Kania, J. - (1.) This is an appeal against a judgment of a Division Bench of the High Court of Kerala under the provisions of the Kerala General Sales Tax Act, 1963 and Tax Reference Case No. 52 of 1971 filed pursuant to special leave granted by this Court. The appellant before us is the M/s. Alwaye Agencies and the respondent is the Dy Commissioner of Agricultural Income-tax and Sales Tax, Ernakulam.
(2.) The assessee firm was appointed as Distributor by the Travancore Cochin Chemicals Ltd. (referred to hereinafter as the "said company") to effect the sale of Sodium Hydrosulphite manufactured by the said company in the area covered by the Kerala State under an agreement entered into on 11th Feb. 1967. The dispute pertains to the transaction which took place between 1st Sept. 1967 and 20th Dec. 1968 since it is an undisputed fact that the transactions upto the former date are not taxable. It is common ground that the relations between the parties were governed throughout by the said agreement and that the parties adhered to the terms of the said agreement. In view of this it would be desirable to examine that agreement at this stage. As aforesaid, the agreement is dated 11th Feb. 1967. Under the agreement, the assessee firm was appointed as Distributor for the aforesaid product manufactured by the company for the area covered by the Kerala State. Clause 2 of the agreement provides that the distributorship was on an exclusive basis giving the distributor the right of sale of the product within the aforementioned area and that supplies would be made only direct to the distributor. Sub-cl. (a) of Cl. 2 further provides: "However, when on the advice of the distributor bulk supplies are effected in waggon-load or lorry-load lots the Company may effect supplies direct to the consumer, provided that the distributor arranges the payment as per the clause hereinafter mentioned and also takes the responsibility to bear entirely the resultant effects and risks from effecting such direct despatches."
(3.) Sub-cl. (b) of the said clause provides that the company reserves the right to effect the sale of Sodium Hydrosulphite to anybody and anywhere in India direct.;