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. The question which has been referred to us for our determination is as follows :
'Whether, on the facts and in the circumstances of the case and having regard to the true interpretation of the contract between the respondent and M/s. Morarjee Raisey & Co. for the supply of electrolytic copper ingot bars embodied in the respondent's letter dated 15th February, 1963, which was also signed by M/s. Morarjee Raisey & Co. in confirmation, the Tribunal was justified in law in holding that the transaction was not a sale but was a transaction of agency not liable to tax under the provisions of the Bombay Sales Tax Act, 1959 ?'
2. The facts giving rise to this reference are as follows : M/s. Morarjee Raisey & Co. (hereinafter referred to as 'M.R. & Co.') were the holders of an import licence known as actual user's import licence bearing No. 183273 for the import of electrolytic copper ingot bars. On 15th December, 1962, a letter of authority was issued by the officer of the Joint Chief Controller of Imports and Exports, whereby M.R. & Co., as the holders of the aforesaid licence, were authorised to permit the respondent, viz., Metal Distributors Ltd., on their behalf to import goods and open letter or letters of credit and make remittance of foreign exchange against the said import licence. The relevant conditions in this letter of authority are as follows :
'(a) The person or firm in whose favour it has been issued, will act purely as an agent of the licensee and the goods imported will be the property of the licence-holder both at the time of clearance through the customs and subsequent thereto. The licence-holder will have to assure 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 the letter of authority to dispose of the goods.
(b) The indenter/agent acting on the authority letter shall clearly indicate on all the relevant customs 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 authorities.'
3. On 15th February, 1963, a letter was issued by he respondent addressed to M.R. & Co., whereby the respondent confirmed having agreed to import the material stated therein for M.R. & Co. against the import licence of M.R. & Co. and on the strength of the said letter of authority issued to the respondent by the Joint Chief Controller of Imports and Exports and on the terms and conditions stated therein. The relevant conditions contained in this letter are as follows :
'Material and quantity : Electrolytic copper ingot bars about 770 kg. (Adjustable within Rs. 2,415).
Price : at pounds 239-5-0 per long ton c.i.f. Bombay.
Shipment : During February, 1963, subject to availability of shipping space and other factors beyond the control of our suppliers.
Handling : Apart from the c.i.f. cost of the material quoted above, you will be required to pay Rs. 495 M/Ton for copper which includes clearing expenses, transportation, labour charges, customs duty applicable at the moment, despatching charges and our commission.
Condition : The above arrangement is subject to the usual condition of force majeure clause and as such was will not be responsible for any delay or non-arrival of material due to non-availability of shipping space, strikes, lock-out, import and export regulations and other causes beyond our control.
Taxes : If the above import attracts any sales tax, Central sales tax - other tax or duty - imposed by the Government of the country of origin/destination - the same will be borne by you at actual.
Import licence : No. and date Validity Value Material183273 of 29-5-62 8-2-63Rs. 1,609.80 Copper 862726 of 20-8-62Rs. 805.20 ------------Rs. 2,415.00 ------------ Payment : Full payment to be made by you immediately on receipt of our intimation that the material is ready for delivery.
It must be noted that we are acting as your indenting agents for importing the goods on your account or risks.'
4. By their letter dated 17th February, 1963, addressed to the respondents, Metal Distributors (U.K.) Ltd., an English company, (hereinafter referred to as 'the foreign company') confirmed having sold to the respondent, subject to the terms and conditions shown on the reverse of the said letter, 2.60 long tons of electrolytic copper ingot bars. The price is mentioned in this letter as pounds 239-5-0 per long ton c.i.f. The term relating to payment shows that payment was to be made by cash against first presentation of documents. This letter contains a statement that the buyers hold import licences of which the numbers are set out in the letter. One of the licence numbers mentioned is 183273, viz., the number of the said import licence issued to M.R. & Co., which we have already referred to earlier. The general conditions on the reverse of this document, which are in print, contain the usual force majeure clause. The is also a clause stating that buyers undertake to supply, as the sellers may require, one or all of the following valid documents, viz., import licence, import certificate, end use certificate, delivery verification certificate. There is a further clause providing for arbitration in case of any difference or dispute arising out of the contract. There is also a condition providing that unless otherwise agreed and recorded on the contract the sellers would cover marine and war risk insurance on the basis stated therein. There is a condition relating to price basis, but it is not necessary to set out the same, as no argument has been advanced based therein.
