Under Clause 7, the distributor was liable to guarantee the minimum off take of the said product.
The Tribunal allowed the appeal and directed the aforesaid transactions to be excluded from the taxable turnover of the assessee.
It may be numbered at this stage that the Tribunal has found as a fact that in respect of the said transactions from 1st September, 1967 to 20th December, 1968, the invoices were prepared by the said companypany in the names of the companysumers of goods and the goods were companysigned to the destinations through public carriers booked self.
The companytention of the assessee that these transactions did number companystitute sales by the said companypany to the assessee was number accepted and hence it was held by the Assessing Officer that the said turnover was liable to be included in the taxable turnover of the assessee, as escaped turnover.
An alternative mode of the payment is provided to the effect that the assessee as distributor must remit 10 of the full value by Demand Draft and retire the documents of despatch of goods sent to the assessee through bank for companylection from the bank.
Clause 2 of the agreement provides that the distributorship was on an exclusive basis giving the distributor the right of sale of the product within the aforementioned area and that supplies would be made only direct to the distributor, Sub clause a of clause 2 further provides However, when on the advice of the distributor bulk supplies are effected in waggon load or lorry load lots the Company may effect supplies direct to the companysumer, provided that the distributor arranges the payment as per the clause hereinafter mentioned and also takes the responsibility to bear entirely the resultant effects and risks from effecting such direct despatches.
The dispute pertains to the transactions which took place between 1st September, 1967 and 20th December, 1968 since it is an undisputed that the transactions upto the former date are number taxable.
Thereafter, it was alleged by the Assessing Authority that the transactions in the aforesaid period, which had taken place in the manner set out earlier, had been wrongly excluded from the turnover reported by the assessee in the return and hence that turnover has escaped assessment.
It further pointed out that the question whether there has been transfer of property must necessarily depend upon an appreciation of the rights and obligations of the parties under the companytract.
On a revision to the High Court under Section 41 of the said Act, the Division Bench of the High Court took the view that the Tribunal was wrong in companying to the companyclusion that the assessee was acting only as an Agent in respect of the aforesaid transactions between the said companypany and the companysumers and allowed the Revision Application.
In the assessment of the assessee for the period 1967 68 under the Kerala General Sales Tax Act, 1963, the final assessment was initially companypleted on 27th September, 1968 and a turnover of Rs.70,952.61 as reported by the assessee was accepted and tax levied on that basis.
From 20th December, 1968, goods were companysigned to the destination showing the assessee as companysignor.
They pointed out that in the present case even when the goods were despatched by the said companypany to the address of the customers, whose orders were booked by the distributor, namely, the assessee, the documents of title were number delivered to the customers, but handed over to the distributor on receipt of price, or the documents of title were endorsed in favour of the distributor and sent through the banks to be honoured by the distributor by payment.
But we are number companycerned with the period from 20th December, 1968.
Clause 8 of the agreement provides for mode of payment by the assessee distributor to the said companypany, and very briefly stated, it provides that the assessee would arrange for effecting payment either in cash or by Demand draft payable at par, or, alternatively, would open an irrevocable letter of credit in favour of the said companypany negotiable against R R or other documents of despatch of goods.
It is provided that the letter of credit would companyer the value of goods as well as charges of transport for booking the goods to destination station, Sales tax and other expenses including companyt of insurance, if any, effected at the distributors request.
Under the agreement, the assessee firm was appointed as Distributor for the aforesaid product manufactured by the companypany for the area companyered by the Kerala State.
In such cases, where there was some time lag between the despatch of goods and the entrustment of documents of title on receiving payment through the bank, care was taken to stipulate that the risk would be companyered by insurance which would be at the companyt of the distributor.
523 NT of 1975.
From the Judgment and Order dated 31.1.1974 of the High Court of Kerala in Tax Reference Case No.
The assessee firm was appointed as Distributor by the Travancore Cochin Chemicals Ltd. referred to hereinafter as the said companypany to effect the sale of Sodium Hydrosulphite manufactured by the said companypany in the area companyered by the Kerala State under an agreement entered into on 11th February, 1967.
They further pointed out that the delivery may be either to the distributor himself or to his numberinee the numberinee companyld be the person whose orders are booked by the distributor.
Cluase 6 provides that the said companypany would grant the distributor a rebate of 3 on the ex factory selling price, which the companypany was entitled to determine as aforesaid.
Clause 8 further provides if the documents sent by the said companypany are number retired within the stipulated time, interest would be payable by the distributor on the amount due at the rate of 12 per annum.
In view of this it would be desirable to examine that agreement at this stage.
As aforesaid, the agreement is dated 11th February, 1967.
An appeal preferred by the assessee to the Appellant Assistant Commissioner was dismissed.
This rebate was liable to be paid to the distributor only at the end of the month when the statement of the account would be settled.
Commissioner of Agricultural Income tax and Sales Tax, Ernakulam.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
52 of 1971.
The Division Bench further pointed out that in the said agreement, the distributor had number been referred to as Agent but as Distributor and that this was also significant although number companyclusive.
The clause also makes it clear that if the second mode of payment is adopted by the assessee, companysignments would be insured by the said companypany against transit risk and the insurance charges would have to be borne by the assessee.
If the property is transferred, unless there is a specific stipulation to the companytrary, any risk of loss or injury to the goods would, thereafter, be number in the seller but in the buyer.
In a Second Appeal to the Tribunal, the Tribunal took the view, by majority, that the aforesaid transactions had taken place directly between the said companypany and the companysumers and the assessee was merely an agent of the companypany in respect thereof.
It is companymon ground that the relations between the parties were governed throughout by the said agreement and that the parties adhered to the terms of the said agreement.
52 of 1971 filed pursuant to special leave granted by this Court.
Under Clause 4, the price which the distributor would be entitled to charge to the companysumer was fixed by the companypany and it was provided that the distributor will sell the materials to the clients or companysumers at the said price plus certain companyts incurred by the distributor.
Sub clause b of the said clause provides that the companypany reserves the right to effect the sale of Sodium Hydrosulphite to anybody and anywhere in India direct.
The Appellant before us is the M s Alwaye Agencies and the respondent is the Dy.
Vishwanath Iyer and N. Sudakaran for the Respondent.
S. Krishnamurthy Iyer and P.K. Pillai for the Appellant.
The Judgment of the Court was delivered by KANIA, J. This is an appeal against a judgment of a Division Bench of the High Court of Kerala under the provisions of the Kerala General Sales Tax Act, 1963 and Tax Reference Case No.
