Dipak Kumar Sen, J.:— M/s. Ascu Hickson Limited have initiated the present reference under section 21(1) of the Bengal Finance (Sales Tax) Act, 1941. The West Bengal Commercial Taxes Tribunal has drawn up a statement of case and has referred the following questions for the opinion of this Court as questions of law arising out of its order:

“(i) Whether, on a proper interpretation of the agreement dated 1st January, 1964, executed between the applicant and M/s. V.D Swami & Co. Pvt. Ltd., the relationship between the applicant and M/s. V.D Swami & Co. Pvt. Ltd. was that of a vendor and vendee.

(ii) Whether the despatches outside West Bengal made by the applicant of goods valued at Rs. 4,15,964.34 against orders secured by M/s. V.D Swami & Co. Pvt. Ltd. were sales within the meaning of the Sale of Goods Act and the Central Sales Tax Act.”

2. The facts found and/or admitted in the proceedings are, inter alia, that under an agreement dated 1st January, 1964, entered into by and between M/s. Ascu Wood Products, the predecessor-in-interest of the applicant, and one M/s. V.D Swami & Co. Pvt. Ltd. of Madras, the latter was appointed the sole selling agent of the applicant with effect from 1st September, 1963, for selling of products manufactured and services provided by the Ascu Wood Products on, inter alia, the following terms and conditions:

“3. The agent would sell the products and services of the manufacturers and would within seven days of the receipt of such orders forward them together with an advance amounting to 25 per cent of the quoted price to the manufacturers for the fulfilment of the said orders, but where agreed or staggered deliveries might be spread out over a period exceeding 4 months any advance under the clause would be liable to be paid only on the value of agreed or staggered deliveries of products or services for the first 4 months of such period.

4. The agent would sell the products and services on such terms and conditions of payment as they might deem fit, but on their own responsibility and or their own risk.

5. The agent would sell the products and services of the manufacturers at the prices quoted by the manufacturers but with the right to offer any discount in terms of clause 15 (infra).

6. When any order be received by the manufacturers direct from any person they would pass on the order to the agent and if the agent would approve the same and agree to the acceptance of the order then the agent would be bound to guarantee the due collection of the amounts of the invoices for such supplies in accordance with clauses 7 to 9 both inclusive (infra), and the agent would be entitled to commission at the rate provided in clause 14 below on all products so sold and services so rendered.

6(a). The agent would be authorised to issue invoices for sale of all the products of the manufacturers and also of the services rendered by the manufacturers, on behalf of the manufacturers.

7. The agent would on the eighth day after receipt of the respective ehallan or railway receipt or other document evidencing despatch or delivery of the goods in accordance with the despatch or delivery instructions, if any, specified by the agent at the time of placement of the order pay provisionally to the manufacturers the full sale value less advance paid under clause 3 above of the goods despatched subject to final adjustments in due course and in the case of services or sale of processed timber would make similar provisional payment subject to final adjustments

9. All claims for price due or loss for damage claimable against any defaulting purchaser would be enforced and realised by the agent at their own expense. The manufacturers shall, if required, execute such powers of attorney or other authority to enable the agent to institute legal proceedings and to file any suits for realising any sums due in respect of such sales and services or for breach of contract or otherwise and all the expenses thereof would be borne and paid by the agent.

14. In consideration of the services to be rendered as aforesaid by the agent and inclusive of all expenses and costs that the agent might incur in connection therewith the manufacturers would subject to and in accordance with the terms of these presents pay to the agent commission at the following rates:……

15. The agent would be at liberty to give any dealer or class of dealers any discount or other reduction in price from and out of the commission payable to them.”

3. The applicant was assessed to sales tax for the four quarters ending on 31st March, 1964. At the assessment the applicant claimed exemption in respect of an amount of Rs. 1,04,283.67 on account of sales made through the said M/s. V.D Swami & Co. Pvt. Ltd. The Commercial Tax Officers did not accept the contention of the assessee and held that the transactions between the applicant and M/s. V.D Swami & Co. Pvt. Ltd. were sales inasmuch as the latter were realising sales tax and had collected the declaration forms from the final purchasers. Accordingly, the said, sum of Rs. 1,04,283.67 was included in the taxable turnover and assessed to sales tax.

