COMMISSIONER OF SALES TAX Vs. JIWAN DAS
HIGH COURT OF ALLAHABAD
COMMISSIONER OF SALES TAX
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DESAI, J. -
(1.)THIS statement has been submitted to this Court under section 11(1) of the U.P. Sales Tax Act by the Judge (Revisions) Sales Tax at the assessee's instance. The connected references are of identical statements of cases in respect of the same assessment year but of different assessees and raise the same questions.
(2.)WE are called upon to answer the following two questions :-
(1) Whether or not in view of the conditions of the agreement entered into between the Government and the opposite party, the transactions between the Government and opposite party amounted to sale within the meaning of U.P. Sales Tax Act. (2) If the answer to question No. 1 be in the affirmative, whether in view of the conditions of the aforesaid agreement the sales of foodgrains by the opposite party will be treated to have been made in his own account as dealer.
2. All the assessees sold foodgrains during the assessment year 1958-59 under agreements entered into by them with the Government. They were assessed to sales tax as dealers on the turnover of the sale of foodgrains by them to their customers during the assessment year. The orders passed by the Sales Tax Officer were confirmed by the Judge (Appeals) Sales Tax. The assessees applied to the Judge (Revisions) to revise the orders of the Judge (Appeals) contending that they were not dealers and that the transactions entered into by them with their customers did not amount to sale. The Judge (Revisions) allowed the applications holding that the assessees were agents on behalf of the Government and that sales of the foodgrains by them to their customers were sales on behalf of the Government and they could not be made liable to pay sales tax on their turnover. In the statement he writes that he has not held the assessees to be not dealers and that he only held that the transactions between them and the Government by which they received the foodgrains sold to their customers were not sales because the property in them remained in the Government, that they sold them as agents of the Government and that consequently they were not liable to pay sales tax. "Sale" is defined in section 2(h) of the Sales Tax Act to mean "any transfer of property in goods for cash or deferred payment or other valuable consideration" and to exclude mortgage, hypothecation, charge or pledge. As was pointed out by us in Brij Behari Lal Agarwal v. Commissioner, Sales Tax (Civil Misc. Case No. 4 of 1957 decided on 21-8-1963), if a person does an act which has the effect of transferring property in certain goods it amounts to his selling them regardless of whether the property, before the transfer, vested in him or another person. The definition does not require that the act amounting to sale must be done by the owner of the property, i.e., that the transfer must be of own property in the goods. "Dealer" is defined in section 2(c) to mean any person carrying on the business of buying or selling goods in Uttar Pradesh whether for commission, remuneration or otherwise. The nature of the goods is immaterial and so long as the business consists of buying or selling them it is immaterial that the business is subject to certain restrictions and not at the absolute discretion of the person doing the business. It is an act of buying or selling goods even though the buying or selling is done under certain restrictions and not freely. It is also immaterial what the goods are - whether they are foodgrains or controlled foodgrains or not. Sales tax is payable under section 3 on the turnover of a dealer in the assessment year and "turnover" means the aggregate amount for which goods are supplied or distributed by way of sale or bought or sold by a dealer either directly or through another, or on his account or on account of others, whether for cash or deferred payment or other valuable consideration. Turnover of certain goods is exempt from payment of sales tax under section 4; though a person may not have to pay the sales tax on the turnover of the exempted goods he remains a dealer all the same.
Question No. 1 is not properly framed; the Government are not being charged sales tax on the sale of foodgrains by them to the assessees and the question whether the transactions by which the assessees obtained foodgrains from the Government are sales as defined in the Act or not does not arise at all. The question before us is whether the assessees are dealers when selling foodgrains to their own customers; if they are dealers and if the transactions between them and their customers amount to sales they are liable to pay the sales tax on the turnover of the sales. It is immaterial to their liability how they obtain the foodgrains. If they are dealers we are not concerned with the question whether the transactions between them and the Government are sales or not. Whether they are sales or not may have to be considered when deciding whether they are dealers or not but the real question is whether they are dealers or not and that is the question that should have been framed.
Since "sale" means transfer of property we have to decide here whether the transactions that the assessees entered into with their customers involve transfer of property in the foodgrains to the customers or not. There cannot be any doubt about the answer; the customers become the owners of the foodgrains delivered to them by the assessees. The property in the goods is undoubtedly transferred to them, whether from the assessees or from the Government. So long as the property is transferred to them they are sales regardless of whether it is their property or the Government's property that is transferred. The question whether the assessees sold on their own account or as dealer is irrelevant. The definitions of "sale" and "turnover" do not require that sales tax is payable only when a dealer transfers his own property in the goods to another. It has been held by this Court in Sarju Prasad Pritam Lal v. Judge (Revisions) Sales Tax (Civil Misc. Case No. 77 of 1955, decided on 21-12-1962;  14 S.T.C. 884), that there is a sale when a commission agent does an act involving transfer of his principal's property in the goods to another for cash. The assessees obtained the foodgrains from the Government; previously the property in the foodgrains vested in the Government. If the transactions by which they obtained the foodgrains from the Government do not involve transfer of the property to them the property remains in the Government and it is the property that is transferred to the customers when the assessees transferred the foodgrains for cash to them. After the foodgrains have been transferred to the customers the property no longer remains in the Government. If when the assessees obtained the foodgrains from the Government the property in them is transferred to them, that property is retransferred to the customers when the foodgrains are transferred to them for cash. These propositions hold good in all circumstances. Therefore, the transactions by which the assessees transferred the foodgrains to their customers amounted to sales for the purposes of the Sales Tax Act and question No. 2 is answered in the affirmative.
(3.)AS we pointed out, question No. 1 is badly framed and we reframe it as follows :
(1) Whether in view of the provisions of the agreement entered into between the Government and the assessee, the assessee is a dealer carrying on the business of buying or selling foodgrains ?
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