Agency-based export and import transactions were treated as non-taxable sales where no resale by the agent was shown.

Agency arrangements for export promotion were treated as decisive where the assessee acted for sister concerns in exporting hides and skins and importing chemicals under the export entitlement scheme. The record did not show a purchase by the assessee followed by a resale; instead, the export and the connected import entitlement retained the principals' character. On that basis, distribution of the imported chemicals to the sister concerns was described as an act done in the capacity of agent, not as a taxable local sale by the assessee. The commentary states that unsupported presumptions or fiscal fictions cannot convert genuine agency transactions into sales under the Tamil Nadu General Sales Tax Act, 1959.

---

---

Issues: Whether the assessee, while exporting hides and skins through sister concerns and importing chemicals under the Export Promotion Scheme, acted only as an agent so that the subsequent distribution of the chemicals to the sister concerns did not constitute taxable sales under the Tamil Nadu General Sales Tax Act, 1959.

Analysis: The agreements between the assessee and the sister concerns showed that the assessee was appointed to act as agent for promoting exports and importing chemicals on the basis of export entitlement. The record did not establish any sale of the hides and skins by the sister concerns to the assessee, followed by a resale by the assessee to foreign buyers. The transactions were, instead, sales through the assessee as an agent on behalf of the principals, so the export was attributable to the sister concerns and not to an independent local sale by the assessee. On that footing, the import entitlement arising from the export scheme also retained the same character, and the distribution of imported chemicals to the sister concerns was likewise made by the assessee only in its capacity as agent. The Board of Revenue erred in treating the transactions as if the assessee had acted on its own account and in sustaining tax by creating a deeming fiction unsupported by the record.

Conclusion: The distribution of the imported chemicals to the sister concerns was not a taxable sale by the assessee, and the assessee succeeded on the issue.

Final Conclusion: The Board's revisional order was unsustainable, and the appellate order in favour of the assessee was restored.

Ratio Decidendi: Where export transactions and the connected import entitlement are evidenced by genuine agency arrangements, and the record does not show a sale to the agent followed by a resale, the authorities cannot treat the transactions as taxable local sales by resorting to unsupported presumptions or fiscal fictions.

---