4. Being aggrieved, the applicant preferred an appeal against the assessments to the Assistant Commissioner of Commercial Taxes. It was contended in the appeal, inter alia, that the applicant did not effect any sales itself and all sales were made by the agent, M/s. V.D Swami & Co. Pvt. Ltd., in terms of the said agreement dated 1st January, 1964. The goods in the hands of the agent belonged to the applicant. It was contended further that sales tax was being paid by the agent in respect of the goods and no further tax was exigible in the hands of the applicant. The Assistant Commissioner held that two sales were involved in the transactions, namely, one by the applicant to the agent and the second by the agent to the final purchaser. The Assistant Commissioner took note of the fact that the agent were selling goods in their own name as appeared from some invoices produced. Accordingly, the assessment of the Commercial Tax Officer was confirmed. From this order the assessee went up in revision before the West Bengal Commercial Taxes Tribunal. The Tribunal was of the view that the controversy had to be resolved solely on the construction and interpretation of the agreement dated 1st January, 1964. After consideration of the said agreement and a decision of the Supreme Court in Rohtas Industries Ltd. v. State of Bihar [1961] 12 S.T.C 615 S.C., the Tribunal found that the terms of the agreement in the present case were similar to the terms of the agreement before the Supreme Court and following the decision of the Supreme Court held that the relationship between the applicant and its sole selling agents was in fact a relationship of vendor and purchaser. Accordingly, the order of the Assistant Commissioner was upheld by the Tribunal.

5. At the hearing, Mr. Anindya Mitra, the learned counsel for the applicant, submitted that the controversy in this reference was covered by another decision of the Supreme Court in Hafiz Din Mohammad Haji Abdulla v. State Of Maharashtra. [1962] 13 S.T.C 292 S.C.. It is convenient to refer to the said decision at this stage. The facts before the Supreme Court were that the appellants were bidi merchants at Nagpur. During the relevant period the appellants despatched bidis to merchants at diverse parts of India and each merchant executed an agreement in the form of a letter addressed to the assessee containing the following terms:

“(1) You will have to meet my demand of bidis in my area.

(2) You will have to give delivery of bidis at Manmad station.

(3) I will sell your bidis at the rate fixed by you adding to it the expenses incurred.

(4) Money towards goods will be remitted to you as sales are effected or sometimes remittances will be made in advance.

(5) After the goods are delivered, I shall be responsible for the damages or risk at my place or in transit.

(6) I shall take from you, in lieu of my labour, Rs. 3-3-0 as commission per pitara.

(7) You will have the right to increase or reduce the rate of bidis.

(8) On the goods remaining in stock when the rate is increased or decreased, necessary adjustment of accounts will be made.

(9) If I were to be acting in contravention of these conditions, you wilfr have the right to cancel my agency. You will have right to make arrangements for the sale of your bidis as you think best.”

6. The question arose whether such agreements created a relationship of principal and agent or vendor and purchaser between the appellants and the merchants concerned. The Supreme Court held that though it was recorded in the agreement that the merchants would be agents the designation was of little consequence inasmuch as the real relationship between the parties had to be ascertained. Construing clauses 3, 6, 7 and 9 of the agreements in question, the Supreme Court held that in the hands of the merchants, the bidis were to remain the property of the assessee as in the said clauses the goods were referred to as “your bidis”. Clause 4 of the agreement also emphasised that the property in the goods despatched would remain with the appellant as by that clause the merchants undertook to remit money towards goods after the sales were effected.

7. On construing the aforesaid clauses, the Supreme Court held that the terms in the agreement that goods were to be sold at prices fixed by the supplier, that prices of the goods were liable to be altered at the instance of the supplier and that the person to whom the goods would be supplied would receive a fixed remuneration for exertion and would be liable to remit the price soon after the sale was effected clearly indicated that the relationship created was that of principal and agent.

8. The Supreme Court also held that though, under clause 5 of the agreement, the risk on the goods was on the merchants during transit or when the goods were in the shops of the merchants, the title in the goods was not affected thereby. The appeal was allowed and it was held that the transactions had by and between the principal and the agent did not amount to sales…

9. Mr. S.N Saraf, the learned counsel for the sales tax authorities, contended on the other hand that the facts and circumstances of the present case were more akin to the facts and circumstances in the case of Rohtas Industries Ltd., which was followed by the Tribunal. In that case, the Rohtas Industries Ltd. was engaged in the manufacture of cement, amongst other commodities, and was registered as a dealer under the Bihar Sales Tax Act, 1944. In its assessment to sales tax, the company denied its liability to pay tax in respect of cement supplied, delivered or consigned pursuant to orders issued by a company called Cement Marketing Company Ltd. during the relevant period on the ground that there was no sale by the company to the said Cement Marketing Company Ltd. The Supreme Court construed the agreement between the appellant and the said Cement Marketing Company Ltd. in order to resolve the controversy whether delivery, despatch or consignment of cement by the appellant to the said Cement Marketing Company Ltd. were sales under the Bihar Sales Tax Act, 1944. The following terms in the agreement were noted by the Supreme Court:

(a) Cemeht Marketing Company Ltd. was appointed as sole and exclusive sales manager for sale of cement.

