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The Pench Valley Coal Co. Ltd. Vs. the State of Madhya Pradesh and ors. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtMadhya Pradesh High Court
Decided On
Case NumberMiscellaneous Petition No. 182 of 1967
Judge
Reported in1973MPLJ32; [1973]31STC64(MP)
AppellantThe Pench Valley Coal Co. Ltd.
RespondentThe State of Madhya Pradesh and ors.
Appellant AdvocateK.A. Chitaley, ;C.P. Sen and ;P.P. Naolekar, Advs.
Respondent AdvocateY.S. Dharmadhikari, Adv.-General and ;M.V. Tamaskar, Deputy Government Adv.
DispositionPetition allowed
Cases ReferredAkola v. Firm Jasroop Shrinath
Excerpt:
- - c 251 clearly stated that the applications were allowed. 23. it was urged on the basis of this definition as well as the general concept of sale according to the provisions of the sale of goods act that unless there was a transfer of property in goods to the del credere agent in the course of transaction there would be no sale in his favour and the petitioner would not be entitled to a deduction under sub-clause (iv) of clause (r) of section 2 of the m. we need not, however, deal with the various provisions in detail because sub-clause (2) of clause (6) clearly contemplates purchase of coal by a consumer through a del credere agent. 25. a del credere agent is one who, usually for extra remuneration, undertakes to indemnify his employer against loss arising from the failure of.....orders.m.n. raina, j.1. this order will also govern miscellaneous petitions no. 183 of 1967 (the pench valley coal co. ltd. v. the state of m.p. and ors.), no. 184 of 1967 (the pench valley coal co. ltd. v. the state of m.p. and ors.), no. 185 of 1967 (the amalgamated coalfields ltd. v. the state of m.p. and ors.), no. 186 of 1967 (the amalgamated coalfields ltd. v. the state of m.p. and ors.), no. 187 of 1967 (the pench valley coal co. ltd. v. the state of m.p. and ors.), no. 188 of 1967 (the amalgamated coalfields ltd. v. the state of m.p. and ors.), no. 189 of 1967 (the amalgamated coalfields ltd. v. the state of m.p. and ors.), no. 262 of 1967 (the amalgamated coalfields ltd. v. the state of m.p. and ors.), no. 263 of 1967 (the pench valley coal co. ltd. v. the state of m.p. and.....
Judgment:
ORDER

S.M.N. Raina, J.

1. This order will also govern Miscellaneous Petitions No. 183 of 1967 (The Pench Valley Coal Co. Ltd. v. The State of M.P. and Ors.), No. 184 of 1967 (The Pench Valley Coal Co. Ltd. v. The State of M.P. and Ors.), No. 185 of 1967 (The Amalgamated Coalfields Ltd. v. The State of M.P. and Ors.), No. 186 of 1967 (The Amalgamated Coalfields Ltd. v. The State of M.P. and Ors.), No. 187 of 1967 (The Pench Valley Coal Co. Ltd. v. The State of M.P. and Ors.), No. 188 of 1967 (The Amalgamated Coalfields Ltd. v. The State of M.P. and Ors.), No. 189 of 1967 (The Amalgamated Coalfields Ltd. v. The State of M.P. and Ors.), No. 262 of 1967 (The Amalgamated Coalfields Ltd. v. The State of M.P. and Ors.), No. 263 of 1967 (The Pench Valley Coal Co. Ltd. v. The State of M.P. and Ors.), No. 387 of 1967 (The Pench Valley Coal Co. Ltd. v. The State of M.P. and Ors.) and No. 388 of 1967 (The Pench Valley Coal Co. Ltd. v. The State of M.P. and Ors.).

2. All these petitions are directed against the assessment of sales tax. Eight of these petitions, namely, No. 182 of 1967, No. 183 of 1967, No. 184 of 1967, No. 187 of 1967, No. 263 of 1967, No. 428 of 1967, No. 387 of 1967 and No. 388 of 1967 have been filed by the Pench Valley Coal Co. Ltd., while the others, namely, M.P. No. 469 of 1967, No. 262 of 1967, No. 189 of 1967, No. 188 of 1967, No. 186 of 1967 and No. 185 of 1967 have been filed by the Amalgamated Coalfields Ltd, Both the companies are incorporated under the Indian Companies Act and have their registered offices at Calcutta in the State of West Bengal. They are engaged in winning and trading in coal from coal mines at Parasia in the district of Chhindwara within the State of Madhya Pradesh. Both of them are registered dealers under the Madhya Pradesh General Sales Tax Act (hereinafter referred to as the 'M.P. Act') and were formerly registered dealers under the C.P. and Berar Sales Tax Act, 1947 (hereinafter referred to as the 'C.P. Act').

