- (1.) THIS is a Writ petition under Article 226 of the Constitution by Messrs. Shiv Ratan G. Mohatta which is a partnership Firm having its office at Station Road, jodhpur, for quashing the order of assessment dated the 5th of March 1962 (Ex. 2 on the record) passed by the Sales Tax Officer, Jodhpur City Circle Jodhpur (Respondent No. 1) with respect to the assessment year 1958-59 to the extent it seeks to charge sales tax on the turnover of Rs. 23,92,252. 75 np. which sum according to the petitioner, represents the price realised on account of the sale of the cement imported from Pakistan as agent of Shri State Trading Corporation of india Private Ltd. , New Delhi (hereinafter called 'the State Trading Corporation' ). The relevant facts relating to the import of the Pakistan cement are mentioned in paragraph 9 of the petition and are not denied in the reply filed by the Slate of rajasthan who is Respondent No. 2 and must also he taken to be admitted by respondent No. 1. The Zeal Pak Cement Factory, Hyderabad (hereinafter called 'the Pakistan Factory') manufactured cement in Pakistan. For the export of this cement from Pakistan, the Pakistan Industrial Development Corporation (hereinafter called 'the Pakistan Corporation') entered into an agreement with messrs. Milkhiram and Sons (Private) Ltd. , Bombay (hereinafter called 'mitkhiram and sons Ltd.), white for the import of this cement in India the State Trading corporation entered into an agreement with Milkhiram and Sons Ltd. on the 12th of September 1956. This agreement is Ex. 3 on the record. Under this agreement 35,000 long tons were to be delivered by Milkhiram and sons Ltd. to the Stale Trading Corporation f. o. r. Khokhropar in Pakistan on the border of Rajasthan at approximately 5,000 tons per month commencing from september 1956. Another 70,000 long tons were to be delivered f. o. r. Wagh. It is with respect to the cement to be delivered f. o. r. Khokhropar that we are concerned in this case. The goods were to be sent to such places in India as were to be intimated by the buyer or his nominee from time to time. The railway receipt was sent to the State Bank of India, Karachi. Goods were to be despatched on 'freight To Pay' basis Freight for the distance to be covered in Pakistan was to be paid by the seller and for the distance to be covered in India Was to be paid by the buyer or his nominee. Payment of the price was to be made by the buyer by means of an irrecoverable (sic --irrevocable?) and divisible letter of credit for the f. o. r. value of the goods calculated @ Rs. 98/8/ for deliveries at Khokhropar in favour of the seller or his nominee with the Commercial Bank Ltd. , Lahore and karachi within 10 days of the receipt by the buyer of the intimation of the seller's readiness to export, and by means of cheques drawn on the State Bank of India, new Delhi in favour of the seller for the balance value of the goods on receipt of advice of negotiations of documents in Pakistan. Clause 11 of the agreement which is important provided that title and risk in the cement shall pass from the seller to the buyer at Khokhropar or Wagh Railway Station, as the case may be.