(b) The company contracted not to sell directly or indirectly any cement to any person save and except through the said Cement Marketing Company Ltd.

(c) The company agreed to wind up their entire selling organisation.

(d) The Cement Marketing Company Ltd. agreed to pay to the company Rs. 24 per ton of ordinary cement and above Rs. 24 per ton of special cement supplied, but such fixed rate was liable to be revised from time to time.

(e) Provision was made for payment of interest by the company if they desired immediate payment in cash for any supply for which credit had been given by the Cement Marketing Company Ltd.

(f) The Cement Marketing Company Ltd. was authorised to sell cement on such price or prices or at such terms as it might in its sole discretion think fit and the contracts were to be made by it in its own name.

(g) The company undertook to deliver, despatch and consign cement in accordance with the orders and instructions of the Cement Marketing Company Ltd. from the company's factories and works specified by the Cement Marketing Company Ltd.

10. On a construction of these terms, the Supreme Court found that the Cement Marketing Company Ltd. was constituted a monopoly purchaser of the cement manufactured by the appellant during the subsistence of the agreement and that the relationship between the appellant and the Cement Marketing Company Ltd. was that of a seller and buyer. The appellant had no control over the terms on which the cement was to be sold or otherwise disposed of by the Cement Marketing Company Ltd., which would pay a fixed price to the appellaat who would deliver in accordance with the orders and instructions of the Cement Marketing Company Ltd. The contracts were to be entered into only by the Cement Marketing Company Ltd. in its own name and for itself. The Supreme Court, accordingly, held that the sales of cement by the appellant to the Cement Marketing Company Ltd. were exigible to tax under the Bihar Sales Tax Act, 1944.

11. Mr. Saraf also cited another decision of the Supreme Court in Bagal Kot Cement Co. v. State Of Mysore. The facts in this case were, inter alia, that the Bagal Kot Cement Co. Ltd., the appellant, was a manufacturer of cement. During the relevant period, it had filed a return showing a taxable turnover, had collected amounts on account of sales tax and had paid such sales tax-without raising any disputes. Thereafter, the appellant filed an appeal before the Deputy Commissioner of Commercial Taxes on the ground that in the transactions in question it was not a dealer and was not liable to pay any sales tax. In this appeal and in all subsequent appeals and revision up to the Supreme Court the appellant was unsuccessful.

12. It was contended before the Supreme Court that the appellant had entered into an agreement with the State Trading Corporation of India Ltd. and had been acting as the agent of the latter and, therefore, could not be assessed as a dealer. The Supreme Court considered and construed the agreement and noted the following terms and conditions thereof:

(a) The appellant was appointed the agents to take on its behalf delivery of the entire cement produced at the works of Bagal Kot Cement Co. Ltd. and to arrange for the distribution of such cement in accordance with the directions of the Corporation.

(b) The appellant would enter into contracts for sale of cement on betfalf of the Corporation and would arrange for the despatch of cement to the consignees.

(c) The appellant would submit bills, receive payments and would do all acts and things necessary in that connection.

(d) The appellant would sell cement at prices as may be indicated by the Corporation from time to time.

(e) The appellant would collect State or inter-State sales tax and other local and State Government taxes as may be leviable and pay the same in accordance with law.

(f) The appellant would discharge all liabilities devolving upon them as dealers under the various Sales Tax Acts.

(g) The appellant would credit to the Corporation at the end of every month the sale proceeds of the cement sold at the price referred, reduced, inter alia, by the appellant's remuneration.

13. On a construction of the said agreement and its terms and after considering the course of conduct of the appellant's business, the Supreme Court held that the appellant was not a mere commission agent or a broker acting on behalf of the Corporation. There was no privity of contract between the ultimate customers and the Corporation and no property in the goods sold passed to the Corporation. After taking symbolical delivery of the cement produced at its works the appellant was in the custody of the cement. It was entering into contracts for sale of such cement and selling the same. The property in the goods was being passed on to the buyers by the appellant. The Supreme Court held that the appellant was carrying on the business of selling and was effecting sales of cement to the customers and thus came within the term “dealer” as defined in the relevant Sales Tax Act. The Supreme Court also held that the Corporation was not the dealer.