3. The companies carried on business in coal during the years 1954-55 to 1960-61 and in the course of business despatched coal to various destinations outside the State of Madhya Pradesh in accordance with the directions of the appropriate authorities under the Colliery Control Order, 1945 (hereinafter referred to as the Order). The companies also effected sales of coal within the State of Madhya Pradesh through del credere agents who were also registered as dealers under the Acts. The sales were effected on declarations made by such dealers under Sub-clause (iv) of Clause (r) of Section 2 of the M.P. Act. The companies claimed deduction in respect of such sales from the taxable turnover under Section 2(r)(iv) of the M.P. Act. They also claimed that the coal despatched to various destinations outside the State of Madhya Pradesh to the consumers was not liable to sales tax under the M.P. Act. Both these claims were disallowed by the assessing authority.

4. It would be here pertinent to note that the M.P. General Sales Tax Act came into force on 1st April, 1959. Prior to that the Central Provinces and Berar Sales Tax Act, 1947, was in force in the Mahakoshal region. The companies and their agents were also registered as dealers under the C.P. Act. In respect of the sales effected prior to the commencement of the M.P. Act, the companies claimed deduction from the taxable turnover under Section 2(a)(ii) of the C.P. Act in respect of inside sales and exemption from sales tax in respect of sales outside the State in the course of inter-State trade and commerce. Both these claims were also disallowed by the assessing authority.

5. During the pendency of the assessment proceedings the companies had filed petitions before the Supreme Court challenging the assessment on similar grounds but they were ultimately withdrawn. Against the orders of the assessing authority, the companies preferred appeals to the Deputy Commissioner of Sales Tax, Jabalpur. During the pendency of these appeals, the companies filed petitions under Articles 226 and 227 of the Constitution of India challenging the order of assessment in respect of the period from 1st April, 1954, to 31st March, 1961. By the order dated 13th December, 1965, in Miscellaneous Petition No. 333 of 1963, this court upheld the contention of the companies that no sales tax was leviable under the Act in respect of the sales outside the State of Madhya Pradesh. The other contention of the petitioners that in respect of sales within the State they were entitled to a deduction from taxable turnover under Section 2(r)(iv) of the M.P. Act and under Section 2(j)(a)(ii) of the C.P. Act was neither considered nor decided by this court. After the decision of these petitions, the Deputy Commissioner decided the appeals preferred by the companies on 29th April, 1966. The appeals were allowed in part in pursuance of the decision of this court in the petitions filed by the companies so far as the inter-State sales were concerned. In respect of the intra-State sales, the Deputy Commissioner held that the companies were not entitled to deduction from the taxable turnover on the basis of the declarations furnished by the del credere agents and remanded the cases to the assessing authority for a fresh assessment in pursuance of the observation made in the order, vide order dated 29 th April, 1966, in Sales Tax Appeals Nos. 81-A of 63-64, 82-A of 63-64, 83-A of 63-64, 75-A of 64-65, 36-A of 64-65, 128-A of 64-65 and 129-A of 64-65 (anuexure B in M.P. No. 182 of 1967). A similar order was passed by the Deputy Commissioner of Sales Tax in respect of the appeals filed by the Amalgamated Coalfields Limited, namely, Sales Tax Appeals Nos. 80 of 63-64, 63-A of 63-64, 74-A of 64-65, 109-A of 64-65, 126-A of 64-65 and 127-A of 64-65. In pursuance of the remand order the Assistant Commissioner of Sales Tax passed an assessment order dated 19th September, 1966, which has been challenged in the said petition. Similar assessment orders have been passed in other cases, which have been challenged in these petitions.

6. On behalf of the Government certain preliminary objections have been raised as to the ten ability of these petitions and it would be proper to deal with them first before proceeding to consider the various contentions raised by the petitioners on merits.

