C.S.P. Singh, J.
1. In compliance with the order of this court, the Additional Revising Authority, Sales Tax, Allahabad, under Section 11(4) of the Act referred the following question for our opinion :
Whether, on the facts and in the circumstances of the case, the assessee was an importer liable to tax on the sale of sugar amounting to Rs. 9,71,680 made to dealers in Uttar Pradesh, who were not traceable ?
2. During the assessment years 1956-57 and 1957-58, the assessee was a dealer in mobile oil, tyres, tubes, petrol and other commodities. They also were the selling agents of sugar manufactured by New Sewan Sugar Factory, Bihar. Regular assessment under Rule 41(5) of the U.P. Sales Tax Rules were completed for both the years and accounts of the dealers accepted. Subsequently, information was received that the assessee had sold several thousand bags of sugar in Uttar Pradesh in the names of fictitious parties. Proceedings were as such initiated under Section 21 of the U.P. Sales Tax Act against the assessee. In these proceedings, the assessing authority held that in the year 1957-58 the assessee had imported 19,836 bags of sugar from New Sewan Sugar Factory, Bihar and sold them in Uttar Pradesh. It estimated the escaped turnover at Rs. 32,00,000 and imposed tax thereon. For the year 1957-58, it was found that the assessee had imported and sold 14,067 bags in Uttar Pradesh and the escaped turnover was determined at Rs. 14,00,000. On appeal, the Assistant Commissioner held that for the year 1957-58 only 6,048 bags of sugar had escaped assessment and the escaped turnover was reduced to Rs. 4,83,920. For the year 1957-58, the Assistant Commissioner held that the corporation had sold 14,317 bags of sugar and calculating the price at Rs. 87 per bag, determined the escaped turnover at Rs. 12,45,579.
3. Before we set out the findings of the Additional Judge (Revisions), it is worthwhile to set out the facts as found by the Sales Tax Officer and the Assistant Commissioner, Sales Tax, in respect of the sale transactions which led to the passing of the order under Section 21 of the Act. The case set up by the assessee was that they were authorised agents on a certain rate of commission for the New Sewan Sugar Factory. Under instructions from their Calcutta head office, they contacted parties both from Allahabad and Kanpur, who gave instructions in writing for booking sugar in their names. The assessee thereafter passed on the said instructions to their head office at Calcutta for placing orders with the New Sewan Sugar Factory, in the names of the parties who had given instructions. The goods were then despatched by the New Sewan Sugar Factory to various destinations in the names of the parties who had placed the orders and the railway receipts along with invoices were sent by the factory to their bankers and intimations sent to the purchasers. The purchasers retired the railway receipts and documents from the bank and took delivery. It was contended that this being so, the assessee was neither an importer, nor a seller of the sugar but merely acted as a commission agent. By a letter to the Sales Tax Officer it was pointed out that intimations sent to the head office at Calcutta were sent only after local sugar brokers had placed orders of various parties for sugar. On the orders being placed advance money used to be deposited by the brokers for the transaction and despatch instructions used to be taken in writing from the brokers or from the parties themselves. Thereafter, this information was sent to the head office, which issued despatch instructions to the mill under advice to the dealer. After the goods had been received by the parties, bills were submitted by the brokers for their commission and payments made after verification. Before the Sales Tax Officer, a list of eight parties, who were introduced directly to the sugar mills on receiving orders from them, was given. The Sales Tax Officer made an inquiry from these dealers, but they denied to have imported sugar from the ex-U.P. mills. Some of the parties who had purchased sugar from the assessee informed the Sales Tax Officer that they had paid the tax due on the purchase to the assessee. It was admitted by Shri Joshi, the manager of the firm, that all taxes in respect of such sales had been paid by the assessee.
4. Now, before we set out the findings of the Sales Tax Officer and the Assistant Commissioner, Sales Tax, it is necessary to extract Rule 2(d-l) of the Rules framed under the U.P. Sales Tax Act, 1948, as liability for the tax has been fastened on the dealer on the basis of this Rule :
2. In these Rules, unless there is anything repugnant in the subject or context-
(d-1) 'Importer' means, as respects goods imported into Uttar Pradesh from any other State in India-
(a) in a case where the goods are not imported for the purpose of resale in the same condition as they were imported by the person who imported them, the dealer in such other State, who made the sale as a direct result of which the goods are imported into Uttar Pradesh ;
(b) in a case where the goods are imported for the purpose of resale in the same condition as they were imported by the persons who imported them, the dealer who makes the first sale as a direct result of which the goods were imported into Uttar Pradesh ;
(c) in a case where the goods are imported into Uttar Pradesh otherwise than as a direct result of a sale, the dealer who makes the first sale after such import ; and
(d) in a case where the goods are imported for the purpose of resale in the same condition as they were imported by the persons who imported them, but the sale of business as a whole was made by the said persons, the dealer who makes the first sale after the sale of the business as a whole as a direct result of which the goods were purchased by such dealer.