5. Pursuant to these transactions the agreed quantity of electrolytic copper ingot bars was imported by the respondent and supplied to M.R. & Co. An invoice dated 7th March, 1963, was sent by the foreign company to the respondent which refers to the aforesaid contract dated 17th February, 1963. This invoice mentions the numbers of the various import licences pursuant to which the goods covered under the invoice have been shipped and one of these import licences whose number is given is the aforesaid import licence of M.R. & Co. The term of payment in this invoice shows that payment is to be made against first presentation of shipping documents. The respondent by its bill No. 157 dated 3rd May, 1963, addressed to M.R. & Co. demanded payment from M.R. & Co. of the amount of Rs. 2,706.89 as the amount payable to the respondent for the aforesaid goods supplied to M.R. & Co. The particulars contained in this bill show that electrolytic copper ingot bars were delivered against c.i.f. value of Rs. 2,415 of licence No. 183273 dated 29th May, 1962, issued to M.R. & Co., which licence was utilised in the import of the above lot under the said letter of authority issued by the Joint Chief Controller of Imports and Exports on 15th December, 1962. The bill further shows that handling commission including all charges and customs duty at the rate of Rs. 300 per metric ton came to Rs. 367.54. On 8th October, 1963, the respondent made an application to the Commissioner of Sales Tax, the applicant herein, inter alia, for determining the question as to whether the transaction entered into under the aforesaid bill or invoice No. 157 dated 3rd May, 1963, was a sale within the definition of that word in section 2(28) of the said Act. It is necessary to set out in detail all the statements contained in this application. Suffice it to say that this application set out that the mode of business of the respondent is that buyers approach the respondent first for the requirement of metal. These buyers hold actual user's import licences and the respondent has specialised arrangement to import the particular commodity which the buyers require. The respondent agrees to import the goods for the buyers against their import licences. On receipt of the letter of authority in respect of a licence belonging to a buyer, the respondent would place an indent with its foreign counterpart (the foreign company) for sending the goods required for the buyer's order. It has been further set out in this application that the respondent's foreign supplier arranges for shipment of bulk consignment to cover the various orders backed by actual user's import licences. The statements in this application show that a single consignment sent by the foreign supplier to the respondent would include the goods to be imported under several import licences belonging to different buyers. The Deputy Commissioner of Sales Tax, who disposed of this application, held that the transaction in question was one of sale by the respondent to M.R. & Co. The respondent preferred as appeal against this decision of the Deputy Commissioner to the Sales Tax Tribunal. The Sales Tax Tribunal accepted the contention of the respondent that the respondent had acted as the indenting agent of M.R. & Co. and that the transaction between the respondent and M.R. & Co. was not one of sale but only amounted to a supply by an agent to his principal. On the basis of this conclusion the Tribunal allowed the appeal preferred by the respondent. The correctness of this conclusion arrived at by the Tribunal is sought to be impugned by the Commissioner of Sales Tax by way of the question raised before us in this reference.
6. The submission of Mr. Bhabha, the learned counsel for the department, is that really speaking there were two sales in this case, one by the foreign company to the respondent and the other by the respondent to M.R. & Co. It was submitted by him that the transaction whereby the copper ingots were supplied by the respondent to M.R. & Co. was an independent transaction of sale and attracted the liability for payment of the sales tax. In our view, what we have really to determine is the true nature of the transaction which took place between the respondent and M.R. & Co. and as to what was the relationship between them regarding the supply of the aforesaid copper ingots by the respondent to M.R. & Co. In order to determine this, it appears to us, the first document which we must look at is the document recording the contract between the respondent and M.R. & Co. If we turn to this document, namely, the letter dated 15th February, 1963, the material contents whereof we have set out earlier, we find that in the opening part of the letter it has been recorded that the goods are agreed to be imported by the respondent against the import licence of M.R. & Co. and on the strength of the said letter of authority issued to the respondent. The price of the goods, that is, the copper ingots, is shown as pounds 239-5-0 per long ton c.i.f. Bombay, which is the same price as was charged by the foreign company to the respondent under the contract between them and this amount is subsequently referred to in the letter as the c.i.f. cost of the material. The term regarding 'handling' shows that apart from the c.i.f. cost of the material, viz., pounds 239-5-0 per long ton, M.R. & Co. is required to pay Rs. 495 per metric ton for the copper ingots which amount includes clearing expenses, transportation, labour charges, customs duty applicable, despatching charges and the respondent's commission. It has been clearly set out in this letter that is must be noted that the respondent is acting merely as the indenting agent of M.R. & Co. for importing the goods on he account of M.R. & Co. and at their risk. In our view, the dominant intention of the parties to this contract is shown by the opening words in the letter to the effect that the respondent agreed to import the said copper ingots for M.R. & Co. against the import licence of M.R. & Co. and the note in the concluding portion which shows that the respondent was merely acting as an indenting agent of M.R. & Co. for importing the goods on the account of M.R. & Co. and at their risk. This, in our view, clearly indicates that the contract entered into between the respondent and M.R. & Co. was one of agency, whereby the respondent agreed to import the aforesaid copper ingots as the agent of M.R. & Co. and the respondent's main interest in the transaction was of earning commission. We may mention at this stage that bill No. 157 sent by the respondent to M.R. & Co. is also entirely consistent with the transaction between them being one of agency. This bill clearly shows that the goods have been imported by the respondent on the said import licence of M.R. & Co. and under the said letter of authority, and further shows that the handling commission of Rs. 495 per metric ton includes the customs duty at the rate of Rs. 300 per metric ton.