7. The learned Advocate-General frankly conceded that no question of res judicata could arise in vieof the petitions filed by the petitioners before the Supreme Court because they were ultimately withdrawn, but he urged that the claim of the petitioners regarding their rights to deduction from the taxable turnover in respect of intra-State sales through del credere agents was barred by res judicata, in view of the decision of this court dated 13th December, 1965, in Amalgamated Coalfields Ltd. v. The State of M.P. [1966] 18 S.T.C. 251 in the petitions previously filed by the companies in this court. The said decision has been reported as Amalgamated Coalfields Ltd. v. The State of M.P. [1966] 18 S.T.C. 251. It is not disputed that in these petitions, the petitioners had also claimed their right to deductions from the taxable turnover under Section 2(j)(a)(ii) of the C.P. Act and Section 2(r)(iv) of the M.P. Act (vide paragraphr16 of one of the petitions copy of which is at page 53 in M.P. No. 182 of 1967),

8. It is clear from the order of this court in Amalgamated Coalfields Ltd. v. The State of M.P. [1966] 18 S.T.C. 251 that the right to claim deduction from the taxable turnover in respect of intra-State sales was neither considered nor decided by this court. The learned Advocate-General, however, urged that the relief in respect of this claim should be deemed to have been disallowed and, therefore, the claim of the petitioners is barred on the principle of constructive' res judicata.

9. There can be no doubt that though Section 11 of the Code of Civil Procedure is not in terms applicable to writ petitions, the principle underlying it is applicable. In Daryao and Ors. v. State of U.P. A.I.R. 1961 S.C. 1457 their Lordships considered at length the applicability of the rule of res judicata to writ petitions and made the following observations in paragraph 19, which are pertinent :

We hold that if a writ petition filed by a party under Article 226 is considered on the merits as a contested matter and is dismissed the decision thus pronounced would continue to bind the parties unless it is otherwise modified or reversed by appeal or other appropriate proceedings permissible under the Constitution...If a writ petition is dismissed in limine and an order is pronounced in that behalf, whether or not the dismissal would constitute a bar would depend upon the nature of the order. If the order is on the merits it would be a bar; if the order shows that the dismissal was for the reasons that the petitioner was guilty of laches or that he had an alternative remedy it would not be a bar, except in cases which we have already indicated. If the. petition is dismissed in limine without passing a speaking order then such dismissal cannot be treated as creating a bar of res judicata.

10. In Devilal v. Sales Tax Officer, Ratlam and Ors. A.I.R. 1965 S.C. 1150 their Lordships considered the applicability of constructive res judicata to writ petitions and observed that the basic doctrine underlying the principle of res judicata is that the judgments pronounced by the court are binding and final between the parties in respect of the matter covered by them (vide paragraph 10). It was further observed that the prin. ciple of constructive res judicata is applicable to writ petitions (vide paragraph 12).

11. From the aforesaid decisions it is clear that although the principle of res judicata is applicable to writ petitions, it would not be correct to apply it in terms of Section 11 of the Code of Civil Procedure, which has many technical aspects. Thus, the rule of res judicata is applicable only where an issue between the parties can be said to have been decided by the court either expressly or by implication; but where no such adjudication can be inferred, the rule would not apply.

12. In the instant case, the question of the right of the petitioners to deduction from the taxable turnover under Section 2(r)(iv) of the M.P. Act and Section 2(j)(a)(ii) of the C.P. Act was neither considered nor decided by this court. It cannot be said to1''have been decided even by implication because the final order in Amalgamated Coalfields v. The State of Madhya Pradesh [1966] 18 S.T.C 251 clearly stated that the applications were allowed. No doubt, it would appear from the said paragraph that they were allowed in respect of the claim relating to inter-State trade but there is nothing to shothat the court disallowed the claim in respect of the deductions in question. If it had been stated in the order that the claim of the petitioners on other counts was disallowed, the position might have been different but that is not so. It appears that for one reason or the other the claim for deductions was withdrawn by the petitioners and, therefore, the court did not apply its mind to it. Where a claim is dismissed or disallowed without stating any reasons it may be inferred that it was not pressed because the petitioners conceded that it was not tenable. In these circumstances, the matter can be said to have been adjudicated upon. But where there is no reference to it in the judgment whatsoever, the matter cannot be said to have been adjudicated upon even by implication and where there is no adjudication either expressly or by implication the rule of res judicata would not be applicable. We, therefore, hold that the claim of the petitioners is not barred by res judicata. It would be here pertinent to mention that the Deputy Commissioner of Sales Tax also proceeded on this vieand, therefore, examined the contention of the petitioners in regard to the deduction on merits.

