1. This is a reference under section 61(1) of the Bombay Sales Tax Act, 1959 (hereinafter referred to as 'the said Act'), made at the instance of the Commissioner of Sales Tax.
2. The facts on which the reference arises, as can culled out from the judgment of the Tribunal, are as follows : Pursuant to certain discussions, which took place between the respondents and the officers of one Indo-Burma Petroleum Company Limited (hereinafter referred to as 'the said company'), the said company addressed a letter dated 26th July, 1963, to the respondents stating that enclosed therewith was their official order No. 108 for the supply of certain Fractional H.P. Flameproof Motors and requesting the respondents to import the material on behalf of the said company as their agents and deliver the same to the said company on importation. The said letter clarified that the respondents were to act purely as the agents of the said company to import the material on their behalf and hence the property in the material would not pass to the respondents at any stage of the import of thereafter. It appears from the order of the Deputy Commissioner that the said company had an actual user's licence for the import of the said goods and it was pursuant to that licence that the above letter came to be addressed by the said company to the respondents. It may also be mentioned that in the letter of authority dated 11th July, 1963, issued in favour of the respondents, it was clearly provided that the respondents would act purely as the agents of the licence-holder, viz., the said company, and the goods imported would be the property of the said company both at the time of clearance from the customs and subsequent thereto. In the order dated 24th July, 1963, which was enclosed with the said letter dated 26th July, 1963, referred to earlier, the particulars of the goods to be supplied by the respondents were set out and the rate was mentioned as 'lowest'. There was a reference made to the letter of authority, which was enclosed with the said order. There was also a reference in the said order to the actual user's import licence under which the goods were to be imported and a statement that the said licence was for c.i.f. value of Rs. 10,000. The said order at the end contains a note that the goods would not be accepted after time-limit. The opening part of the order shows that the goods were to be supplied and delivered to the Sewri office of the said company before 4 p.m. on week days and 12 p.m. on Saturdays. After the goods were supplied by the respondents to the said company, it appears that a debit note was issued by the respondents to the said company, which is dated 19th December, 1963. This debit note contains particulars of the goods supplied and states that the material was imported against the said import licence of the said company as the agents of the said company, and the total amount demanded in respect of the said goods is mentioned as Rs. 15,366. The respondents made an application to the Deputy Commissioner of Sales Tax under section 52 of the said Act for determination whether the aforesaid transaction of supply of the said goods by the respondents to the said company constituted a sale. The contention of the respondents was that the transaction was not a sale, that they had acted only as the agents of the said company and that the property in the said goods had never vested in them at any stage. On the other hand, the contention of the department was that the transaction was one of sale. The Deputy Commissioner of Sales Tax came to the conclusion that the said transaction constituted a sale under the said Act. Against this decision, the respondents preferred an appeal to the Sales Tax Tribunal. The Tribunal came to the conclusion that the respondents were acting merely as the agents of the said company in respect of the supply of the aforesaid goods to the said company and that there was no transaction of sale. The Tribunal, therefore, allowed the appeal preferred by the respondents.
3. The question, which has come up for our consideration in this reference, is as follows :
'Whether, on the facts and in the circumstances of the case and having regard to the true import and nature of the impugned transaction as a whole between the respondents and Indo-Burma Petroleum Company Limited, Bombay, the Tribunal was justified in law in holding that the transaction was not a sale, but was a transaction of agency not liable to sales tax under the provisions of the Bombay Sales Tax Act, 1959 ?'
4. The submission of Mr. Parekh, the learned counsel for the applicant, was that the transaction was really one of sale by the respondents to the said company. In support of this contention, Mr. Parekh relied strongly on the order dated 24th July, 1963, and the said debit note dated 19th December, 1963, to which we have already referred. We may, however, point out that in order to ascertain whether the relationship of agency existed between the respondents and the said company, we cannot look at these documents alone, but we have to consider the true nature of the agreement between the parties and the exact circumstances of the relationship between them. We have, therefore, to consider the transaction as a whole and determine whether in supplying the aforesaid goods to the said company the respondents were acting as the agents of the said company or whether there was a transaction of sale between the respondents and the said company. In this regard, it is very significant that the goods were imported by the respondents under the actual user's licence of the said company and pursuant to the letter of authority, to which we have already referred. This letter of authority makes it quite clear that the goods were being imported by the respondents purely as the agents of the said company, that the property in these goods was always to remain in the said company and was never vested in the respondents. It was submitted by Mr. Parekh that the mere fact that the goods were imported by the respondents on the actual user's licence belonging to the said company and under a letter of authority, which provided that the respondents were to act purely as the agents of the said company would not conclusively show that the transaction was not one of sale, and that, even in such circumstances, there could be a transaction of sale by the respondents to the said company. This may perhaps be so. However, it is beyond dispute that where goods have been imported in this manner, one should normally expect that the transaction would be one of agency and not of sale unless the circumstances clearly show that the transaction was intended to be one of sale. The inference that the transaction was one of agency and not that of sale is considerably reinforced by the terms of the said letter dated 26th July, 1963, addressed by the said company to the respondents with which the aforesaid order was enclosed. This letter clearly provides that the respondents were to import the material, viz., the said goods, on behalf of the said company as their agents and deliver the same to the said company on importation. The said letter also provides that the respondents were to act purely as the agents of the said company to import the material on their behalf and the property in the material would not pass to the respondents at any stage. These circumstances, in our view, leave very little doubt that the transaction in question was one of agency and not that of sale.
5. Strong reliance was placed by Mr. Parekh on the terms of the said order. The contention of Mr. Parekh was that it was very significant that in the order there was a reference to the rate being the 'lowest' and, according to him, this showed that the transaction was one of sale. We find it difficult to accept this contention. In fact, it appears to us that had the transaction intended been one of sale normally the rate would never have been mentioned merely as the 'lowest', because where one party is selling goods to another, it could rarely expected that the purchaser would leave it to the seller to determine as to what he considers to be the lowest rate and agree to purchase at that rate. In fact, the rate being provided, as aforesaid, leads to the inference that the transaction was between a principal and an agent, who enjoyed a large measure of confidence.
6. Reliance was next placed by Mr. Parekh on the condition in the order that the goods would not be accepted after the time-limit. This provision, however, is of little significance, because, as pointed out by the Tribunal, the reference seems to be to the time-limit mentioned earlier in the order, namely, that the goods had to be supplied before 4 p.m. on week days and 12 p.m. on Saturdays. These is no other time-limit referred to in the said order. Reliance was also placed by Mr. Parekh on the word 'supply' used in the said order. We are afraid that this reliance is also misplaced. The use of the word 'supply' is equally consistent with a transaction of sale or a direction to the agents to supply the goods obtained by the agents on behalf of the principals. Mr. Parekh further relied on the circumstance that in the debit note dated 19th December, 1963, there is no separate reference to the cost of the material and the expenses and the commission of the respondents. This circumstance, however, does not rule out a transaction of agency, because the agents could very well have furnished the particulars aforesaid to the principals as and when they were demanded. Apart from this, in view of the other circumstances, which strongly point to the transaction being one of agency, this circumstance would not lead to the conclusion that the transaction was one of sale.
7. In our view, the Tribunal was justified in coming to the conclusion that the transaction in question was one of agency and not of sale. The question referred to us must, therefore, be answered in the affirmative. The applicant to pay to the respondents the costs of this reference.
8. Reference answered in the affirmative.