ORDER
Janarthanam, J.
1. This revision, at the instance of the Revenue, is directed against the order dated 28th day of April, 1989 of the Tamil Nadu Sales Tax Appellate Tribunal, Madras-104 (Additional Bench) (for short “the Tribunal”) and made in T.A. No. 1136 of 1987 relating to the assessment year 1983-84 under the Central Sales Tax Act, 1956 (Act No. 74 of 1956 – for short “the CSTA”).
2. The assessee-dealers – TVL. Cocoa Products and Beverages Limited, Madras-99 are registered dealers under CSTA. The assessee-dealers were stated to have made consignment sales, through their agent TVL Parry Confectionery Ltd., Bombay (for short, “PCL”) of cocoa products by effecting despatches through transfer challans. The consignment sales effected during the relevant assessment year is to the tune of Rs. 9,09.820 (for Rs. 9,09,819.64) and the despatches for the said consignment sales were effected between the period January 20, 1984 and March 31, 1984. Their agent PCL, it is said, kept quiet and dormant in not getting themselves registered under the CSTA for a major portion of the period of the said assessment year 1983-84.
3. It appears, they filed an application for registration at the fag end of the said assessment year 1983-84 and consequent to the application so filed, they were registered as “registered dealers” with effect from January 30, 1984. Before they were registered as “registered dealers” it appears, they took steps for getting themselves appointed as agent of the assessee-dealers at Bombay for the sale of their cocoa products. In that regard, the Board of Directors of the assessee-dealers company passed a resolution on March 4, 1983 for appointment of PCL as their agent for effecting sales of their cocoa products. The resolution so passed was stated to have been approved by the general body meeting of the assessee-dealers-company on March 19, 1983 recognising the said agency with effect from April 1, 1983. Despite the passing of the resolution by the Board of Directors and the general body meeting of the assessee-dealers-company, some delay occurred in issuing appointment order, appointing PCL as their agent. The appointment was actually made on March 4, 1985.
4. The Deputy Commercial Tax Officer, Back Year Assessment, Zone-VII (Alandur Assessment Circle), after complying with the requisite formalities, passed the assessment order, in his proceedings CST : 2147/83-84 dated February 11, 1986 disallowing the exemption claimed on consignment sales stated to have been effected by PCL to the tune of Rs. 9,09,820 (Rs. 9,09,819.64), and treated that part of the turnover as inter-State sales exigible to tax at ten per cent.
5. The aggrieved assessee-dealers filed an Appeal No. 47/86/CST before the Appellate Assistant Commissioner (CT), Kancheepuram (for short, “the AAC”), who, in turn, after taking into consideration the relevant materials available on record and of course, after hearing the respective representatives on both the sides, dismissed the appeal, by his order dated August 17, 1987 confirming the view taken by the assessing officer, in the sense of treating the turnover to the tune of Rs. 9,09,820 as inter-State sales exigible to tax at ten per cent.
6. The assessee-dealers did not stop there and agitated the matter further by way of filing an appeal in T.A. No. 1136 of 1987 before the Tribunal, as stated above, which, in turn, on consideration of the materials available on record and after hearing the respective representatives of the assessee-dealers and the Revenue, held that the turnover of Rs. 9,09,820 for the said assessment year was only a “stock transfer on consignment basis” and consequently, the same cannot be assessed under the CSTA at ten per cent. So holding, the Tribunal set aside the order of the assessing officer and AAC as well treating the turnover of Rs. 9,09,820 as inter-State sales exigible to tax at ten per cent, giving rise to the present revision – Tax Case (Revision) No. 902 of 1990.
7. During the course of arguments, the entire file relating to the assessment year in question had been produced before us by learned Government Advocate (Taxes) representing the Revenue for our perusal and consideration and the facts, as culled out above, are nothing but the reflection of the materials traceable to the file as well as the orders passed by the authorities below, inclusive of the Tribunal.