13. The next objection raised by the learned Advocate-General is that the petitioners are not entitled to any relief because they have not expressly challenged the order of the Deputy Commissioner of Sales Tax. According to him, the proper remedy of the petitioners was to file an appeal against the said order. It was further urged that the order of the Assistant Commissioner of Sales Tax dated 19th December, 1966, having been passed in pursuance of the order of the Deputy Commissioner of Sales Tax, which has not been challenged, it is not open to the petitioners to challenge the order of the Assistant Commissioner of Sales Tax. It was also urged that since the petitioners have already filed an appeal against the order dated 19th December, 1966, they are not entitled to seek any remedy in these petitions because the same point cannot be simultaneously agitated in two proceedings. It is no doubt true that in the concluding paragraph, the petitioners have not expressly prayed that the order of the Deputy Commissioner of Sales Tax be quashed but a perusal of the petition would shothat they have challenged the conclusions of the Deputy Commissioner. Moreover since they have challenged the assessment order passed in pursuance of the order of the Deputy Commissioner, it is obvious that they seek to challenge the order of the Deputy Commissioner of Sales Tax itself.

14. Ordinarily, the proper course for the petitioners was to file an appeal againt the order of the Deputy Commissioner of Sales Tax. It seems that they have filed an appeal against the assessment order but they must have realised the futility of pursuing this course because the appellate authority has already come to a definite conclusion on the point in issue. The existence of an alternative remedy is no bar to the exercise of jurisdiction by this court under Article 226 of the Constitution, particularly in proceedings for a writ of certiotari. The fact that the aggrieved party had another remedy is no doubt, a relevant consideration, but where it appears that the remedy would not be adequate, the court may interfere. The question involved in this case is an intricate question of lacalling for an authoritative decision of this court. Moreover, it is also a matter of general interest affecting the dealers in general. It would, therefore, be proper to decide this question noat this stage to cut short unnecessary litigation.

15. We now proceed to consider the claim of the petitioners on merits. The usual procedure for sale of coal is not in dispute and has been fully set out in paragraph 7 of Miscellaneous Petition No. 372 of 1963 filed by the Pench Valley Coal Co. Ltd. against the State of Madhya Pradesh, a copy of which is on the record of M.P. No. 182 of 1967. Briefly stated, the procedure was as follows : A consumer had to obtain a permit authorising him to purchase the coal required by him from a colliery. On the basis of this permit the Coal Controller sanctioned the movement of coal. The consumer then has to forward the permit along with an application to the colliery of his choice with an offer to buy it either directly or through a del credere agent indicating the place of destination, if the offer was accepted by the colliery, it issued a letter of consent to the buyer and the Deputy Coal Controller (Distribution) who issued priority sanction. The sanction was accorded on the condition that the coal will be consumed for the purpose stated and that it will not be used for any other purpose. On the basis of the contract of sales the colliery loaded the wagon supplied for each consumer affixing a label indicating its destination, etc. The railway receipt was handed over by railway to the colliery. It was left to the colliery to send the railway receipt to the consumer or to the del credere agent or to a bank for delivery to the consignee on payment. The sale transactions in question were effected through del credere agents who were registered dealers.

16. The contention of the learned Advocate-General is that in these transactions, the del credere agent does not function either as a purchaser or seller and as such he is not a dealer within the meaning of Clause (d) of Section 2 of the M.P. Act and the corresponding definition of 'dealer' in Clause (c) of Section 2 of the C.P. Act. He further urged that the fact that the del credere agent was registered as a dealer under the Acts is of no consequence and must, therefore, be ignored.

17. It is necessary in this connection to refer to the definition of 'dealer' as given in Section 2(d) of the M.P. Act and Section 2(c) of the C.P. Act, which are reproduced belofor facility of reference :

2(d) of the M.P. Act.-'dealer' means any person who carries on the business of buying, selling, supplying or distributing goods, directly or otherwise, whether for cash or for deferred payment or for commission, remuneration or other valuable consideration and includes...

(iii) A commission agent, a broker, a del credere agent, an auctioneer, or any other mercantile agent, by whatever name called, who carries on the business of buying, selling, supplying or distributing goods on behalf of any principal.

