G. SIVARAJAN, J. -
(1.) ALL these tax revision cases are filed by M/s. Harrisons Crossfield Ltd. , presently known as Harrisons Malayalam Ltd. , against two common orders of the Sales Tax Appellate Tribunal, Additional Bench II, Ernakulam, one in T. A. Nos. 149, 465, 151, 468, 397, 467, 469, 466, 150 and 152 of 1992 and the other in T. A. Nos. 422 of 1992, 6 of 1984 and 423 of 1986. T. R. C. Nos. 165, 168, 171 and 172 of 2002 arising from T. A. Nos. 468, 397, 467 and 469 of 1992 relate to Central Sales Tax assessments and the remaining tax revision cases relate to Kerala general sales tax assessments. C. S. T. assessment relates to the assessment years 1970-71, 1974-75, 1967-68 and 1971-72 respectively and K. G. S. T. assessment relates to the assessment years 1969-70, 1967-68, 1976-77, 1970-71, 1971-72, 1973-74, 1974-75, 1975-76 and 1977-78 respectively. In all these cases the main issue involved is regarding the agency status claimed by the petitioner in respect of its transactions with M/s. Malayalam Plantations Ltd. In the tax revision cases in respect of the assessment under the C. S. T. Act, in addition, there is another point regarding the claim for deduction of the sales return and trade discount. According to the petitioner the entire transactions in question both under the K. G. S. T. assessment and under the C. S. T. assessment are agency transactions effected by the petitioner on behalf of M/s. Malayalam Plantations Ltd. , for whom the petitioner was acting as the managing agent under an agreement dated May 13, 1948 executed between them w. e. f. April 1, 1948. The assessing authority did not accept the said contention and had treated the entire transaction between the petitioner and M/s. Malayalam Plantations Ltd. , as one of sale and the respective turnovers were assessed either under the K. G. S. T. Act, 1963 or under the C. S. T. Act, 1956 as the case may be. The petitioner took up the matter in appeal before the Additional Deputy Commissioner (Appeals), Agricultural Income-tax and Sales Tax, Ernakulam. The claim made by the petitioner was allowed by the first appellate authority in respect of the assessment under the K. G. S. T. Act for the years 1971-72, 1973-74 and 1974-75. However, another Deputy Commissioner, who heard the appeals for the other years under the K. G. S. T. Act and appeals under the C. S. T. Act for the four years mentioned earlier did not allow such claims made by the petitioner. Thus both the assessee and the department filed appeals before the Tribunal against the respective appellate orders. As already noted, except in the three cases, T. R. C. Nos. 272, 333 and 334 of 2000 all other appeals were dismissed by a common judgment. The appeals which are the subject-matter of the three tax revision cases filed by the department was allowed. Thus the petitioner has filed revisions in all the 13 cases.
(2.) SHRI Jayasankar Nambiar, the learned counsel for the petitioner submitted before us that the petitioner is not independently engaged in the business of purchase and sale of any goods and that the entire purchases of goods which have been delivered to M/s. Malayalam Plantations Ltd. , were made in their capacity of agents under the managing agency agreement dated May 13, 1948 with effect from April 1, 1948. The counsel submitted that they had purchased goods only on receipt of requisition in that behalf from the plantations owned by M/s. Malayalam Plantations Ltd. , and the goods so purchased were made over to the respective estates by raising a debit note in which the petitioner had charged only the actual purchase price including sales tax collected by the suppliers + 2. 5 per cent buying commission and packing and loading charges. In short the submission of the counsel is that the petitioner had not charged any additional sum by way of profit. The counsel took us to the various clauses in the managing agency agreement particularly clauses 2 (b), 2 (d), 16, 18 and item 3 of the schedule to the agreement and submitted that the entire transactions between the petitioner and M/s. Malayalam Plantations Ltd. , under consideration are mere agency transactions and that the petitioner had collected only 2. 5 per cent commission on such transactions as provided under item 3 of the schedule to the agreement. The counsel also submitted that the petitioner had produced copies of the purchase orders, sale bills, debit notes and other correspondence in regard to the transactions in question before the authorities and the Tribunal and that the Tribunal had erroneously come to the conclusion that those documents also would show that the transactions between the petitioner and M/s. Malayalam Plantations Ltd. , are independent sale transactions. The counsel further submitted the Tribunal, with reference to clause 16 of the agreement, had erroneously taken the view that the managing agency agreement contemplated both agency transactions and independent sales between the petitioner and M/s. Malayalam Plantations and that the transactions in question fell under latter category. This view was taken by the Tribunal, according to the counsel, relying on the first limb of clause 16 of the agreement in respect of transactions covered by the said limb : The counsel also submitted that the Tribunal had not considered the issue in question under the second and third limb of clause 16 of the agreement. The point for decision is whether there is a sale in the first category of transactions mentioned in clause 16 where the petitioner purchases the goods for the company and supplies the goods to the company. The Tribunal in paragraph 11 of the appellate order held that reading the caption given to clause 16 along with the latter two limbs of clause 16 and clause 2 (b) appointing the petitioner as buying agent for the goods purchased by the company will lead only to the conclusion that the transactions mentioned in the first category of the transactions is only a contract for purchase and sale and not a contract of agency. The counsel submitted that this finding of the Tribunal is not supported by any evidence and that the evidence produced by the petitioner will establish to the contrary. Counsel also submitted that all the debit notes produced by the petitioner in respect of the transactions in question would show that the petitioner had charged commission from which it would be clear that the transaction is covered by the first limb of clause 16 of the agreement. The counsel in short submitted that going by the provisions in the agency agreement and by the documents produced by the petitioner the conclusion can be only one way, i. e. , to the effect that the transactions in question are agency transactions only. Counsel in support of his contention regarding the principles governing the relationship between the principal and agent had relied on the decision of the Madras High Court in Mysore Chemical Supplies v. State of Tamil Nadu  84 STC 544 and the decision of the Supreme Court in Peninsular Traders v. Deputy Commissioner, Sales Tax (Law), Kerala  108 STC 575.