8. From the pith and submissions of Mr. R. Mahadevan, learned Government Advocate (Taxes) representing the Revenue and Mr. N. Inbarajan, learned counsel appearing for the assessee-dealers, the one and only point, which crops up for consideration is :
Whether the order of the Tribunal in holding that the turnover of Rs. 9,09,820 for the assessment year 1983-84 is only ‘stock-transfer’ on consignment basis for open market sale through agents and therefore not exigible to tax under CSTA, on the facts and in the circumstances of the case, is sustainable in law ?
9. The point : There is no pale of controversy that the assessee-dealers effected despatch of their cocoa products to their agent PCL for sales to be effected on consignment basis by way of “stock transfer challans” between January 20, 1984 and March 31, 1984, covering a turnover of Rs. 9,09,820. It is also not in dispute that PCL is the registered dealers under the CSTA with effect from January 30, 1984. Equally true it is that PCL got themselves appointed as the agent of the assessee-dealers with effect from March 4, 1985. A perusal of the file also reveals that PCL filed form “F”, covering the entirety of the turnover relatable to the period between January 20, 1984 and March 31, 1984.
10. The Revenue would contend that inasmuch as the assessee-dealers appointed PCL as their agent with effect from March 4, 1985, it is impermissible in law to give retrospectivity to the agency from April 1, 1983 so as to cover the turnover effected between January 20, 1984 and March 31, 1984 as representing the sales effected on consignment basis through their agent PCL and if at all, such an agency can be given prospectivity with effect from March 4, 1985, the date of their appointment and if so construed, the said transaction cannot at all be anyone, other that an outright inter-State sales made exigible to tax at the appropriate rate. The alternative contention of the Revenue is that at least the despatches effected by the assessee-dealers between January 20, 1984 and January 30, 1984, involving a part of the turnover to the tune of Rs. 3,20,686, as revealed from the records, by way of “stock transfer challan” to their agent – PCL for their consignment sales have to be necessarily construed, in the eye of law, as outright inter-State sales effected by the assessee-dealers to their so-called agent-PCL, inasmuch as the PCL got themselves registered as “registered dealers” under the CSTA with effect from January 30, 1984.
11. Mr. N. Inbarajan, learned counsel appearing for the assessee would strike a discordant note to the submissions, as above and what he would contend is that the salutary provisions adumbrated under the CSTA do not at all require the agency to be evidenced by a written agreement or contract. Such an agency may be oral and reflected by transactions that took place between two individuals at different ends, giving the necessary and requisite clue to treat the said individuals as principal and agent respectively. The only specific requirement, which the CSTA mandates, as reflected by the statutory provisions adumbrated, in the shape of section 6-A of CSTA and form “F” prescribed by rule 12(5) of Central Sales Tax (Registration and Turnover) Rules, 1957 (for short “the Rules”), is that the agent must be a “registered dealer” to enable the principal effecting despatches of goods from one State to another for sale on consignment basis, through his agent. He would further submit that from the fact that PCL got themselves registered as “registered dealers” with effect from January 30, 1984, the transactions that took place between the period January 20, 1984 and January 30, 1984, covering a part of the turnover to the tune of Rs. 3,20,686 cannot at all be excluded from the domain of consignment sales effected through their agent, inasmuch as it is legally permissible for such an agent under the provisions adumbrated in the proviso to rule 12(5) of the said Rules to file a single declaration, covering the transfer of goods effected by a dealer during the period of one calendar month.
12. The moot issue cropping up for consideration under the rival submissions of either counsel relates to the question as to whether it is always necessary that the agency must be in writing only, so as to enable the principal to claim the benefit of exemption on despatches effected from one State to another for sale on consignment basis through his agent.
13. Before answering such a moot issue, we rather feel, impelled to refer to certain precedents emerging from the apex Court, in order to draw necessary inspiration and guidelines.
(a) In Gordon Woodroffe & Co. v. Sheikh M.A. Majid & Co. [1966] Supp SCR 1 what their Lordships of the Supreme Court said relatable to the difference between “said” and “agency to sell” – which is relevant for our present purpose – is reflected, as below :
“The essence of sale is the transfer of title to the goods for price paid, or to be paid, whereas the essence of the agency to sell is the delivery of the goods to a person who is to sell them, not as his own property but as the property of the principal who continues to be the owner of the goods, and the agent is liable to account for the proceeds. On the terms of the contract and the course of dealing between the parties, the contract was not one of agency for sale but was an agreement of sale”.
