TaxTMI 
TaxTMI 
1991 (7) TMI 315
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....hase and sale of piggeries and other meat products. During the course of the same, it supplied meat, etc., worth Rs. 27,80,122.34 in that year to Government. The assessee claimed that all that was meant for Defence forces and the sales were completed in Delhi itself. No sales tax was pleaded to be leviable on these sales as they were covered by rule 29(iii) of the Delhi Sales Tax Rules. The sales tax authorities, however, did not accept that the sales were exempted under this rule or that they were local sales at Delhi only. Instead it was found that those supplies were meant for Defence forces in different places in India and the contract of sale involved despatch of those supplies to places outside Delhi. They were, therefore, held assessable as inter-State sales and eligible to sales tax at the rate of 10 per cent. The procedure for placement of orders for the said supplies was that the Ministry of Agriculture, Government of India, floated tender enquiries for obtaining canned meat. In the present case the "invitation of tenders and instructions to tenders" dated 24th July, 1970, was issued by the Government of India, Ministry of Food, Department of Food (Army Purchase....
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....Appellate Tribunal in two separate appeals, one under the local Act and the other under the Central Act. These were allowed by the Tribunal and it was held that after considering the entire circumstances of the case and the law cited, the sale in the present case did not occasion the movement of goods from Delhi to another State nor could it be said that the movement was in pursuance or incidental to the contract of sale. If the goods after having been purchased and supplied at Delhi or New Delhi station were despatched to another State, it was observed, it could not be said that this movement of goods was the result of the contract itself. The Tribunal referred to two certificates dated 24th May, 1970 and 22nd January, 1976, issued by the Officer Commanding, Composite Food Laboratory, ASC, to the effect that the goods supplied by the dealer to Defence Ministry were free on rail at Delhi and New Delhi and the consignor in all these cases was the army unit. The Tribunal further came to the conclusion that the provisions of rule 29(iii) were attracted to the present sales as the goods were purchased for official use of Ministry of Defence. The Tribunal made reference to certificate d....
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....uld be movement of goods from Delhi to outside Delhi. It is for this reason, it was submitted, that the contract envisaged that the delivery of the goods would take place at the railway station/siding at Delhi. If there was not to be any movement of goods from Delhi, there would have been no need, it was contended, for the agreement to require the delivery to take place at the railway station or the siding. In our opinion there is no merit in this submission. The Tribunal has found as a fact that the delivery of the goods took place at Delhi. Furthermore, reliance was placed on a certificate issued by the Composite Food Laboratory, Delhi, which is to the following effect: "It is certified that all the foods, viz., canned mutton, ham, bacon supplied to Defence against various contracts by M/s. Essex Farms Pvt. Ltd., 4, Mehrauli Road, Delhi-16 are free of Delhi/New Delhi railway stations. Consignor in all the cases is Composite Food Laboratory, ASC, Delhi (Defence) and consignee are the various army units." The aforesaid certificate shows that even though goods were being sent out of Delhi, the consignor in all the cases was the Composite Food Laboratory, ASC, Delhi, which i....
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.... dated 28th May, 1970, also certifies that the consignor is not the dealer but the purchaser. This being so, it is a case where a purchaser has bought goods in Delhi and then, de hors the contract, has either utilised them in Delhi or despatched them from Delhi. The sale was complete when the goods were delivered and that was a local sale. Another case which is similar to the present case is that of Delhi Cloth and General Mills Co. Ltd. v. Commissioner of Sales Tax [1981] 48 STC 351 (Delhi). That was a case where the dealer had offered to supply certain quantities of vanaspati ghee to the J & K Government at Delhi against cash payment. The sale note was made in the name of the Trade Commissioner of Jammu & Kashmir at Delhi though the destination was mentioned as Jammu. In the correspondence between the parties, there was no stipulation regarding the movement of the goods though the delivery of the goods was taken in Delhi and was then despatched by the Trade Commissioner to Jammu & Kashmir. A Division Bench of this Court following the aforesaid Supreme Court decision in Balabhagas case [1976] 37 STC 207 came to the conclusion that the sale was a local sale and not an int....
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....stry of Food and Agriculture, but it was stipulated in the acceptance of tender that the price was to be debited to the account of the Controller of Defence Accounts (Western Command). From the aforesaid, it is clear that the said purchase was made for and on behalf of the military, viz., the Ministry of Defence. Shri Salve is right in contending that this is a case of an agent of a disclosed principal who has made the purchases from the dealer. In law, it was sought to be contended that the purchaser was the Ministry of Defence and not the Ministry of Food and Agriculture. To put it differently, the sale by the dealer was, in law, to the Ministry of Defence which was the disclosed principal of the agent, viz., Ministry of Food and Agriculture. In Lester v. Balfour Williamson Merchant Shippers Ltd. [1953] 1 All ER 1146, there was a sale by agents "for account of " foreign principals. The question arose with regard to the liability of the agents for act or default. It was held in that case that the agents were not the sellers. The principle which was invoked was that an agreement by an agent on behalf of a disclosed principal binds the principal qua the other contracting party an....
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....t liable." Applying the principle of Radhakrishna's case AIR 1962 SC 538 (SC) here, we find that the Ministry of Food and Agriculture was acting on behalf of the Ministry of Defence. The Ministry of Defence was the disclosed principal. It is, therefore, the Ministry of Defence which was bound by the contract of sale. When rule 29(iii) provides that the sale shall be to the Ministry of Defence, it means, in fact that the purchases are made by the Ministry of Defence. The principal contracting parties were the dealer and the Ministry of Defence and the Ministry of Food and Agriculture was merely an agent of the disclosed principal. The two parties, to put it differently, which were bound by the terms of the contract as a result of the issuance and acceptance of the tender, were the dealer and the Ministry of Defence. The intention of the said rule is very clear and that is, on the purchases made by the Ministry of Defence, sales tax under the provisions of the Delhi Sales Tax Rules should not be paid. It was submitted by the learned counsel for the department that rule 29(iii) should be literally construed. This submission cannot be accepted in view of the following obse....