5. The Sales Tax Officer did not accept the dealer's case, as the dealer did not produce any agreement between him and any of the U.P. principals, which indicated that it was acting only as an agent. Certain letters produced by the dealers show that sugar had been purchased by other parties were also not relied upon on the ground that they had been signed by brokers and not by the purchasers themselves. The Sales Tax Officer also relied upon a report of the Sales Tax Officer, Special Investigation Branch, Kanpur and Varanasi, to the effect that the assessee in the course of inquiry had submitted the names of fictitious principals. On appeal, the Assistant Commissioner seems to have accepted the dealer's case as to the manner in which the goods were sold, but he held that there was no privity of contract between the U.P. purchasers and the sugar mills. He took the view that the dealer conducted sugar business in U.P., booked orders from parties and arranged the supply and delivery thereof and, as such, was an importer of the goods. He also held that so far as sales made through brokers to U.P. parties were concerned the sales being the first sales, attracted the provisions of Rule 2(d-1). In the alternative, it was held that at best the dealer was the selling agent of their ex-U.P. principals, i. e., their head office at Calcutta and as such liable. The Assistant Commissioner (Judicial) in support of his conclusions also derived support from the fact that it had been admitted by the dealer that in respect of certain parties it had paid tax on the transactions entered into with them.
6. In revisions the modus operandi of the sale as disclosed by the assessee was taken to be correct and it was held that so far as the turnover in respect of sales to genuine U.P. parties was concerned, the assessee-dealer could not be held liable as it were these dealers who had made the first sale after import. In respect of some U.P. dealers introduced by brokers and in whose names the sale notes were prepared and forwarded by the corporation but were not traceable, the Judge (Revisions) held that the position was that there were no buyers at all and no sale transaction could, therefore, be completed between the sugar factories and the non-existing buyers. It held that inasmuch as the imports were made not as a result of any sale, the case of the assessee fell under Rule 2(d-1)(c) and the assessee-dealer was an importer of the goods and, as such, liable to tax.
7. We have already extracted Rule 2(d-1)(c). The assessee could be an importer only in case he had made the first sale after such imports. In the present case, goods have been imported into U. P. but before liability to tax can be fastened on the assessee-dealer, it had to be established that it was the assessee who had made the first sale after such imports. The Judge (Revisions) has accepted the modus operandi of the sale transactions, i. e., the assessee, after receiving orders from the brokers and otherwise used to forward them to its head office, which, in turn, sent it to the sugar mills and then the goods were despatched. Liability to tax on the assessee has been fastened on account of the fact that some of the parties in whose names the goods were despatched were not traceable. Now, in the present case, there is no finding by any of the authorities that the assessee had taken deliveries of the goods or retired the railway receipts which were sent by the factory in the name of the party in whose favour the sale orders were drawn up. In fact, the Judge (Revisions) seems to have accepted the assessee's case that the goods were imported into U. P. after the orders for the same had been received from the brokers. We fail to understand as to how the liability can be fastened on the assessee merely because some of the parties who booked the orders were not traceable.
8. The standing counsel urged that the Judge (Revisions) has found as a fact that it was the assessee who had made the first sales, but on a fair reading of the judgment it appears that this conclusion of his is based solely on the fact that he treated the assessee to be an importer under Rule 2(d-1)(c) of the Rules and is not based on any material on the record. Neither the Sales Tax Officer nor the Assistant Commissioner (Judicial) gave any finding that the assessee had sold the goods in U.P. or, at any rate, there is no finding based on any relevant material that the first sales had been effected by the assessee. This conclusion of the Judge (Revisions), therefore, appears to be purely conjectural. In fact, no reasons at all have been given by the Judge (Revisions) for this stray conclusion in his judgment. He appears to have reached this conclusion after holding that inasmuch as the U.P. dealers were not traceable, there was no transaction of sale at all between the sugar factory and those persons. From this, however, it does not follow that it was the assessee which made the first sales. This being so, the assessee would not be an importer within the meaning of Rule 2(d-1) and no liability for sales tax in respect of untraceable U.P. dealers could be fastened on it.
9. We, therefore, answer the question in the negative in favour of the assessee and against the department. The assessee is entitled to its costs which we assess at Rs. 100. This order will govern S.T.R. No. 170 of 1973 also.