(b) In Sri Tirumala Venkateswara Timber and Bamboo Firm v. Commercial Tax Officer [1968] 21 STC 312, their Lordships of the Supreme Court said :
“The question as to whether the transactions in any given case are sales or contracts of agency is a mixed question of fact and law and must be investigated with reference to the material which the dealer might be able to place before the appropriate authority”.
(c) In Bhopal Sugar Industries Ltd. v. Sales Tax Officer , their Lordships of the Supreme Court said :
“The concept of a sale has undergone a revolutionary change, having regard to the complexities of the modern times and the expanding needs of the society, which has made a departure from the doctrine laissez faire by including a transaction within the fold of a sale even though the seller may, by virtue of an agreement, impose a number of restrictions on the buyer, namely, fixation of price, submission of accounts, selling in a particular area or territory and so on. These restrictions per se would not convert a contract of sale into one of agency, because in spite of these restrictions the transaction would still be a sale and subject to all the incidents of a sale.
A contract of agency 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 principle and under his instructions and directions. Furthermore, since the agent is not the owner of the goods, if any loss is suffered by the agent he is to be indemnified by the principal.
While interpreting the terms of the agreement, the court has to look to the substance rather than the form of it. The mere fact that the word ‘agent’ or ‘agency’ and the word ‘buyer’ and ‘seller’ are 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 that status would be conferred. Thus, the mere formal description of a person as an agent or buyer is not conclusive, unless the context shows that the parties clearly intended to treat a buyer as a buyer and not as an agent.
It is always open to the buyer to purchase goods for a limited purpose and within the field of that limited purpose the buyer has absolute title to the property once it is delivered to him by the seller.
The payment of commission by itself is not conclusive to show that the agreement was one of agency.
The essential distinction between an agreement of sale and an agreement of agency is that, in the former case, the property is sold by the seller as his own property and, in the latter case, the property is sold by the agent not as his own property but as the property of his principal and on his behalf”.
14. The aforequoted decisions of the Supreme Court clearly spelt out essential distinction between “agreement of sale” and “agreement of agency”. No doubt true it is, that the Supreme Court happened to consider in those decisions, written agreement existing between the parties, in drawing such a distinction.
15. No other provision, other than the provision adumbrated under section 6-A of the CSTA and form “F” prescribed under rule 12(5) of the Rules is traceable in the CSTA relatable to burden of proof, etc., in the case of transfer of goods claimed otherwise than by way of sale.
(a) Sub-section (1) of section 6-A of the CSTA which is relevant for our purpose, reads :
“6-A. Burden of proof, etc., in case of transfer of goods claimed otherwise than by way of sale. – (1) Where any dealer claims that he is not liable to pay tax under this Act, in respect of any goods, on the ground that the movement of such goods from one State to another was occasioned by reason of transfer of such goods by him to any other place of his business or to his agent or principal, as the case may be, and not by reason of sale, the burden of proving that the movement of those goods was so occasioned shall be on that dealer and for this purpose he may furnish to the assessing authority, within the prescribed time or within such further time as that authority may, for sufficient cause, permit, a declaration duly filled and signed by the principal officer of the other place of business, or his agent or principal, as the case may be, containing the prescribed particulars in the prescribed form obtained from the prescribed authority, along with the evidence of despatch of such goods.
(2)…..
Explanation. – In this section, ‘assessing authority’ in relation to a dealer, means the authority for the time being competent to assess the tax payable by the dealer under this Act.”
(b) Form ‘F’ prescribed by rule 12(5) of the Rules is as below :
“FORM ‘F’
FORM OF DECLARATION TO BE ISSUED BY THE TRANSFEREE
[See rule 12(5)]
Serial No.
Name of the issuing State
Office of issue
Date of issue
Name and address of the person to whom
issued along with his registration certificate No.
Date from which registration is valid.
Seal of the issuing authority
To
…………… (Transferee) Registration certificate No. of the
transferor
Certified that the goods transferred to me/us as per details
below have been received and duly accounted for.
