TaxTMI 
TaxTMI 
TaxTMI 
2020 (3) TMI 143
X X X X Extracts X X X X
X X X X Extracts X X X X
....as no alternative or efficacious remedy against the impugned order as the respondent had no authority to levy tax under the provisions of the respective Acts in as much as the sale has taken place from the petitioner's principal at Mumbai or principal's branch office who had paid CST/TNGST as the case may be, on the sales booked by the appellant. 5.In the impugned orders, the respondent Commercial Tax Officer has held that the petitioner was acting as a Del credere agent for Tvl. Reliance Industries Ltd. and had failed to discharge the tax liability under the respective Acts. It is submitted that the demand was in violation of the provisions of the respective enactment in as much as the tax liability was on the principal and the appellant merely acted as an agent who received 'commission' from the principal for the orders booked for on behalf of the said principal. 6.The learned counsel for the petitioner relied on the decision of the Hon'ble Supreme Court in Peninsular Traders and Another Vs. Deputy Commissioner of Sales Tax (Law), Kerala, (1998) 108 STC (SC). In paragraph 7, the Hon'ble Supreme Court observed as under:- "7. The overall effect the agreement produced on....
X X X X Extracts X X X X
X X X X Extracts X X X X
....able in the facts of the present case. 11.He refers to the decision of the Hon'ble Supreme Court in Alwaye Agencies Vs. Dy.Commissioner of Agricultural Income Tax and Sales Tax Ernakulam, referred to supra, wherein it is stated even when the goods were destined directly to the customer, it was the distributor who had to guarantee to arrange the payment. 12.He further refers to the decision of the court in the Bhopal Sugar Industries Ltd. Vs. Sales Tax Officer, Bhopal, (1977) 3 SCC 147, wherein it was observed that "a contract of agency, however, differs essentially from a contract of sale inasmuch as an agent after taking delivery of the property does not sell it as his own property but sells the same as the property of the principal and under his instructions and directions." There the Court held that the mere fact that the word ' agent' or 'agency' was used or the words 'buyer' and 'seller' were used to describe the status of the parties concerned is not sufficient to lead to the irresistible inference that the parties did in fact intend that the said status would be conferred. 13.He further submits that the mere formal description of a person as an agent or buyer is not c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....carries on the business of buying, selling, supplying or distributing goods on behalf of any principal, or through whom the goods are bought, sold, supplied or distributed; (i) a local authority, a body corporate, a company, any cooperative society or other society, club, firm, Hindu undivided family or other association of persons which carries on such businesses; (ii) a factor, broker, commission agent, del credere agent or an auctioneer, or any other mercantile agent, who carries on the business of buying, selling, supplying or distributing goods belonging to any principal whether disclosed or not; (iv) every local branch of a firm or company situated outside the State; (iii) an auctioneer who carries on the business of selling or auctioning goods belonging to any principal, whether disclosed or not and whether the offer of the intending purchaser is accepted by him or by the principal or a nominee of the principal Every person who acts as an agent, in any State of a dealer residing outside that State and buys, sells, supplies, or distribute goods in the State or acts on behalf of such a dealer, as:- (v) a person engaged in the business of transfer otherwise than in purs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y system of payment by installments; (iv) a transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration; (v) a supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration; (iv) a transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration; (v) a supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration; (v) a supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration; (vi) a supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating) where such supply or service is for cash, deferred payment or other valuable consideration, and such transfer, delivery or supply of any goods shall be deemed to be a s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....act of sale or purchase is made; and (ii) in the case of unascertained or future goods, at the time of their appropriation to the contract of sale or purchase by the seller or by the purchaser, whether the assent of the other party is prior or subsequent to such appropriation. Explanation (3)(b):Where there is single contract of sale or purchase of goods, situated at more places than one, the provisions of clause (a) shall apply as if there were separate contracts in respect of the goods at each of such places. 19.The Supreme Court in Peninsular Traders and Another Vs. Deputy Commissioner of Sales Tax (Law), Kerala (Supra), was concerned with Section 2 (xxi) of the Kerala General Sales Tax Act, 1963 which defined the expression sale as follows:- xxi) 'Sale' with all its grammatical variations and cognate expressions means every transfer (whether in pursuance of a contract or not) of the property in goods by one person to another in the course of trade or business for cash or for deferred payment or other valuable consideration, but does not include a mortgage, hypothecation, charge or pledge; Explanation (1): - A transfer of the property in the following goods namely, tea,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ess otherwise expressly provided in this Act, any transfer, delivery or supply of any goods referred to in this clause shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and purchase of those goods by the person to whom such transfer, delivery or supply is made; Explanation(4) (a) The sale or purchase of goods shall be deemed, for the purposes of this Act, to have taken place in the State whether the contract of sale or purchase might have been made, if the goods are within the State. (i) In the case of specific or ascertained goods at the time the contract of sale or purchase is made; and (ii) In the case of unascertained or future goods, at the time of their appropriation to the contract of sale or purchase by the seller or by the purchaser, whether the assent of the other party is prior or subsequent to such appropriation. (b) Where there is a single contract of sale or purchase of goods situated at more places than one, the provisions of clause (a) shall apply as if there were separate contracts in respect of the goods at each of such places; (c) For the purpose of this Act, the transfer of property in goods (whether as g....