- (1.) THIS is a rule issued upon the Member, Board of Revenue, West Bengal, under Section 21(2) of the Bengal Finance (Sales Tax) Act, 1941 (hereinafter referred to as the Act) to show cause why he should not refer to the High Court the two questions appearing in the schedule annexed to the rule.
(2.) THE facts are briefly as follows : The petitioner is the Standard Pharmaceutical Works Ltd., a public limited company incorporated under the Indian Companies Act. There is another company called the Standard Products Ltd. The petitioner calls this a "subsidiary company" and claims that the subsidiary company acted as its agent. It is unnecessary to go into details as to the precise nature of the transaction but substantially they were as follows : The petitioner manufactured goods which were distributed by the Standard Products Ltd. The Standard Products Ltd., was entitled to commission. When the Standard Products Ltd. realised the monies it remitted the same to the petitioner. Under Section 10(2) of the Act, the petitioner had to furnish a return for the year ending 31st March, 1948. This it did in form No. III. The original return has been produced in Court. The first item in the return is headed "Total cash receipts on account of - (1)(i) sales of goods other than sales involved in the execution of contract as defined in the Act". Against this the petitioner entered the sum of Rs. 32,27,845-8-9. Against item 4, namely, "Turnover", the petitioner entered the very same sum. From this he deducted under the heading "Deductions under Section 5(2)(a) on account of sales effected during the return period" the same sum, and has shown the balance to be "nil". This return shows that during the year of accounting, the total cash receipts of the petitioner on account of sale of goods was Rs. 43,27,845-8-9, the whole of which was sold to a registered dealer and therefore the whole of its was to be exempted under Section 5(2)(a) of the Act. The Commercial Tax Officer who scrutinised this return found that the Standard Products Ltd. was not registered under Act till the 23rd of June, 1947. Therefore, between the 1st of April, 1947, and the 22nd of June, 1947, the sales had been made to an unregistered dealer. When such a thing is discovered in the department, the officer requires a statement from the registered dealer as to the period of the transaction with such dealer and it appears that a statement by Standard Products Ltd., dated 1st of May, 1950, was handed over to the department by the petitioner, the contents of which are as follows :- "With reference to your letter No. S.P./50-51-R.C.B. dated 1st May, 1950, we confirm that our purchase from you amounting to Rs. 37,94,397-12-6 from 23rd June, 1947, to 31st March, 1948, are covered by our sales tax certificate No. TL-1055A." The Commercial Tax Officer, therefore, made his calculations thus : He took Rs. 43,27,845-8-9 as the gross turnover and he has disallowed the exemption for that period during which M/s. Standard Products Ltd. was not a registered dealer and on this footing he has assessed the tax. It must be pointed out here that the petitioner made no attempts at any time to amend the return.
(3.) THE Commercial Tax Officer submitted his report to the Assistant Commissioner who then dealt with the matter. Before the Assistant Commissioner it was contended by the petitioner that there was no sale to Standard Products Ltd. The Assistant Commissioner in his order dated the 30th June, 1950, said as follows :- "In the facts of the case stated above I am of opinion that the Standard Products Ltd., were the selling agents of the dealer and the goods placed at their disposal on consignment basis and the privity of the contract of sales to the outside parties existed between Standard Products Ltd., and their customers. In my opinion, the Standard Products Ltd., acted as agents to the assessee dealer and as such under the provisions of the law and in the circumstances of the case there were simultaneously two sales, one between the assessee dealer and Standard Products Ltd., and another between the latter and the outside customer." ;