Description of the goods sent………………………
Quantity or weight
Value of the goods
Number and date of invoice or challan or any other
document under which goods were sent
Name of railway, steamer or ferry station or air port or
post office or road transport company’s office from where
the goods were despatched
No. and date or railway receipt or postal receipt or goods
receipt with trip sheet of lorry or any other document
indicating the means of transport
Date on which delivery was taken by the transferee
The above statements are true to the best of my knowledge and belief.
(Signature)
(Name of the person signing the declaration)
* (Status of the person signing the declaration in
relation to the transferee)
* (Status of the person signing the declaration in
relation to the transferor)
Date…………..
*Strike out whichever is not applicable
Note. - On the counterfoil ... To be retained by the transferee
On the duplicate ... To be retained by the transferor
On the original ... To be furnished to the assessing
authority in accordance with the
rules framed under section 13(4)(e).
(This form is in triplicate, identical, except for the 'Note' below as indicated above.)"
(c) Rule 12(5) of the Rules and the first proviso adumbrated therein - relevant for our present purpose - reflect as below :
"12(5). The declaration referred to in sub-section (1) of section 6-A shall be in form 'F'.
Provided that a single declaration may cover transfer of goods, by a dealer, to any other place of his business or to his agent or principal, as the case may be, effected during a period of one calendar month;"
16. Section 6-A of the Principal Act had been inserted for the purpose of providing that the burden of providing that movement of goods from one State to another was occasioned otherwise than by way of sale shall be on the dealer making the claim. For the purpose of discharging its burden, the dealer may produce a declaration in the prescribed form from the person in the other State, to whom the goods have been sent, along with the evidence of such despatch of goods. Therefore, what is requisite and necessary for the dealer to claim exemption in respect of the transaction of despatch of goods from one State to another for sales on consignment basis through agent is to produce declaration in the prescribed form, that is to say, form “F”, with the evidence of the despatch of such goods, and nothing further. To put it otherwise, the section does not at all require any written agreement or contract evidencing appointment of agent for the purpose of effecting sales on consignment basis through agent by the principal moving the goods for such sale to another State. A perusal of form “F” clearly indicates that the agent must be a registered dealer under the CSTA, where he transacts his business. It is also made clear by the first proviso to rule 12(5) that a single declaration may cover transfer of goods, by a dealer, to any other place of his business or to his agent or principal, as the case may be, effected during a period of one calendar month.
17. The information required on the body of form “F” as to “date from which registration is valid” and the first proviso to rule 12(5) of the Rules, we rather feel, must have to be construed in a liberal way so as to foster or develop inter-State trade or commerce. If liberally interpreted, we are of the view that it is permissible for the dealer to obtain declaration form “F” from appropriate tax officer, even in respect of consignments received during the period he was not registered.
18. Appropriate it is, to quote at this juncture, the view expressed by learned authors K. Chaturvedi and M. K. Chaturvedi at page 723 in their book on Central Sales Tax Laws, Eighth Edition, 1995 Volume I, reflecting thus :
“A later-registered dealer issuing ‘F’ form for a pre-registration period. – There seems to be lesser difficulty in coming to the conclusion that there is no bar to a later-registered dealer in obtaining, when he is properly registered, declaration form ‘F’ from his appropriate tax officer and using it in respect of consignments received during the period he was not registered. The information required on the body of the form as to the ‘date from which registration is valid’ may not be construed in a restrictive sense but only in an informative sense. Provisions are to be interpreted in a manner to help their proper working. Form ‘F’ is a document of evidence.”
