Principal-agent transfer of copra not a taxable sale; sales tax arose only on later third-party sales, with set-off available for tax already paid.

Where copra was procured under a scheme through a nodal agency and local procurement agencies acted only as commission agents, the transfer from the procurement agency to the nodal agency was treated as an internal movement within a principal-agent arrangement and not as an independent sale liable to sales tax. The goods were regarded as the nodal agency's stock, stored and insured at its cost, so tax arose only when the nodal agency later sold the goods to third parties. Any tax collected at the procurement stage was not proof of double taxation and could be adjusted by set-off. The assessment and appellate orders were upheld and the petitions were rejected.

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Issues: (i) whether the transfer of copra from the procurement agency to the nodal agency amounted to a sale attracting sales tax, or was only a transfer within a principal-agent arrangement; (ii) whether the petitioner was exposed to double taxation and entitled to set-off of tax already paid at the procurement stage.

Issue (i): Whether the transfer of copra from the procurement agency to the nodal agency amounted to a sale attracting sales tax, or was only a transfer within a principal-agent arrangement.

Analysis: The scheme was implemented through a nodal agency with local procurement agencies acting under the scheme and receiving only commission. The goods procured were treated as the stock of the nodal agency, stored at its cost, insured at its cost, and procured for its benefit. On those terms, the movement of goods from the procurement agency to the nodal agency did not amount to an independent sale.

Conclusion: The transfer was not a taxable sale between the procurement agency and the nodal agency; sales tax became payable only when the nodal agency sold the goods to third parties.

Issue (ii): Whether the petitioner was exposed to double taxation and entitled to set-off of tax already paid at the procurement stage.

Analysis: Even if tax had been collected by the procurement agency at the time of transfer, the proper consequence was a claim for set-off of the amount so paid. The petitioner's apprehension of being taxed twice was therefore unfounded.

Conclusion: The petitioner was not shown to suffer double taxation and any admissible tax already paid could be adjusted by way of set-off.

Final Conclusion: The assessment and appellate orders were upheld and the petitions were rejected for want of merit.

Ratio Decidendi: Where goods are procured and transferred under a scheme in which the procurement agency acts for the nodal agency and the goods are treated as the nodal agency's stock, the transfer is not a sale for sales tax purposes; tax arises on the subsequent sale by the nodal agency, with any tax wrongly collected at the transfer stage being adjustable by set-off.

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