7. In connection with the contract recorded in the letter dated 15th February, 1963, it was submitted by Mr. Bhabha that this contract was not one of agency and this was shown by the fact that it contained a force majeure clause and there was no break-up given in respect of the amount of Rs. 495 per metric ton which was said to include clearing expenses, transportation, labour charges, customs duty applicable, despatching charges and the respondent's commission. It was urged by him that if the respondent was acting as the agent of M.R. & Co. it was incumbent on the respondent to show the exact commission to which it was entitled and there was no necessity to provide or a force majeure clause. We are unable to accept this submission. Mere inclusion of a force majeure clause cannot lead to the conclusion that the contract was between a principal and principal. As far as the question of commission is concerned, the bill sent by the respondent, to which we have already referred, shows that out of the amount of Rs. 495 per metric ton which was payable by M.R. & Co. in addition to the c.i.f. cost of the material, an amount of Rs. 300 per metric ton was payable on account of customs duty. The mere fact that the break-up of the balance has not been given cannot lead to the conclusion that the transaction was between two principals. In any event, these two terms, on which reliance has been placed by Mr. Bhabha, do not, in our view, militate against the dominant intention of the parties shown by the opening part of the letter dated 15th February, 1963, and the concluding note thereto to which we have already made reference earlier. It is beyond dispute that in order to construe the agreement or the contract between the respondent and M.R. & Co. it would not be proper to look at certain terms and conditions thereof in isolation but the entire contract will have to be construed as a whole. In our view, if the entire contract is construed as a whole, it appears to be not a contract of sale by the respondent to M.R. & Co. but one of agency, as we have indicated earlier. Even assuming that we are wrong in this conclusion and the terms and conditions of the contract set out in the letter of 15th February, 1963, leave some ambiguity as to the true relationship between the respondent and M.R. & Co., the fact that the agreement was to import the material on the strength of the said letter of authority issued to the respondent by the Joint Chief Controller of Imports and Exports would, in our view, clearly suggest that the transaction was one of agency. This letter of authority clearly shows that the respondent was to act purely as an agent of the licence-holder (M.R. & Co.) and the goods imported were to be the property of the licence-holder, viz., M.R. & Co., both at the time of clearance and subsequent thereto. In this connection, we may refer to our decision in Commissioner of Sales Tax v. Hard Castle Waud & Co. Pvt. Ltd.  37 S.T.C. 479 (S.T.R. No. 65 of 1968 decided on 31st January, 1975). In that case, Hard Castle wood & Co. Pvt. Ltd., the respondents, imported certain goods on the strength of an actual user's licence belonging to one Indo-Burma Petroleum Company Limited and a letter of authority in respect of this licence issued in favour of the respondents. The question there was whether the respondents in importing those goods and delivering the same to Indo-Burma Petroleum Company Limited had acted merely as agents of Indo-Burma Petroleum Company or whether there was a transaction of sale between them. In connection with this question, we have observed as follows :
'...... It was submitted by Mr. Parekh (the learned counsel for the department) 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.'