The learned Government pleader appearing for the respondent on the other hand submits that the petitioner and M/s. Malayalam Plantations are two distinct and different entities and that in the present case there are two transactions (1) purchase of goods by the assessee from various parties and (2) the sale of the said items by the petitioner to M/s. Malayalam Plantations Ltd. The Government pleader submits that as soon as the petitioner purchases goods from various dealers the title to such goods passed on to the petitioner and that it is only thereafter the petitioner had effected transfer of property in the goods to M/s. Malayalam Plantations Ltd. , for consideration. He further submitted that in order to constitute a sale, it is not necessary that the selling dealer must sell the goods at a higher rate so as to provide for some profit also. The Government pleader further submitted that the intention of the parties are very clear from the agreement itself. He in support of the same relied on the side caption to clause 16 of the agreement. He submitted that though the agreement is one styled as a commission agreement in fact the intention of the parties was that the transactions in question should have the incidents of a sale. Government pleader also sought reliance on the explanation to the definition of "sale" under section 2 (xxi) of the Act. The Government Pleader also pointed out that there is no stipulation in the agreement that the goods ordered to be purchased by the petitioner should be delivered within any time frame. According to the Government Pleader the transactions between the petitioner and M/s. Malayalam Plantations Ltd. , which are the subject-matter of these tax revision cases are nothing but outright sale by the petitioner in favour of M/s. Malayalam Plantations Ltd. The Government pleader relied on clause 16 of the agreement in that regard.
We have considered the rival submissions. We have also perused the orders of the authorities including the Tribunal. As already stated, these revisions relate to various assessment years both under the K. G. S. T. Act and under the Central Sales Tax Act. Of course, since the petitioner had placed some of the purchase orders for M/s. Malayalam Plantations Ltd. , the sale bills evidencing the purchases effected by the petitioner and debit notes raised by the petitioner and since the Tribunal had considered the question in the light of those documents also. We will consider the question in the light of those documents also. It is necessary to find out as to whether the agreement between the petitioner and M/s. Malayalam Plantations Ltd. , contemplates only agency transactions and also as to whether the transactions in question are consistent with the agency transactions pleaded by the petitioner.
(3.) FIRST we will deal with the clauses in the agency agreement (annexure-A in T. R. C. No. 145 of 2000) executed between the petitioner and M/s. Malayalam Plantations Ltd. Under clause 1 of the agreement it shall come into force on the first day of April, 1948 and the same will continue in force unless and until determined by either party giving to the other not less than three years notice in writing to determine the same. There is no case for the department that this agreement is not in force as on the relevant assessment years concerned. Clause 2 says that the agents shall act and the company shall employ the agents exclusively as - we are only concerned with sub-clauses (b) and (d) of this clause. Clause (b) says that the "buying agents for all plant, machinery, utensils, goods and things purchased by the company (hereinafter referred to as 'goods') but subject to the provisions of clause 16 hereof" and clause (d) says that the local agents in India (hereinafter called "the said territory" ). Clause 10 provides that the agents shall keep true accounts in London and in the East (a) of all advances made and all moneys paid to or on account of the company (b) of all commission charges and interest accruing to or payable by the company (c) of all produce received by them (d) of the proceeds realised by the sale thereof and (e) of all purchases made by them on behalf of the company. Clause 10, inter alia, provides that agents shall keep accounts. . . . . . . of all commission charges and interest accruing to or payable by the company. . . . . . . . . . . and of all purchases made by them on behalf of the company. Clause 13 provides for remuneration for their services. It is stated that the agents shall be entitled to the fees and charges set out in the schedule hereto. Clause 15 provides that the agent shall in addition to such remuneration be repaid all godown rent, freights, insurances, duties, harbour and wharfage dues, commissions, brokerages and charges incurred in the ordinary course of business and all travelling and out-of-pocket expenses which may be incurred by them or their employees in the performance of the company's business. Clause 16 is more relevant and crucial for the purpose of these cases, which reads as follows : " The agents shall procure for the company the benefit of all discounts, rebates and allowances obtainable on goods purchased for the company, but they shall be entitled to receive and retain in respect of such purchases all commissions payable to them as the duly appointed agents of the suppliers or manufacturers if the agents have previously given notice to the company that they hold such agency appointments. Provided always that, where it is customary to purchase the goods locally or owing to urgency or to any other reason the agents deem it in the interests of the company to do so, the agents may act as principals in the sale of goods to the company at prices not greater than the current prices of the goods at the place of sale in which cases no buying commission shall be payable to them. Provided also that, if at any time the company or its estate managers shall be able to make purchases direct upon terms more advantageous than can be obtained through the agents as buying agents or from them as principals, the company may do so but no such purchases shall be made without the opportunity first being given to the agents to do the business. "
It is also necessary to note the side caption of clause 16 which reads "discount and Commissions on Purchases by Company". Item No. 3 of the schedule referred to the services and remunerations contemplated under clause 13. Item No. 3 which is the only relevant portion so far as the transactions in question is concerned reads - "buying agency. For buying as agents for the company - Two and a half per cent on the C. I. F. prices".;