2(c) of the C.P. Act.-'dealer' means any person who, whether as principal or agent, carries on in Madhya Pradesh the business of selling or supplying goods, whether for commission, remuneration or otherwise and includes a firm, a partnership, a Hindu undivided family and the Central or a State Government or any of their departments and includes also a society, club or association selling or supplying goods to its members.

The first point for consideration is whether a del credere agent is a dealer within the meaning of the Acts.

18. It is, therefore, necessary to examine the true capacity and the function of the del credere agent in these transactions. Before we proceed to consider this matter it may be mentioned that Shri K.A. Chitale, the learned counsel for the petitioners urged that since it is not disputed that the agent was registered as a dealer under the Act and that the sales were effected on the basis of the declaration furnished by him, it is immaterial whether he was rightly or wrongly registered as a dealer because a vendor cannot be expected to embark on an enquiry into this question before acting on the declaration furnished by him. In support of his contention, he relied on the decision of the Supreme Court in The State of Madras v. Radio and Electricals Ltd. and Anr. [1966] 18 S.T.C. 222 (S.C.). In the said case, their Lordships made the following observations at page 233, which are pertinent:

Indisputably the seller can have in these transactions no control over the purchaser. He has to rely upon the representations made to him. He must satisfy himself that the purchaser is a registered dealer and the goods purchased are specified in his certificate, but his duty extends no further...He cannot hold an enquiry whether the notified authority who issued the certificate of registration acted properly, or ascertain whether the purchaser, notwithstanding the declaration, was likely to use the goods for a purpose other than the purpose mentioned in the certificate in Form 'C. There is nothing in the Act or the Rules that for infraction of the lacommitted by the purchasing dealer by misapplication of the goods after he purchased them, or for any fraudulent misrepresentation by him, penalty may be visited upon the selling dealer.

19. Following the aforesaid decision, this court held in Commissioner of Sales Tax, Madhya Pradesh v. Samaj Paper Mart, Ranipura, Indore [1968] 21 S.T.C. 239 that the seller has to rely on the representalons made to him. He must satisfy himself that the purchaser is the registered dealer and the goods purchased are specified in his certificate. But his duty extends no further.

20. In view of the aforesaid decisions, the question whether the agent was entitled to be registered as dealer under the Act or not is not material. We may, however, add that the definition of the dealer as given in Clause (d) of Section 2 of the M.P. Act and the corresponding definition in the C.P. Act is very wide inasmuch as it expressly includes a del credere agent or any other mercantile agent by whatever name he is called who carries on the business of buying, selling or distributing goods on behalf of any principal. In vieof this definition it is not necessary that the agent must carry on the business of buying or selling on his account and figure as a purchaser or seller for being a dealer within the meaning of the Acts. Looking to the definition, he would be a dealer even if he acts as a buyer or seller on behalf of his principal and not on his own account. In State of Bombay v. Ratilal Vadilal & Brothers [1961] 12 S.T.C. 18 (S.C) their Lordships had to decide the question whether the respondents were dealers within the meaning of the Bombay Sales Tax Act, 1953. It was held that in vieof the definition as given in the Act the person must carry on the business of selling goods in the State of Bombay. The definition of the word 'dealer' in the M.P. Act and C.P. Act is wider, as pointed out above and, therefore, the said decision is not applicable to this case. In State of Rajasthan v. Karamchand Thappar and Bros [1965] 16 S.T.C. 412 (S.C.) the petitioner was held to be a dealer in vieof the extended definition of the word as given in Section 2(f) of the Rajasthan Sales Tax Act. It is clear that in each case the question whether the person is a dealer or not has to be answered in the light of the definition of the word 'dealer' as given in the Act. The learned Advocate-General cited a number of cases in respect of his contention that the del credere agents were not dealers within the meaning of the M.P. Act and the C.P. Act. But it is not necessary to consider them because they related to enactments of other States where the definition of the word 'dealer' is different.

21. The most important argument advanced by the learned Advocate-General was, however, based on the definition of the taxable turnover given in Clause (r) of Section 2 of the M.P. Act and the corresponding definition given in Clause (j) of Section 2 of the C.P. Act. The two definitions are reproduced below:

M.P. Act.-2. (r) 'Taxable turnover' in relation to any period means that part of a dealer's turnover for such period which remains after deducting therefrom...

