TaxTMI 
TaxTMI 
2020 (3) TMI 143
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....ent writ petition stating that the petitioner has 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:-....
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....cited by the learned counsel for the petitioner was distinguishable and inapplicable 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 furt....
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....y other mercantile agent by whatever name called, and whether of the same description as herein before or not, who 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 ....
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....works contract; (iii) a delivery of goods on hirepurchase or any system of payment by installments; (iii) a delivery of goods on hirepurchase or any 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 ....
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....s Act, to have taken place in the State, wherever 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. 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 ....
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.... service or in any other manner whatsoever, of goods, being food or any other articles for human consumption or any drink (whether or not intoxicating), where such supply or service is for cash, deferred payment or other valuable consideration shall be deemed to be a sale; Explanation (3D): - Unless 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 su....
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.... any goods or supplying by way of or as part of any service, any goods directly or otherwise, whether for cash or for deferred payment, or for commission, remuneration or other valuable consideration and includes: (a) Omitted (b) a casual trader (c) a commission agent, a broker or a del credere agent or an auctioneer or any other mercantile agent, by whatever name called, who carries on the business 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:- ....
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.... account of possible default. He gives a security to the seller. The Del credere commission is the premium or price given by the principal to the Del credere agent for the guarantee given by the latter. A Del Credere agent is like any other agent bound to handover the money to the principal, as soon as he receives it or pays in advance and is distinguished from other agents. 22. For deciding the dispute, it would be useful to refer few decisions of the court as there is no definition of the expression 'Del credere' Agent 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-exte....
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.... stated in - 'Ex-parte while', (1871) 24 LT 45 A- 'a 'del credere' agent is distinguished from other agent who is to sell according to the instructions of the principal, simply in this that he guarantees that those persons to whom he sells shall perform the contracts which he makes with them, and, therefore, if he sells at the price at which he is ordered to sell by the principal and upon the credit which he is ordered to give by the principal, then no doubt, he guarantees that the customer will pay him at that time.' 10. The later view is- 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....
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....The order dated 9-5-52 holding it a dealer under the Act is erroneous." 27. Thus, the fact that the petitioner acted as a 'Del Credere' Agent stands established and therefore, the petitioner was a dealer within the meaning of the respective enactments. 28. The definition of 'sale' in Section 2(n) of TNGST Act, 1959 and Section 2(g) of the CST, 1956 are almost identical. Both the definitions are inclusive and therefore expensive. For a transaction to come within the fold of 'sale' there should be:- a) transfer of property of goods (other than by way of mortgage, hypothecation, charge or pledge); 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 A....
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....cific or a certain goods, at the time the contract of sale or purchase is made; b) in 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. 35. Thus, from a cumulative reading of the definition of 'sale' in Section 2(n) of the TNGST Act, 1959 only in the case of 'ascertained goods' within the state of Tamil Nadu at the time of sale will be liable to tax in the hands of a 'Del credere' agent. In this case, it is the contention of the petitioner that the goods were transferred 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' ....