Shri Pawan Dwivedi, Advocate for the petitioner. Shri Raghvendra Dixit, Govt. Advocate for the respondents/State. Heard.

2. The present petition requires interpretation of Explanation (c) of section 2(u) of Madhya Pradesh VAT Act, 2002 (hereinafter shall be referred to as the 'VAT Act').

3. The petitioner is a Private Limited Company incorporated under the provisions of Indian Companies Act. It is also registered under the provisions of VAT Act. The company is in the business of purchase and sale of allopathic medicines particularly life saving drugs within the State of M.P. and out side the State.

4. Petitioner entered into an agreement with M/s Rahul Pharma and appointed the aforesaid Firm as Carry and Forward Agent. In accordance with the terms of the agreement, the agent has to supply the goods to the authorized distributors or dealers appointed by the company. The petitioner was assessed for tax under the provisions of VAT Act for the assessment year 2006-07. In view of Explanation (c) of section 2(u) of the VAT Act, the authorities have held that when the petitioner supplied the goods to its agent M/s Rahul Pharma, this transaction is first sale and tax is chargeable o