(iv) Sales to a registered dealer of goods specified in Part I of Schedule II and declared by him in the prescribed form as being intended for resale by him in the State of Madhya Pradesh or for sale in the course of inter-State trade or commerce,

C.P. Act.-2. (j) 'Turnover' means the aggregate of the amounts of sale prices and parts of sale prices received or receivable by a dealer in respect of the sale or supply of goods in the carrying out of any contract, effected or made during the prescribed period; and the expression 'taxable turnover' means that part of a dealer's turnover during such period which remains after deducting therefrom-

(a) his turnover during that period on--

(i) ...

(ii) sales to a registered dealer of goods declared by him in the prescribed form as being intended for resale by him by actual delivery in Madhya Pradesh for the purpose of consumption in that region or of goods specified in such dealer's certificate of registration as being intended for use by him as ramaterials in the manufacture of any goods for sale by actual delivery in Madhya Pradesh for the purpose of consumption in that region and of containers and other materials used in the packing of such goods...

22. The learned Advocate-General urged that no deduction can be claimed under Sub-clause (iv) of Clause (r) of Section 2 of the M.P. Act and the corresponding clause under the C.P. Act unless it is proved that there was a sale to the registered dealer. The word 'sale' has been defined in Clause (n) of Section 2 of the M.P. Act as under:

'Sale' with all its grammatical variations and cognate expressions means any transfer of property in goods for cash or deferred payment or for other valuable consideration and includes a transfer of property in goods involved in the supply or distribution of goods by a society or club or any association to its members, but does not include a mortgage, hypothecation, charge or pledge and the word 'purchase' shall be construed accordingly.

The definition of the word 'sale' in Clause (g) of Section 2 of the C.P. Act is similar.

23. It was urged on the basis of this definition as well as the general concept of sale according to the provisions of the Sale of Goods Act that unless there was a transfer of property in goods to the del credere agent in the course of transaction there would be no sale in his favour and the petitioner would not be entitled to a deduction under Sub-clause (iv) of Clause (r) of Section 2 of the M.P. Act from the taxable turnover even though he had obtained a declaration from the agent as a registered dealer. This contention appears to be sound and, therefore, it is necessary to consider the position of a del credere agent in these transactions. The learned Advocate-General contended that there could be no sale to the del credere agent in vieof the provisions of the Colliery Control Order (hereinafter referred to as the Order). In support of his contention he referred to the various provisions in the said Order governing the sale of coal. We need not, however, deal with the various provisions in detail because Sub-clause (2) of Clause (6) clearly contemplates purchase of coal by a consumer through a del credere agent. It further provides that such agent on the sale of such coal shall not charge or receive from the consumer a margin over the price not exceeding Re. 1 per ton in the case of coal or Re. 18 annas per ton in the case of soft coke. Further Clause (c) of Sub-clause (2) of Clause 6 of the Order contemplates a del credere agent also functioning as a broker and provides for brokerage being charged in addition to a margin over the price fixed.

24. In the absence of a definition of the del credere agent we must construe it in the sense in which it is viewed in commercial practice.

25. A del credere agent is one who, usually for extra remuneration, undertakes to indemnify his employer against loss arising from the failure of persons with whom he contracts to carry out their contracts (Halsbury's Laws of England, Vol. I, page 152, para 326, third edition). Thus a del credere agent is one who guarantees performance of contracts in consideration of extra remuneration. Del credere agents are, however, common in foreign commercial practice. In our country we have the system of kuchha adtyas and pakka adtyas. Pakka adtya is also not a creature of labut of custom in commercial world. Main feature of pakka adtya is that he acts as a principal in relation both to his constituent as well as to the opposite party with whom he deals on the instruction of his constituent. The position of a pakka adtya is analogous to a del credere agent.

26. In Ramlal Hansraj Bhate v. Bhagwandas Goverdhandas Agarwala (1947) M.L.J. 533 it was held that the incident of pakki adat is a question of fact depending on the proof of custom prevailing at a particular time in a particular market. It is also subject, to the terms and conditions of an express agreement between the parties to the contract of pakki adat. The relationship is not purely of a principal and agent. It is of a complex character being the mixture of the two and the predominance of one or the other depends on the circumstances of each case.

