1993 (3) TMI 347 - HC - VAT and Sales Tax

High Court upholds Tribunal decision on purchase tax liability

Hira Lal Jain Versus State of Bihar

Hira Lal Jain Versus State of Bihar - [1999] 116 STC 62 (Pat) Issues:Interpretation of whether a sum representing aggregate sale price in transactions where the dealer acted as both selling and purchasing agent can be included in the gross turnover for levy of purchase tax.Analysis:The case involved a reference by the Commercial Taxes Tribunal regarding the inclusion of a sum in the gross turnover for the purpose of purchase tax levy. The assessee, a registered dealer, was involved in transactions related to chillies during the financial year 1966-67. The assessing authority found discrepancies in the inclusion of purchases of chillies in the taxable turnover, as the assessee claimed to have acted as an agent for both the seller and the purchaser. The assessing officer's investigation revealed manipulations in the books to claim exemption. The Tribunal examined the transactions and concluded that the assessee acted as a purchasing agent and was liable for purchase tax.The appellate authority relied on an Allahabad judgment and remanded the case for fresh assessment. The Tribunal, after examining the books of accounts, determined that the assessee acted as a commission agent for both sellers and purchasers. The Tribunal's finding emphasized that the assessee arranged for despatching goods to outstation buyers, indicating a dual agency role. The Tribunal held the assessee liable for purchase tax based on these findings.The High Court noted the absence of relevant precedents cited at the Bar. It questioned the Tribunal's finding that the dealer acted as an agent for both sellers and purchasers simultaneously. The Court emphasized that a person cannot be both a seller and a purchaser in the same transaction. It concluded that the assessee acted either as an agent of the seller or the purchaser, not both simultaneously.The Court analyzed the facts and determined that the assessee, by acting as an agent of the purchasers, was liable for purchase tax under the Bihar Sales Tax Act, 1959. The Court referred to the Act's definition of a dealer, stating that the assessee, even when making purchases for commission on behalf of principals, qualified as a dealer and was liable to pay tax on such purchases. The Court upheld the Tribunal's decision, holding the petitioner liable for purchase tax due to acting solely as an agent of the purchasers.In conclusion, the High Court affirmed the Tribunal's decision, answering the referred question in the affirmative. The judgment emphasized the assessee's role as a purchasing agent and upheld the liability for purchase tax. No costs were awarded in consideration of the circumstances.*Aftab Alam, J.* - concurred with the decision, and the reference was answered affirmatively.