and not by isolated reference to the order or debit note. The goods were imported under the actual user's licence of the company and under a letter of authority stating that the respondents would act purely as agents, that the goods were being imported on behalf of the company, and that property in the goods would not pass to the respondents at any stage. The surrounding circumstances, including the manner of import, the correspondence, and the terms governing delivery, supported the inference that the respondents were acting as agents and not as vendors. The references to the rate as the "lowest", the use of the word "supply", and the form of the debit note were not sufficient to displace the dominant indicia of agency.

Conclusion: The transaction was a transaction of agency and not a sale, and the Tribunal was right in so holding.

Ratio Decidendi: The true legal character of a commercial transaction must be determined from the entire arrangement and surrounding circumstances; where the documents and conduct show that goods were imported and delivered only as agent on behalf of the licence-holder, the transaction is one of agency and not a taxable sale.

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