TaxTMI 
TaxTMI 
2007 (2) TMI 602
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....the State of U.P. In all the three years, the dealer/opposite party (hereinafter referred to as "dealer") claimed to have purchased oil, manufactured by M/s. Shree Durga Industries, Fatehabad Road, Agra, on principal-to-principal basis under the agreement dated January 9, 1985 and sold the same within the State of U.P. Exemption was claimed on the sale of such mustard oil, purchased from M/s. Shree Durga Industries, Fatehabad Road, Agra, on the ground that the dealer was neither manufacturer nor importer of such oil and, therefore, such oil was not liable to tax in the hands of the dealer. The assessing authority on the basis of the terms of the agreement dated January 9, 1985 held that M/s. Shree Durga Industries, Fatehabad Road, Agra, had manufactured the oil as per the directions of the dealer and the first sale after the manufacture of oil was made by dealer-company and, therefore, held the dealer liable to tax. The view of the assessing authority has been upheld in first appeals. The Tribunal by the impugned order deleted the tax. The Tribunal held that the dealer had purchased the oil on principal-to-principal basis in terms of the agreement and the first sale was made by ....
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....t of DCM Limited, a company incorporated under the Indian Companies Act having its registered office at Bara Hindu Rao, Delhi 110 006 (hereinafter called "the Company" which expression shall include its successors and assigns) of the one part and Shree Durga Industries, Agra, a proprietary firm (hereinafter called "the Firm" which expression shall include its successors and assigns) of the other parts. Whereas the company is renowned manufacturer of vegetable products and edible oils in India and has agreed to market the mustard oil manufactured by the firm in its factory at Fatehabad Road, Village Tora, P. O. Kalal Kheria, Agra, U.P. under all or any of the brand names "Panghat", "Rath", "Palki" and "Jawan", etc., which are the registered trade marks of the company. And whereas the firm has agreed to sell the mustard oil manufactured by it in its factory at Fatehabad Road, Village Tora, P.O. Kalal Kheria, Agra to the company for marketing by the company under its brand names. (1) Product The product covered by this agreement shall be "filtered mustard oil", quality or purity of which will be in accordance with the standards laid down hereinafter and packed in 15kg, 5kg....
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.... marks to the firm in any manner and the property in the said trade marks which consists in the exclusive right to use the trade marks in relation to edible oils (including mustard oil) will continue to be vested in the company. The firm hereby undertakes not to use or allow others to use these trademarks in relation to the product manufactured by them. (7) Rules and regulations The firm has agreed to comply with all the legislative requirements and the Rules and Regulations promulgated by the Government (Central and State) and the local bodies for manufacture and supply of the product. (8) Mode of supply and delivery The product will be dispatched by the firm as per the advice of the authorised officials of the company to various destinations through such carriers or transporters as approved. It is further agreed that the firm will dispatch the product in such quantities in good and sound containers, properly packed with saw-dust and or other suitable dunnaging material to avoid any transit loss. (9) Right to sell the product to any other party It is agreed that the firm will have the right to supply the product to any other party covered by this agreement after....
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....n the seeds in excess of 5.5 per cent. (b) Interest on investment This is being allowed as fixed expenses on the presumption that there shall be a minimum stock of 10 days production requirement of seeds in the factory godown(s) of the firm. In the event the stock level is observed to be below this minimum level by more than 7.5 per cent in any weeks during the month, pro-rate deduction will be made in the said fixed expenses for the whole month. (c) Remuneration Since the firm is entitled to sales tax exemption up to April 23, 1988, the firm will charge the service charge at 4% (four per cent) of the cost of naked oil up to April 23, 1988 and no sales tax is leviable. However, effect from April 24, 1988, till the expiry of the agreement or from the earlier date following the date on which sales tax exemption benefit is withdrawn by the Government, the firm will be entitled to charge by way of remuneration a fixed sum of Rs. 22.00 per MT of filtered mustard oil actually supplied to the company (subject to a maximum of Rs. 50,000 per month on the existing capacity of 225 MTR) and the same shall constitute an element of price. Sales tax will be charged at the rate prevalent ....
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....ental expenses and the firm will have no control over fixation of reselling price by the company. (13) Agmark certification The firm will arrange at it own cost and expenses for Agmark certification of the product covered under this agreement. The company will be entitled to reject the product which does not bear Agmark certification or the standard of quality or purity of which is not as per Agmark specifications. (14) Maintenance and verification of records and inspection of stocks and quality The firm will maintain proper records relating to the dispatches, purchases of seeds and sale of cake, etc., as also other records as are required to be maintained under different laws, e.g., excise law, sales tax law, income-tax law, etc. For proper implementation of the agreement the company shall be entitled to require the firm to maintain such other records and accounts in a particular manner. These records will be available for inspection by the officials of the company. The firm shall extend full co-operation to the various officials of the company for verification of accounts, stocks, quality of the product as often as it is deemed necessary or proper by the company. (15)....
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....other party. Oil cake obtained in the course of manufacturing remained the property of the manufacturer. As per clause 16 in the event of non-fulfilment of the obligations, the firm was held liable for damages. Merely because as per the agreement, the manufacturer was instructed to manufacture oil of a specified quantity and for the determination of the selling price, cost of the oilseed and the expense, etc., was taken into account, it cannot be said that the supply of mustard oil by M/s. Shree Durga Industries, Fatehabad Road, Agra to the dealer-company was not sale on principal-to-principal basis. The oilseed and the oil manufactured from the oilseed had always remained the property of M/s. Shree Durga Industries, Fatehabad Road, Agra and the title on the aforesaid goods never vested with the dealer-company before the sale of oil. In the circumstances, on the basis of the agreement, it cannot be said that M/s. Shree Durga Industries, Fatehabad Road, Agra had manufactured oil on job-work basis on behalf of dealer-company and after manufacturing of such mustard oil, dealer-company had made first sale and, therefore, liable to tax being a manufacturer as defined under the Act. T....