Commissioner Of Sales Tax, New ... vs Remington Rand Of India Ltd.
1992 Latest Caselaw 104 Del

JUDGMENT

B.N. Kirpal, J.

(1) The Sales Tax Appellate Tribunal, Delhi has referred to this Court the following two questions for our opinion : "1. Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessed acted as agent on behalf of the license holders ? 2. Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the sales in dispute were in the course of import and, therefore, not assessable to tax."

(2) The assessment order in question relates to the year 1972-73. The facts as found by the Tribunal are as follows : "THE controversy pertains to sales worth Rs. 4,77,419. 94P which the assessed claimed were in the course of Imports and, therefore, exempt from levy of sales tax. The background of the facts in this regard is that the Controller of Imports and Exports issued Actual Users Import licenses in favor of different parties for the import of electric typewriters etc. Those parties then contacted the assessed for their import and supply. These typewriters etc. were mostly manufactured by the present concerns of the assessed in Western countries. The assessed then quoted prices of different items to those license holders. Supplies were to be effected within stipulated periods and the contracts were C.I.E. Those license holders then obtained letters of authority from the office of the Joint Chief Controller of Imports and Exports in favor of the assessed for importing those articles on their behalf. These letters of authority contained the following conditions : A. The persons or concern in whose favor it has been issued will act purely as an agent of the license holder and the goods imported will be the property of the license holder both at the time of clearance through the customs and subsequent thereto. The license bolder will have to ensure that the goods on importation will be delivered to him and shall not be disposed of otherwise. The licensee shall not cause or permit the holder of letter of authority to dispose of the goods. B. The holder of the letter of authority shall clearly indicate on the relevant custom documents including the triplicate copy of the customs bill of entry that the goods have been imported by him on behalf of the licensee. This endorsement will be duly attested by the Customs Authority. C. The holder of the letter of authority shall not under any circumstances be entitled to any quota licenses on the basis of their imports."

(3) The assessed then imported those typewriters etc. and supplied them to the license holders at the prices agreed upon.

(4) At the stage of assessment, the assessed claimed that it simply acted as an agent of these import license holders, and as such it could not be said that any sales were effected by it in their favor. All that it did was to import typewriters etc. from its overseas manufacturers for and on behalf of the license holders.

(5) In any case it was urged that in case the transactions were treated as sales, they were essentially in the course of import and, therefore, exempt from levy of sales tax under Section 5 of the Central Sales Tax Act.

(6) These contentions, however, did not prevail with the authorities below and they held that there were two distinct contracts one by the assessed for purchase of typewriters etc. from the foreign manufacturers and the other by the assessed for their sale in favor of license holders. To such cases the ratio of the decision of the Supreme Court in the case of Mohd. Serajuddin, 36 Stc 130 was held applicable. The assessed was found to have earned profit on the sale of typewriters etc. from the license holders. There was no mention of any charging of commission as agent in those contracts."

(7) The Tribunal decided the appeal of the dealer in its favor and held as follows: "FEELING still aggrieved, the assessed has moved the present appeal before the Tribunal. I have heard the parties and given my due consideration to all the circumstances. As would be clear from the narration of facts above, the license holders were given Actual User Import licenses by the Controller of Imports and Exports. They had the implications that the goods to be imported were actually required by the importers for their own use. They were not entitled to transfer them in any manner. One of the conditions was that the goods imported were to remain the property of the license holders at the time of the import and thereafter up to the time of clearance through customs. The letters of authority which the Controller of Imports and Exports issued on behalf of license holders in favor of the assessed also next stipulated that the assessed was purely acting as an agent of these license holders in the import of the articles. The assessed was not competent to dispose of those articles In any manner or to deliver them to any third party. In the import documents also the names of the license holders and on whose behalf the articles were being imported were to be specified. These circumstances thus bring out the role of an intermediary or an agent which the assessed played. The license holders instead of importing the articles directly from the manufacturers considered it more convenient and advantageous to get them imported through the assessed which specialised in this category of goods. The properly in the goods had to throughout remain with the license holders and the assessed was not competent to dispose them of otherwise. It was obliged to deliver the imported goods to the license holders. The cumulative effect of these circumstances thus brought out a role of agency."

(8) The Tribunal then concluded that the sale occasioned the movement of goods from abroad and the said sales were in the course of Import.

(9) On an application being made the aforesaid two questions have been referred to this Court.

(10) The facts in this case are more or less similar to the facts in the case of Commissioner of Sales Tax v. General Trading and Sales Corporation, 84 Stc 193. In that case also import on behalf of the actual user licensee had been on the basis of letter of authority which had been issued to the dealer. The terms of the import license and the letter of authority were more or less identical On a consideration of the law this Court came to the conclusion that such sales were in the course of import.

(11) Following the ratio of the aforesaid decision we are of the opinion that the conclusion of the Sales Tax Appellate Tribunal was correct and calls for no interference.

(12) The two questions of law referred to this Court are, accordingly, answered in the affirmative and in favor of the dealer. There will be no order as to costs.