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High Court Of Rajasthan
Judgename : D.M.Bhandari,B.P.Beri
SHIVRATAN G.MOHATTA - Appellant
Versus
SALES TAX OFFICER, JODHPUR - Respondent
Civil Misc. Writ Petn. 157 Of 1962
Decided On : 05/07/1963
SALES TAX - Dealer - Petitioner appointed as agent of State Trading Corporation to sell cement imported from Pakistan - Whether petitioner is a dealer within the meaning of Section 2 (f) of the Rajasthan Sales Tax Act - Whether sale took place in the course of import into the territory of India - Article 286 (1) (b) of the Constitution.
Fact of the Case:
Petitioner, appointed as agent of State Trading Corporation, sold cement imported from Pakistan to various dealers in Rajasthan. Sales Tax Officer assessed petitioner to pay sales tax on the turnover of Rs. 23,92,252.75 np. Petitioner challenged the assessment order, contending that he was not a dealer within the meaning of Section 2 (f) of the Rajasthan Sales Tax Act and that the sale took place in the course of import into the territory of India, exempt from sales tax under Article 286 (1) (b) of the Constitution.
Finding of the Court:
The Court held that the petitioner was a dealer within the meaning of Section 2 (f) of the Act, as he was appointed as an agent of the State Trading Corporation to sell cement in Rajasthan. However, the Court also held that the sale took place in the course of import into the territory of India, as the property in the goods passed to the ultimate buyers in Rajasthan before the goods reached the territory of India. Therefore, the sale was exempt from sales tax under Article 286 (1) (b) of the Constitution.
Issues: 1. Whether the petitioner is a dealer within the meaning of Section 2 (f) of the Rajasthan Sales Tax Act? 2. Whether the sale took place in the course of import into the territory of India?
Ratio Decidendi: 1. The Court held that the petitioner was a dealer within the meaning of Section 2 (f) of the Act, as he was appointed as an agent of the State Trading Corporation to sell cement in Rajasthan. The Court relied on the terms of the agreement between the petitioner and the State Trading Corporation, which showed that the petitioner was responsible for selling the cement, receiving payment, and maintaining accounts of all payments and expenses incurred. 2. The Court held that the sale took place in the course of import into the territory of India, as the property in the goods passed to the ultimate buyers in Rajasthan before the goods reached the territory of India. The Court relied on the fact that the Railway Receipts were in the name of the ultimate buyers, the risk in transit after Khokhropar was also of the ultimate buyers, and the price had been paid by the ultimate buyers before the goods were even despatched.
Final Decision: The Court quashed the assessment order to the extent it sought to levy tax on the transactions of sale of the cement imported from Pakistan by the State Trading Corporation under the agreement with Milkhiram and Sons Ltd. The Court also directed the respondents not to collect any sales tax on such transactions.
BHANDARI, J.
( 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 sellers 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 char
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