1. Since the point involved in both the tax cases are the same, they are dealt with together.
2. These tax revision cases question the correctness of the order passed by the Tribunal in Tribunal Appeals Nos. 2104 and 1820 of 1982 relating to the same assessee, viz., the State Trading Corporation of India, in relation to two assessment years.
3. The State Trading Corporation of India reported taxable turnovers of Rs. 38,27,65,157.68 and Rs. 39,92,10,188.54 for the assessment years 1979-80 and 1980-81 respectively. However, the assessing officer determined the taxable turnover for the said assessment years at Rs. 42,50,11,444.95 and Rs. 58,11,56,853.55 respectively. In regard to the said two assessments, the assessee disputed the turnover of Rs. 4,00,14,066 for year 1979-80 and Rs. 18,12,15,180.69 for the year 1980-81. The said disputed turnovers represented the deliveries effected by the State Trading Corporation to the Civil Supplies Corporation, (sic) Kerala, of repressed oil for distribution in the States concerned, as per the directions of the Government of India, Ministry of Civil Supplies. According to the assessee, the said disputed turnovers represent the agency transaction and they do not represent actual sales, and the Civil Supplies Corporation, Andhra Pradesh, and the Civil Supplies Corporation, Kerala, were constituted as the agents of the State Trading Corporation for distribution of the repressed oil to the consumers within the concerned States and there has been no sale between the State Trading Corporation and the Civil Supplies Corporations in the concerned States, which have been constituted only as agents for distribution of repressed oil. According to the revenue, however, the disputed turnover represented sales of repressed oil effected by the State Trading Corporation to the concerned Civil Supplies Corporations and, therefore, it should be taken to represent inter-State sales. In this case, the assessing authority as well as the appellate authority have held that the supplies of repressed oil by the State Trading Corporation to the Civil Supplies Corporations of Andhra Pradesh as well as Kerala constituted inter-State sales and, therefore, they are liable to pay tax as inter-State sales under the Central Sales Tax Act. However, the Tribunal on appeal by the State Trading Corporation in relation to the two assessment years had held that the concerned Civil Supplies Corporations both at Andhra Pradesh as well as in Kerala are only agents and that the supply effected by the State Trading Corporation, principal, to the Civil supplies Corporations, who have been constituted as agents, will not amount to a sale at all and that in the transaction, there is only one sale when the Civil Supplies Corporation sells the goods to the consumers through fair price shops or other agencies and those sales have been taxed in the concerned States of Andhra Pradesh and Kerala. The revenue is questioning the said view taken by the Tribunal.
4. On a due consideration of the matter we are satisfied that the Tribunal has come to the right conclusion. The original authority has chosen to treat the deliveries effected by the State Trading Corporation to the concerned Civil Supplies Corporations as amounting to sales merely because there has been pre-payment towards the value of the goods by the Civil Supplies Corporation to the State Trading Corporation. We are not in a position to accept the said reasoning. The payment of the price in advance by the agent will not transform the agent as a purchaser. Therefore, the question whether there is in fact an agency as contended by the assessee or whether the so-called agent is only a purchaser as contended by the revenue has to be decided without reference to the factum of the pre-payment of the price.
5. The Appellate Assistant Commissioner, in his order upholding the assessment on the disputed turnover, refers to the existence of an agreement between the State Trading Corporation and the Civil Supplies Corporation in Andhra Pradesh. But, he did not give any significance or weight to the terms of the agreement, but proceeds to say that the State Trading Corporation continued to have domain over the goods even after the goods have been delivered to the Civil Supplies Corporation, that in the agreement, the State Trading Corporation has no right to recall the goods, and it has not agreed to bear the insurance coverage during transit and that these facts will clearly show that the condition for the agency transaction have not been fulfilled. Thus, the Appellate Assistant Commission took the view that there has been sales between the State Trading Corporation and the Civil Supplies Corporations of Andhra Pradesh and Kerala and, therefore, the transactions that took place between the State Trading Corporation at Madras (sic) should be taken as inter-State sales.