14. Relying on the aforesaid judgments, Mr. Saraf submitted that, in the instant case, M/s. V.D Swami & Co. Pvt. Ltd. should be held to be selling goods to the ultimate purchasers on its own account. This was also established by the fact that invoices were being issued by M/s. V.D Swami & Co. Pvt. Ltd. in their own name. It followed that there must be a prior sale by the applicant to M/s. V.D Swami & Co. Pvt. Ltd., which was exigible to sales tax.

15. On a consideration of the agreement in the instant case, we are unable to accept the contentions of Mr. Saraf. The terms and conditions of the agreement before us are more in accordance with the terms and conditions of the agreement, which was considered by the Supreme Court in Hafiz Din Mohammad Haji Abdulla than those in Rohtas Industries Ltd. The agreement in Rohtas Industries Ltd. differs from that in the instant case on, inter alia, the following aspects. The Cement Marketing Company Ltd. in Rohtas Industries Ltd. was paying a fixed price to the manufacturer but so far as the ultimate purchasers were concerned, they were at liberty to charge any price they liked. The remuneration of the Cement Marketing Co. Ltd. was not fixed. There was a specific clause preventing the manufacturing company from selling directly or indirectly any cement to any person except through the Cement Marketing Company Ltd., which was not appointed as a selling agent. Its appointment was designated “Sole and exclusive sales manager”. The contracts between the Cement Marketing Company Ltd. and the ultimate purchasers were made in the name of the former and for itself. The manufacturing company had no control over the terms thereof. The manufacturing company did not receive the difference between the price at which an individual consignment would ultimately be sold by the Cement Marketing Company Ltd. and the basic price fixed in the agreement. If there was an over-all profit, a portion thereof would be shared by the manufacturing company in proportion to the supply.

16. In the agreement, in the instant case, M/s. V.D Swami & Co. Pvt. Ltd., on the other hand, is described as the sole selling agent not only for the goods but also for services to be rendered. Such services could obviously be rendered by the principal. The prices at which the ultimate purchasers would purchase the goods would be controlled by the manufacturer. The manufacturer had similar control over publicity. The agreement authorised the agent to issue invoices on behalf of the manufacturer. Railway receipts and other documents issued to the manufacturer would be made over to the agent for the purpose of collection of the proceeds of sale. The agent would be entitled to a fixed stipulated commission in consideration of the guarantee, the agent would give for collection of sale prices. If the ultimate purchaser failed to pay the price, for the goods supplied, the manufacturer agreed to authorise the agent to sue in the name of the manufacturer to realise the same.

17. The above clauses indicate that the agreement in the instant case is an agreement as between a principal and an agent and not an agreement between a vendor and a purchaser.

18. The decision in the case of Bagal Kot Cement Co. is of little assistance to the sales tax authorities in the instant case. There the agent itself was the manufacturer. After manufacturing the agent took symbolical delivery of the goods manufactured on behalf of the Corporation and then without any reference to the Corporation sold the goods to the permit-holders at a fixed price. The agent agreed to collect and pay all sales tax and agreed to remain liable for such tax. In the transactions in that case, it was the agent who was held to be a dealer and not the Corporation.

19. In the case before us, it is also the admitted position that the agent collected and paid sales tax. In the transactions, in the instant case, it is the agent who has been treated as a dealer and it does not appear to us that if the manufacturer can also be treated as a dealer and held liable to pay sales tax for the same transactions.

20. The agent, in the present case, might, on reasons, have issued invoices in its own name but it is of little relevance. The agreement between the manufacturer and the agent and the relationship created thereby would determine the relationship between the parties and the steps the parties take in implementing or performing the agreement cannot determine the matter. In any event, by reason of Jhe frame of the question as referred to us we are only to interpret the agreement and determine the relationship of the parties therefrom.

21. For the above reasons, we hold that the relationship between the applicant and the said M/s. V.D Swami & Co. Pvt. Ltd. is that of a principal and an agent and answer question No. (1) in the negative and in favour of the assessee.

22. We decline to answer question No. (2) for several reasons. Firstly, it appears to us the question as framed is unintelligible. Secondly, it appears to us that the said question as framed was neither mooted nor argued before the Tribunal. Thirdly, it seems that the appellant did not ask the Tribunal to refer this question but the Tribunal referred the same suo motu. The reference is disposed of accordingly. The applicant will be entitled to the costs of this reference.

C.K Banerji, J.:— I agree.

23. Reference answered accordingly.