27. In Shop Bakairam Rodmal, Akola v. Firm Jasroop Shrinath, Harda A.I.R. 1948 Nag. 173 it was observed that a pakka adtya acts as a principal in relation both to his constituent and to the opposite party with whom he deals on the instructions of his constituent. A pakka adtya is very much like an ordinary del credere agent. In paragraph 10, the following observations of Shri Ramnik Lal, learned author of the book 'the Laof Pakki and Kuchhi Adat' were quoted with approval in the said case :

Pakka adtya, though a noted personality both in commercial and legal worlds bears such a complex character as to defy exact definition or easy description. The system of pakka adtya was brought into existence by the ingenuity of the Bombay merchants and by the exigencies of commerce and commercial convenience and though it has by notravelled into other markets and in its minor characteristics is affected by the local customs of an individual market it has throughout maintained its main characteristic, i.e., that a pakka adtya unlike a kuchha adtya acts as a principal in relation both to his constituent tand to the opposite party with whom he deals on the instructions of his constituent. As Beaman, J., put it in Bhagwandas 1'arashram v. Burjorji Ruttanji Bomanji (1913) 15 Bom. L.R. 85 at p. 96 he is very like an ordinary 'del credere' agent but he is that and more.

28. Although a del credere agent is also a wellknown type of agent in the commercial world, he is more commonly found in foreign market than in India and, therefore, it would be difficult to say what is the exact position of a del credere agent vis-a-vis .the constituent and the opposite party in India. As in the case of a pakki adat it must depend on the commercial practice actually obtaining in the market subject of course to the terms and conditions of an express agreement between the parties. As pointed out above, a del credere agent is very much akin to a pakka adiya and, therefore, although it is difficult to say that in every case he deals as a principal, there can be no doubt that he can as well act as a principal.

29. In the absence of the definition of del credere agent in the Order it would be necessary to examine the facts and circumstances of each case to determine whether he acted as a pakka adtya or as a mere guarantor. If he acts as a pakka adtya it follows that he would be acting as a principal and as such would function as an intermediate purchaser with the result that two sales will be involved-one from colliery to the agent and the other from the agent to the consumer. In such a situation, there can be no doubt that the colliery would be entitled to the deduction in the taxable turnover as claimed because it is not disputed that the agent in this case was a registered dealer and the sale was on the basis of the declaration furnished by him. If he does not act as a principal and merely acts as an agent of the consumer there would be no sale to him and the declaration furnished by him that the goods were purchased for resale would also be incorrect.

30. Thus the position that emerges is that it would be necessary for the assessing authority to determine whether the del credere agent acted as a pakka adtya and as such there was a sale of goods to him. If he finds that he acted in that capacity, the petitioners would be entitled to the deduction claimed by him but not otherwise. We find nothing in the Order to suggest that intermediate sale to del credere agent is not permissible. Sub-clause (2) of Clause 6 of the Order reads thus :

Where a consumer purchases coal through a del credere agent, such agent shall not, on the sale of such coal, charge or receive from the consumer a margin over the price fixed under Clause 4 which exceeds :

(a) one rupee per ton in the case of coal; or

(b) one rupee eight annas per ton in the case of soft coke ;

(c) two rupees eight annas per ton in the case of hard coke and if in any such transactions as aforesaid, a broker is employed or the del credere agent himself serves as a broker, a brokerage not exceeding six annas per ton may be paid by the colliery owner to the broker or, as the case may be, to the del credere agent.

From the aforesaid provision In the Order, it is clear that it is permissible for a consumer to purchase coal through a del credere agent and on the sale of such coal he can charge from the consumer the specified margin over the price fixed. Sub-clause (2) of Clause 6 thus contemplates certain price to be charged by the del credere agent including his commission on sale of the coal to the consumer.

31. The Deputy Cemmissioner of Sales Tax has already remanded the case to the Assistant Commissioner and it would be for him to make the assessment after determining the true character of the del credere agent in the light of the observations made above. We would, however, like to make it clear that the directions of the Deputy Commissioner that the del credere agents were not dealers, that their registration was void ab initio and, therefore, the declarations furnished by them were of no consequence, are entirely erroneous and, therefore, are hereby quashed.

32. The petitions are, therefore, hereby allowed and the assessment orders of the Assistant Commissioner of Sales Tax in pursuance of the remand order of the Deputy Commissioner of Sales Tax dated 29th April, 1966, are hereby quashed. So far as this petition is concerned, the assessment order of the Assistant Commissioner of Sales Tax is dated 19th September, 1966, which is hereby quashed. The Assistant Commissioner of Sales Tax shall make a fresh assessment in the light of the observations made above. We make no order as to costs, in the circumstances of the case. The outstanding security deposit shall be refunded to the petitioner.


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