(2.) THE State Trading Corporation appointed the petitioner as their agent as per fetter of appointment No. STC/c-5 (29)/56, dated the 15th Dec. 1956 (Ex. 4 ). The relevant terms and conditions of this appointment as given in Ex. 4 are as follows : "you shall inter alia : (a) draw up in consultation with the Corporation a despatch programme destination wise and advise the seller as well as the Pakistan supplier in respect of deliveries to be made for a particular month at least 15 days before the commencement of that month; (b) arrange for the clearance of the Railway wagons loaded with cement through the Customs and for their despatch to different places in India as may be intimated by the corporation or any person authorised by it; (c) make payment in respect of Customs duty and such other charges that need to be incurred; (d) supervise movements of wagons, and the loading, packing, weight etc. , whenever necessary; (e) distribute the cement in accordance with the directions issued by the Corporation and sell it at Rs. 102/8/- per ton of 2240 lbs. f. o. r. destination Railway Station or at such other prices as may be determined by the Corporation from time to time: (f) Keep the Corporation informed of the progress of despatches, clearance and distributions of cement by means of such regular reports as may be prescribed from time to time in this behalf. "
(3.) ACCORDING to the petitioner, he discharged his functions mentioned in Ex. 4 by obtaining orders from the buyers in Rajasthan under an agreement as per pro forma Ex. 5 and communicated the same along with despatching instructions as per pro forma Ex. 6 to the Pakistan Industrial Corporation, Karachi which intimated the same to the 7,eal Pak Cement Factory, the manufacturers, for arranging supply as per specimen letter Ex. 8. The manufacturers consigned goods by rail from Hyderabad (Pakistan) to destination in India, the Railway Receipt being taken in the name of the State Bank of India, Karachi, as consignee, and advice of despatch was sent by the Zael Pak Cement Factory to me ultimate buyer in rajasthan directly with a copy to the petitioner. The original Railway Receipt used to be sent by the manufacturers to the State Bank of India, Karadii, along with the invoice and the State Bank used to endorse the Railway Receipt in favour of the ultimate buyer in Rajasthan and forward it directly to the buyer by registered post. Upon receipt of intimation of despatch of the consignment the buyer used to take delivery of the goods from the Railway generally on the strength of the manufacturer's despatch advice against indemnity bond in pursuance of Railway circulars and the petitioner used to arrange for customs clearance and payment of customs duty at the border station Barmer. The contention of the petitioner in the writ petition is that all these functions and responsibilities were discharged under Ex. 4 only as an agent of the State Trading corporation but thereby he did not become a dealer within the meaning of Section 2 (f) of the Rajasthan Sales Tax Act (hereinafter called the Act' ). It is also contended by the petitioner that the petitioner did not conduct or eifcct any sale as defined under the said Act of any cement. Another important argument is that transfer of property in the cement sold by State Trading Corporation through the agency of the petitioner took place in the course of import of goods in the territory of India, and as such, no sales-tax under the Act could be levied on such sales in view of Article 286 (1) (b) of the Constitution. It is contended that though the respondents had no right to recover sales tax on the price of the cement thus imported, yet Respondent No. 1 issued and served upon the petitioner on 6th of march 1962 a Notice of Demand under Rule 32 of the Rajasthan Sales Tax Rules 1935 demanding of the petitioner to pay to the State of Rajasthan a sum of Rs. 74,757. 88 Nps. within 15 days of the service of notice under the assessment order (Ex. 2 ). The assessment order, is sought to be declared as illegal and invalid on the grounds that: (i) it totally failed to consider the impact and effect of Article 286 (i) (b)on the facts of the case; (ii) it illegally held that the petitioner, for all intents and purposes was a dealer liable to pay sales tax to the opposite party No. 2, on the ground that (a) the petitioner was an agent of a non-resident dealer, (b) the petitioner booked orders, issued sales bills, and thus under his terms of appointment Ex. 4 sale was to be effected by him; (c) the petitioner was an importer of goods as he made application to the Customs Authority for the same; (iii) it illegally attempted to draw support for the legality of the imposition of the tax on Clause (5) of Ex. 5 which says that Sales Tax was agreed to be paid by the buyer. It is prayed that the assessment order be quashed so far as it seeks to recover the sales tax on the cement imported from the Pak Factory under the circumstances mentioned hereinbefore and the respondents be restrained from assessing, levying or recovering any tax or penalty or any other charge under the Act upon, against or from the petitioner in respect of the aforesaid sale. In the Writ Petition it is also mentioned that as the respondents were threatening to take coercive action for the recovery of the aforesaid amount from the petitioner, the petitioner has directly come to this Court without filing an appeal against the assessment as provided under Section 13 (i) of the Act as the remedy by way of an appeal was not speedy, effective or adequate remedy in view of the fact that no appeal was to be entertained unless the amount of tax was paid.;