TaxTMI 
TaxTMI 
1972 (4) TMI 90
X X X X Extracts X X X X
X X X X Extracts X X X X
....re in transit are not sales liable to be taxed under the Central Sales Tax Act in this State at the hands of the opponent?" 2.. Material facts which have been found by the Tribunal in the impugned order dated 2nd January, 1969, may be stated in brief. The dispute is in respect of quarters ending 31st of December, 1961, to 30th of September, 1962. M/s. Ram Avattar Agarwalla & Co. (hereinafter to be referred to as the opposite party) is a registered dealer under the Central Sales Tax Act, 1956 (hereinafter to be referred to as the Act) at Jatni within Puri II Circle and deals in rice and paddy. It despatches rice and paddy to different places in the State of West Bengal in the name of its commission agent M/s. Madanlal Agarwalla (hereinaft....
X X X X Extracts X X X X
X X X X Extracts X X X X
....accepted the return figures and directed excess tax, if any, to be refunded. The question of law already extracted has been referred as arising out of this appellate order. 3.. The following points of law arise for consideration out of the question of law referred to us: (i) Is the sale in the course of inter-State trade? (ii) If so, is the assessment to be made by the sales tax authorities in Orissa? (iii) Did the commission agent effect the sale on behalf of the opposite party or on his own behalf? (iv) Is the opposite party or the commission agent as a dealer liable to pay tax under the Central Sales Tax Act? 4.. Section 3 of the Act, so far as material, runs thus: "3. A sale or purchase of goods shall be deemed to t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ommerce, whether such sales fall within clause (a) or clause (b) of section 3, shall be levied by the Government of India and the tax so levied shall be collected by that Government in accordance with the provisions of sub-section (2), in the State from which the movement of the goods commenced........" Admittedly, in this case the movement of the goods commenced in the State of Orissa. Orissa State is, therefore, the appropriate State to levy and collect tax. 6.. It is contended by the learned standing counsel that in the absence of a finding that the commission agent had the authority to sell the goods in his own name or had the right to pass a valid title, the conclusion of the Tribunal that the opposite party was not liable to pay ta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....a buyer. One has, therefore, to look into the terms of the agreement. The covenant in the agreement between the principal and the commission agent may in certain cases involve transfer of goods. In Hope Prudhomme and Company v. Hamel and Horley Ltd.A.I.R. 1925 P.C. 161., their Lordships brought out the aforesaid view in clearest terms in the following passage: "Notwithstanding the view taken by both the courts in India, the respondents have insisted, as they had a right to do, in an elaborate and useful argument, that in the legal sense of the word they were not agents but principals. There is great force in the observations which were made to their Lordships upon the extension which modern business has given to the terms 'agent' and 'ag....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t in commercial usage, especially in modern contracts, the expression 'agents' or 'agency' has acquired an extended meaning; often the so-called agent is merely a buyer who has been given favourable terms in a particular area to sell the manufacturer's or supplier's goods. The use of the expression agency in clause (9) has therefore no special importance." 9.. The principle as to when a commission agent would be treated as a mere agent or not has been masterly expressed in Kalyanji Kuwarji v. Tirkaram Sheolal and OthersA.I.R. 1938 Nag. 254. After a thorough analysis of the relevant law on the point, his Lordship Vivian Bose, J., (as he then was) laid down the test in the following passage: "The test to my mind is this: Does the commis....
X X X X Extracts X X X X
X X X X Extracts X X X X
....a valid title by endorsement of the R/Rs in favour of the purchasers, then he did not act as an agent of the opposite party and as such the opposite party cannot be assessed in respect of the turnover of sale arising out of the transfer of title to the goods while in transit by the commission agent in favour of the purchasers. If, on the other hand, it is found as a fact that the commission agent had no authority to sell the goods in his own name and had no authority in his own right to pass a valid title, the opposite party is to be assessed in respect of the inter-State sale so effected. None of the assessing authorities was alive to the aforesaid distinction in the role of the commission agent depending upon the covenant of agreement. Th....