6. The Tribunal, on the other hand, was inclined to rest its decision on the terms of the agreement entered into between the State Trading Corporation and the Civil Supplies Corporations concerned. After referring to each one of the terms of the said agreement, the Tribunal has taken the view that the relationship between the State Trading Corporation and the concerned Civil Supplies Corporations is only that of an agency and not one of seller and purchaser as has been assumed by the revenue. It cannot be disputed that to find out whether there has been a sale between the State Trading Corporation and the Civil Supplies Corporations concerned, the terms of the agreement as between the two has to be taken to be relevant and material. For example, if we take the agreement between the State Trading Corporation and the Civil Supplies Corporation of Andhra Pradesh dated 6th November, 1979, it shows that Andhra Pradesh State Civil Supplies Corporation Limited has been referred to as agents. The preamble further states that the agents have agreed to function as the storing and selling agents of the State Trading Corporation for discharging all the functions related and incidental to the movement, storage and distribution of the repressed oil. Clause 1 of the agreement states that the agents shall arrange to take delivery of as much RBD palmolein oil every month for distribution as has been allotted to Andhra Pradesh by the Government of India. Clause 3 states that the agents shall not appoint or assign the benefits of the agreement to any other without the specific permission of the State Trading Corporation. Clause 5, the very important one, says that the title of the goods delivered shall not be hypothecated or caused to be created any lien or charge on the goods in any manner. Clause 6 reads that as the stockist shall be responsible for all transit, storage, and handling losses, the State Trading Corporation shall not be responsible to arrange for insurance coverage. Clause 7 says that for the quantity agreed under these presents, the agent shall ensure distribution in the manner laid down and collect payment not exceeding the rate prescribed by the State Trading Corporation/Government of India from time to time. The agreement also proceeds on the basis that the State Trading Corporation shall pay the agents an over-all charge of an amount to be decided by the State Trading Corporation of India Limited, Madras Branch, towards charges for transportation from Madras, Vizag, etc., ports and all other services in this behalf. The agents shall be responsible for observing all local regulations connected with facilities and of personnel employed by them for their obligations. A reading of the provisions of the agreement as a whole clearly shows that the Andhra Pradesh State Civil Supplies Corporation has been constituted as an agent and they are entitled to charge only for the services rendered by them. Since the title of the goods delivered to the Civil Supplies Corporation continues to vest with the State Trading Corporation, the State Trading Corporation cannot in any sense be said to be a seller of the goods to the Civil Supplies Corporation. It is also seen that the Civil Supplies Corporation have charged a nominal commission from the State Trading Corporation. The transit loss and the unsold stock with the Civil Supplies Corporation is daily tabulated, which clearly proves that the dominion and control over the commodity delivered to the Civil Supplies Corporation vested right through with the State Trading Corporation. Thus, the terms of the agreement between the parties clearly indicated that the transaction between the parties is one of agency and not of sale.
7. As has been pointed out by the Supreme Court in  21 STC 312 (Sri Tirumala Venkateswara Timber and Bamboo Firm v. Commercial Tax Officer, Rajahmundry), that, in law, there is a clear distinction between the contract of sale and contract of agency by which the agent is authorised to sell or buy on behalf of the principal and make over either the sale proceeds or the goods to the principal. The essence of a contract of sale is the transfer of title to the goods for a price paid or promised to be paid. The essence of agency to sell is the delivery of goods to a person who is to sell them not as his own property but as the property of the principal, who continues to be the owner of the goods and will, therefore, be liable to account for the sale proceeds. In that case, the Supreme Court has pointed out that the true relationship of the parties in each case has to be gathered from the nature of the contract, its terms and conditions and the terminology used by the parties is not decisive of the legal relationship. As already pointed out, the agreement entered into between the parties clearly shows that the Civil Supplies Corporations in Andhra Pradesh and Kerala are constituted only as agents and they cannot be taken to be buyers of the goods for a price. The terms of the agreement make it clear that the goods are delivered by the State Trading Corporation to the Civil Supplies Corporations only in their capacity as distribution agents and there is no sale as between them. In this view of the matter, we do not think that any interference is called for in orders of the Tribunal. The revision is, therefore, dismissed.