8. We may also refer to our decision in Dean and Webber Mill Stores Company v. State of Maharashtra  39 S.T.C. 161. (S.T.R. No. 2 of 1971 decided on 11th December, 1975), where we have pointed out that under the Import Trade Control Regulations import licences issued to manufacturers for their actual use are not transferable and can be utilised for importation of the goods covered by them only by the person or firm in whose favour these have been issued and that letters of authority would be issued by the licensing authorities with the limited object of enabling an agent to import the goods and/or make necessary remittances on behalf of the licence-holders. There we have pointed out that there could be no purpose at all in the licence-holders transferring their licences to the applicants, viz., M/s. Dean and Webber Mill Stores Company, to import goods which they had themselves ordered out for the applicants to sell those very goods back to them. These decisions, in our view, clearly show that even if the contract contained in the letter dated 15th February, 1963, and interpreted in the light of other relevant documents and surrounding circumstances leaves some ambiguity as to whether the transaction between the respondent and M.R. & Co. was one of agency or of sale, the fact of the import having been made under the letter of authority as aforesaid would show that the transaction was really one of agency and not of sale.
9. As against this, Mr. Bhabha relied on the decision of a Division Bench of the Madras High Court in Rajeshwari Mills Ltd. v. State of Madras  15 S.T.C. 1 , where it has been held that if the person holding the letter of authority actually imported the licensed goods and sold them to the licensee, the transaction should be viewed as a sale and there is nothing either in the provisions of the Imports (Control) Order, 1955, or in the Regulations issued by the Central Government which would compel the court to hold that though there was a sale, it should not be held as such. In that case, the tenor of the document containing the terms of the contract was consistent only with the transaction of sale of cotton by one G to the assessee and it was in those circumstances that it was held that the mere fact that G had imported the goods, viz., cotton, under a letter of authority based on a licence issued in favour of the assessee could not make a difference. We may make it quite clear that we do not wish to suggest that the letter of authority or the fact of the import having been made under the letter of authority are decisive of the nature of transaction particularly where the relevant documents and the surrounding circumstances apart from these clearly show that there was a sale by the importer, who imported the goods under a letter of authority, to the licence-holder. It cannot be said that merely because of the provisions contained in the letter of authority the relationship between the importer and the licence-holder must necessarily be that of a principal and an agent and there was no sale. However, as we have already pointed out, it is where the relevant documents and other surrounding circumstances leave some ambiguity as to what was the true nature of the transaction that due significance has to be given to the letter of authority and the terms contained therein.
10. The next submission of Mr. Bhabha was that whatever the position under the contract embodied in the letter of 15th February, 1963, the letter dated 17th February, 1963, sent by the foreign company to the respondent and recording the contract between them clearly showed that the foreign company had sold the aforesaid copper ingots to the respondent and that the ownership in the ingots on importation was that of the respondent. He has placed strong reliance on the fact that the terms and conditions of this contract are those of a normal contact of sale. In our view, the circumstance that most of the terms and conditions of this contract are such as are normally found in a contract of sale is not of much significance because what we have to determine is really the relationship between the respondent and M.R. & Co., and not the relationship between the foreign company and the respondent. Moreover, in this contract itself it is significant that the numbers of the import licences of the buyers are set out and one of the numbers set out is that of the import licence of M.R. & Co. Further, the clause relating to consumption certificate shows that the foreign company was entitled to require that the import licence, import certificate, end use certificate and delivery verification certificate should be supplied to them. These two clauses in this contract take along with the fact that the import licences referred to were actual user's licences contain some indication that the respondent was not importing the goods for itself but on account of the buyers, the numbers of whose import licences were given in the said contract. It was submitted by Mr. Bhabha that it was significant that the terms and conditions in the contract between the respondent and M.R. & Co. were not identical with the terms and conditions contained in the contract between the respondent and the foreign company. This, in our view, is not of much significance at all. There are no such differences in these terms and conditions as would lead to the conclusion that the respondent had imported the goods on its own behalf and in its turn sold the goods to M.R. & Co. as contended by Mr. Bhabha. In fact, what is more significant is that in the contract dated 17th February, 1963, between the foreign company and the respondent the price of the copper ingots is shown as pounds 239-5-0 per long ton c.i.f. and in the contract between the respondent and M.R. & Co. this very sum has been shown as the price per long ton c.i.f. Bombay, and this has been referred to subsequently in that contract as the c.i.f. cost of the material.
11. In the result, the question referred to us must be answered in the affirmative. The applicant to pay the costs of this reference fixed at Rs. 250.
12. Reference answered in the affirmative.