19. In the light of what we have said as above, the factual matrix of the instant case, if sifted and scanned in broad spectrum analysis, cocksure it is, we feel that the offending transactions cannot at all be construed as inter-State sale exigible to tax at ten per cent. But, on the contrary, they have to be construed as despatch effected from the State of Madras to the State of Bombay by the assessee-dealers for consignment sales through their agent PCL by “stock transfer challans” and therefore not exigible to tax. The reasons for such a conclusion are capable of being derived, with ease and grace, on a perusal of the materials available on record. We have perused stock transfer challans, sale invoices, statements showing the expenses incurred by PCL for payment of octroi and forwarding the clearing charges, statement containing details of sales at Bombay, form “F”, etc. No doubt true it is that “stock transfer challans” contain trade discount at five per cent. This sort of a trade discount, we are able to trace in all “stock transfer challans”. But, in certain of the “stock transfer challans”, we are able to trace special discount at nine per cent being mentioned. This sort of mentioning of trade discount at five per cent and special discount at nine per cent in “stock transfer challans” perhaps motivated and induced the tax authorities, namely, assessing officer, and AAC to come to the conclusion that the entirety of the transactions in favour of PCL for the said assessment year is one of inter-State sales and therefore exigible to tax at ten per cent.
20. Their rationale or reasoning rather appears to be that there was no need or necessity at all to mention in “stock transfer challans, anticipated trade discount at five per cent to the ultimate buyers and special discount at nine per cent for defraying the expenses towards octroi at seven per cent and the remaining amount of two per cent for expenses to be incurred in the process of clearing the goods”. We also at first blush thought that sort of a rationale or reasoning appeared to be correct. When we made a deep probe into the file, covering the entirety of the transactions during the relevant period, we are able to discern that the trade discount at five per cent as mentioned in “stock transfer challans” had been given to the ultimate buyers, while effecting sales by PCL. Further, from the statement of accounts relatable to special discount at nine per cent, we are able to find out that PCL has paid seven per cent by way of octroi duty for and on behalf of the principal-assessee-dealers, besides expending two per cent in clearing the goods also on behalf of their principal. From a close scrutiny of the other materials, we are able to assess that PCL did not at all retain any amount relatable to trade discount at five per cent and special discount at nine per cent and all those discounts mentioned are either given to the ultimate buyers as trade discount or incurred as expenses by way of octroi duty and for clearing the goods despatched by the principal to the agent. From this, we can easily come to the conclusion that PCL effected sales of all the cocoa products of the assessee-dealers, not as their own goods, but as those of the goods of the assessee-dealers. Therefore, it is rather crystal clear that PCL acted as agent of the assessee-dealers in effecting sales of their cocoa products at Bombay.
21. No doubt, as we have earlier indicated, they got themselves registered as “registered dealers” under the CSTA at Bombay, only with effect from January 30, 1984. While interpreting the salient provisions adumbrated under sub-section (1) of section 6-A of the CSTA and form “F” prescribed under sub-rule (5) and the first proviso thereto of rule 12 of the Rules, it is seen that there is no need or necessity at all under the CSTA for the agency to be always evidenced by a document in writing; but it may also be oral and such an agency is deducible from the very nature of the transaction that took place between two different individuals at different ends in the process of effecting despatch of goods from one end to the other end, for open market sale, that is to say, from one State to a different State on consignment basis and the person effecting despatch of the goods being considered as principal and the person to whom goods were despatched being considered as agent of the said principal. It is further said that a liberal interpretation has to be given to the first proviso to sub-rule (5) of rule 12 and form “F” prescribed under the said Rule. We also quoted the interpretation, as given by learned authors K. Chaturvedi and M. K. Chaturvedi in their book on Central Sales Tax Laws, as stated above. We affix our seal of approval to the interpretation so given by the said learned authors.
22. In that view of the matter, there may not be any difficulty at all even to construe the transactions that took place between the period January 20, 1984 and January 30, 1984 covering a turnover of Rs. 3,20,680 as one effected by consignment sales through their agent PCL by way of “stock transfer challans” and therefore not exigible to tax. Thus, we are of the view that the entirety of the transactions that took place between January 20, 1984 and March 31, 1984 covering a turnover of Rs. 9,09,820 has to be construed as one of “consignment sales” through their agent PCL by effecting transfer of goods through “stock transfer challans” and therefore, not exigible to tax. We should not be misconstrued that we arrived at the same conclusion, as had been arrived at by the Tribunal, for the reasons given by it. We want to positively state that we arrive at such a conclusion, as arrived at by the Tribunal for our own reasons, as given above.
23. In fine, the tax case (revision) deserves to be dismissed and the same is accordingly dismissed. No costs.
24. Petition dismissed.