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ss of buying, selling, supplying or distributing goods executing works contract, transferring right to use any goods or supplying by way of or as part of any service, any goods on behalf of any principal; (d) a non-resident dealer or an agent of a non-resident dealer, or a local branch of a firm or company or association or body of persons whether incorporated or not situated outside the State; (e) a person who, whether in the course of business or not, sells; (i) goods produced by him by manufacture, agriculture, horticulture or otherwise; or (ii) trees which grow spontaneously and which are agreed to be severed before sale or under the contract of sale; (f) a person who whether in the course of business or not:- (1) transfers any goods, including controlled goods whether in pursuance of a contract or not, for cash or deferred payment or other valuable consideration; (2) transfers property in goods (whether as goods or in some other form) involved in the execution of a works contract; (3) delivers any goods on hire-purchase or any system of payment by installments; (4) transfers the right to use any goods for any purpose (whether or not for a specified period) fo....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in the respective Act. 23. In Gurumukh Rai Radha Krishna Vs. The State of Bihar, (1979) 25 STC 70, the Patna High court observed that a Del Credere agent as someone who, in consideration of special remuneration, undertakes that the person with whom he enters into contracts on the principal's behalf will be in a position to perform their duties. In other words, while acting as an agent on the principal's behalf, he guarantees the performance by the persons with whom he deals on behalf of his principal and makes himself liable as a surety to the extent of any default which may be committed by such persons. The liability of the Del credere agents becomes co-extensive with that of the third parties who enter into contract through him. The Del credere agent is not the agent of those third parties. 24. In Para 6, the Court further held as follows: "6. The definition of the 'dealer' as it stood at the relevant time clearly states that it means any person who sells or supplies any goods, whether for commission, remuneration or otherwise. It follows from this definition, therefore, that even though the assessee was selling or supplying goods to the purchasers outside the State of Bihar....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... The liability of the 'del credere' agent is a contingent pecuniary liability, not a liability to perform the contract; it is a pecuniary liability to make good in an event (of) default of the buyer in respect of a pecuniary liability. It does not extend to other obligations of the contract. It does not expose the 'del credere' agent to an action to ascertain the sum due. It is limited to a contingent pecuniary liability in respect of a sum which, as between the seller and the buyer, is an ascertained sum.' 11. Per Buckley L.J. in - 'Gabriel v. Churchill and Sim', 1914-3 KB 1212 at p. 1279 (B). 12. The petitioner is not thus a 'del credere' agent. He has not the possession of the goods for the purpose of sale. Nor has he any of the rights of a mercantile agent. So both the petitioner and the Sales Tax authorities erroneously described it as a 'del credere' agent. The same description is repeated in the petition made here and in the affidavit filed in support of it. The learned Counsel for the petitioner did not realize the mistake and did not seek to amend the petition though the definition of 'del credere' agent was brought to his notice during the course of arguments. Howe....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... b) by one person to another; c) in the course of business; and d) for cash, deferred payment or valuable consideration. 29. It was in the context of Explanation 5 to the definition of 'sale' in Section 2(xxi) as extracted above, the Honourable Supreme Court in Peninsular Traders and Another Vs. eputy Commissioner of Sales Tax (Law), Kerala (supra), gave its decision. The definition of 'sale' did not include sale by a Del credere Agent as to compare to the definition in TNGST Act, 1959. 30. Whereas in Explanation (1-B) to Section 2(n) of TNGST Act, 1959, transfer of property involved in the purchase, sale, supply or distribution of goods through a factor, broker, commission agent or arhati, del credere agent or an auctioneer or any other mercantile agent, by whatever name called, whether for cash or for deferred payment or other valuable consideration, shall be deemed to be a purchase or sale, as the case may be, by such factor , broker, commission agent or arhati, del credere agent, auctioneer or any other mercantile agent, by whatever name called, for the purposes of this Act. Therefore, the decision of the Hon'ble Supreme Court in Peninsular Traders and Another Vs. Deputy ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....by their principal namely Reliance Industries Ltd directly from the State of Gujarat. This would require verification on facts. 36. The petitioner has enclosed copies of Central Excise invoice of the manufacturer namely M/s. Reliance Industries Ltd to demonstrate that the goods were directly dispatched to different buyers in the State of Tamil Nadu and the petitioner merely acted as Del Credere agent simpliciter who paid/settled the payment to M/s. Reliance Industries. 37. The question of treating a transaction as 'sale' by the petitioner would arise only if the 'goods' were available in the State of Tamil Nadu when the petitioner placed purchase orders for and on behalf of the prospective buyers on the supplier in Tamil Nadu. This is a question of fact which would be required to be ascertained under only by the adjudicating authority. 38. To the extent movement of goods is stated from the State of Gujarat, the petitioner cannot be held liable to pay tax under TNGST Act, 1959. If transaction had originated from the State of Gujarat, the transaction would be an interstate sale, liable to tax in the hands of M/s Reliance Industries Ltd. and not in the hands of the petitioner in th....