1. The respondents are dealers in 'mill stores' at Coimbatore. They were assessed by the Joint Commercial Tax Officer, Coimbatore, under the Madras General Sales Tax Act, 1939, for the year 1958-59 on a turnover of Rs. 2,68,000 and odd. Out of this, an amount of Rs. 56,300 and odd was assessed as representing sales in the course of business of the petitioners (sic). The respondents objected to the inclusion of this turnover in the assessment on the ground that they covered what they described as 'accommodation sales'. The respondents having failed before the Joint Commercial Tax Officer, preferred an appeal to the Appellate Authority, but again failed. On a further appeal to the Tribunal, the respondents succeeded. The Tribunal held that the turnover of Rs. 56,300 represents accommodation sales and the petitioners were entitled to have this excluded from the taxable turnover. The State of Madras has preferred this revision petition against the said order of the Tribunal,
2. The only question that arises for consideration in this revision petition is whether the sale value of Rs. 56,300 included in the assessees' turnover, can be excluded on the ground that it represented accommodation sales, in respect of which there are provisions in the statute and the rules. The assessees case is that they were dealers only in mill stores, but in order to oblige their customer, a company called S.R.C. Mills Ltd., Tiruppur, they purchased plates and angles from a Bombay dealer and supplied them to the mills. They submitted that they did not make any profit in respect of this transaction, that they merely obliged S. R. C. Mills Ltd., by placing an order with the Bombay dealer and by getting the goods from Bombay to Coimbatore.
3. We shall at first refer to the provisions of the Act. It is clear that the assessees must establish that the turnover in respect of these sales, which apparently is in respect of transactions of sales, is not liable to be taxed. Section 2(i), Explanation I (iv), deals with accommodation transactions. Section 2(i) defines 'turnover' and the explanation reads :
Subject to such conditions and restrictions, if any, as may be prescribed in this behalf...(iv) where for accommodating a particular customer, a dealer obtains goods from another dealer and immediately disposes of the same to the said customer, the sale in respect of such goods shall be included in the turnover of the latter dealer but not in that of the former.
4. If the case of the respondents is true, then, as per the provisions of Section 2(1), Explanation I (iv), the disputed turnover cannot be included in his turnover, but, if at all, can be included only in the turnover of the Bombay dealer. Rule 5(1)(c) of the Madras General Sales Tax (Turnover and Assessment) Rules provides for exclusion of turnover in respect of accommodation sales. That provision reads :
All amounts for which the dealer sells articles which are not in his stock but which are obtained by him from another dealer specially to accommodate a particular customer and are immediately sold to such customer, provided that the sale is entered in the accounts then and there as an accommodation sale together with the name of the dealer from whom the articles were obtained and provided that the accommodating dealer does not make a profit out of the transaction.
5. But for this provision, the turnover, as per the definition of 'gross turnover' under Rule 4(1) should be included. The statute therefore provides for exclusion of turnover in respect of transactions by way of accommodation sales. But, it is obvious that the assessee must strictly comply with the provisions of the rule before he can claim the exemption.
6. The facts found by the Tribunal are as follows : The assessees obtained the goods from a dealer in Bombay to accommodate S.R.C. Mills Ltd. They obtained the railway receipt for the first consignment of goods on 17th February, 1958. On the same day, they received cash of Rs. 32,000 from the mills. The consignment value of the goods was about Rs. 33,000. The assessees cash book shows that the amount was received from the mills for clearing the railway receipt through the bank. The railway receipt relating to the second consignment was obtained by the petitioners on the 16th April, 1958. The goods were cleared by taking the railway receipt from the bank by paying a sum of Rs. 26,000 and odd. On the same day, the assessees received Rs. 30,000 from the mills. It was not disputed, even before the Tribunal, by the department that the assessees did not make any profit out of these two transactions. The first consignment was cleared on 10th March, 1958, and the second consignment on the 16th April, 1958. But actually the assessees submitted their invoice to the mills only on 31st May, 1958. The Tribunal went into the question as to when exactly the goods were cleared as there was an interval of about a month between the clearing of the second consignment and the actual date of the invoice. It appears that the mills required these materials- plates and angles-for construction of premises and their contractor was one Nirmala Engineering Works. The consignments appear to have been actually cleared by these engineers on behalf of the mills. A letter written by the engineers to the assessees in the following terms was placed before the Tribunal :
This is to inform you that we have taken delivery of eight wagon loads of angles and plates from you directly from Coimbatore goods shed on the same day they reached Coimbatore purely on behalf of Messrs S.R.C. Mills Ltd., Tiruppur, against their fabrication order No. IS. 15/1957 dated 16th October, 1957.
7. This letter does not bear any date, but the Tribunal has accepted this as a correct version. Certainly, there was no material contra placed by the department. There is no reason to suspect that this letter was given by the engineers to oblige the assessees making false averments. We have therefore to act upon this letter and hold that the goods were actually cleared from Coimbatore on the very date of their arrival and the clearance was effected not by the assessees but by a representative of the purchaser, namely, the mills. The accounts of the assessees also show that on the 10th March, 1958, a sum of Rs. 3,500 was paid to them by Nirmala Engineering Works to enable them to pay the railway freight for the first consignment. The requirements of Rule 5(1)(c) are that (1) the goods must have been obtained from another dealer specially to accommodate a particular customer, (2) the goods must have been sold immediately to the customer, (3) the sale must be entered in the accounts then and there as an accommodation sale together with the name of the dealer from whom the articles were obtained, and (4) the accommodating dealer should not make a profit out of the transaction. It is true that the Tribunal has proceeded on the footing that the actual entries in the books of the assessees show these transactions as normal purchases and sales. The learned counsel for the assessees submitted that in fact the entries in the journal described these transactions as accommodation sales. We have looked into the entries ourselves and we are satisfied that this condition of the rule, namely, that the account should show these transactions as accommodation sales has been complied with. The name of the dealer is, however, not shown as part of the journal entry. But the accounts taken as a whole sufficiently establish that in respect of these transactions, the name of the Bombay dealer Madanlal Shah has been disclosed. In our opinion, all the requisites of Rule 5(1)(c) are fully present and certainly there is no reason why this transaction should not be treated as being accommodation sale. There is, however, one circumstance, which appears to be against the assessees contention and it is this. They have issued 'C' Form certificates, these transactions being inter-State transactions, and the recitals in the certificates show that they purchased the goods from the Bombay dealer for the purpose of resale. A strict scrutiny of the recitals in the 'C' Form certificate would lead to the inference that these purchases were made by the assessees only for themselves and not for the purpose of accommodating any other customer. But, it is also open to the construction that though the sales were accommodation sales, in fact and in truth, the assessees were the purchasers, because they had necessarily to purchase before they can accommodate their customers. This is a dubious circumstance and we cannot say that that by itself would be sufficient to disregard the other evidence on record which indubitably points out that this transaction must have been in the nature of accommodation sale. The finding of the Tribunal, which is certainly one of fact, is based upon the materials on record and is fully supported by them.
8. The petition fails and is dismissed, but there will be no order as to costs.