Agency dealership transactions were treated as taxable turnover where two distinct sales emerged from the delivery and service arrangement.

Transactions in the five tempo vans were treated as taxable turnover in the assessee's hands because the record showed an agency and dealership arrangement rather than a single inter-State sale by the manufacturer to customers. The correspondence and surrounding material indicated that the assessee was an authorised dealer, placed initial firm orders, maintained deposits, and handled customer delivery and service, with commission and related benefits supporting two distinct transactions: one between manufacturer and assessee, and another between assessee and customers. On that factual basis, the liability was considered under Explanation 5(a) to section 2(xxi) of the Kerala General Sales Tax Act, 1963, and the assessment challenge failed.

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Issues: Whether the assessee's transactions in five tempo vans constituted taxable sales under the Kerala General Sales Tax Act, 1963, or were merely inter-State sales by the manufacturer to individual customers through the assessee as agent.

Analysis: The correspondence and surrounding material showed that the assessee was appointed as an authorised dealer, required to place initial firm orders, maintain deposits, and deal with customers in the course of delivery and service arrangements. The record also indicated commission and service-related benefits to the assessee. On these facts, the authorities found two distinct transactions: one between the manufacturer and the assessee, and another between the assessee and the customers. The statutory liability was considered in the light of Explanation 5(a) of section 2(xxi) of the Kerala General Sales Tax Act, 1963, and the precedent relied on by the revenue.

Conclusion: The transaction was rightly treated as taxable turnover in the hands of the assessee, and the challenge to the assessment failed.

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