M/S Dcm Limited vs Commr.Of Sales Tax,Delhi

4. The Assessing Authority vide Order dated 28.3.1979 did not grant exemption in respect of the above-mentioned sales on the ground that the three above-mentioned purchasing dealers had been assigned specific territories, under the Contract(s), outside Delhi and that they were under contractual obligations with M/s. DCM Ltd. to supply goods to the specified dealers who were also named by M/s. DCM Ltd. on a price fixed and determined by M/s. DCM Ltd. According to the said order, even the quantity of chemicals stood determined by M/s. DCM Ltd. According to the Assessing Authority, under the above circumstances, the said chemicals meant for inter-State sales, however, to avoid liability under the Central Sales Tax Act, 1956, the transaction was shown by the assessee (appellant - M/s. DCM Ltd.) as a "local sale". Accordingly by the said order dated 28.3.79, the said sales were taxed at 10% under the said 1956 Act.

6. Aggrieved by the decision of the Appellate Authority, the assessee filed appeal(s) before the Appellate Tribunal which held that each of the three registered/purchasing dealers were distributors who had executed Agency Agreement(s) with the assessee. According to the Tribunal, some of the clauses of the said Agreement(s) indicated that all supplies were to be made ex-works of the assessee. Under the said Agreement(s), the purchasing dealers were required to take local delivery at the factory gate. Under the said Agreement(s), the purchasing dealer(s) were required to store the said chemicals in their own godowns in Delhi. Under the said Agreement(s), however, the assessee had to fix the price(s) at which the chemicals were to be sold in the different assigned territories outside Delhi. Accordingly it was held by the Appellate Tribunal, under the facts and circumstances of this case, that under the said Covenant of Agency, since the chemicals were to be sold in the assigned territories outside Delhi, the transaction(s) was inter-State sale(s). In this connection, the Appellate Tribunal placed heavy reliance on clauses 3 & 7 of the said Agreement(s). The Appellate Tribunal once again directed the Assessing Authority to give one more opportunity to the assessee to produce the requisite `C' Forms in respect of the sales made to the said three registered/purchasing dealers.

8. In this case great emphasis is placed by the assessee on the fact that all supplies were made ex-works of the of the assessee and that the above three registered purchasing dealers (distributors/stockists) had taken local deliveries at the factory gate and had arranged to store the chemicals in their own godown(s) in Delhi, both in terms of the contract and in fact.

3. Delivery All supplies will be made on ex-works and you shall take local delivery of the goods at factory gate and shall arrange to store the same in your godown in Delhi.

4. Shortage Losses Damages in Transit The basis of billing and payment for each supply shall be the weight shown in the relative challan and we shall not be responsible for any shortage/losses/damages in transit after the goods have been loaded to the satisfaction of the Railway authorities/Carriers.

7. Agency Security Deposit You shall give us a security deposit of Rs.2,000/- to ensure the due fulfillment of the agreement. This deposit shall carry interest at the rate prevailing from time to time, which will be 1% less than the Bank rate. This deposit shall be liable to forfeit in part or in full at our discretion in the event of breach of the terms of agreement."

14. The short point which we have to decide in this batch of civil appeals is:

18. For the aforestated reasons, we find no infirmity in the impugned judgment of the High Court and accordingly the civil appeals filed by the assessee are dismissed with no order as to costs.

February 27, 2009.