P.G. Agarwal, J.
1. Heard Mr. G.K. Joshi, learned Senior Advocate assisted by Mr. R.K. Joshi, learned counsel for the petitioner, and Mr. H.K. Mahanta, learned Government Advocate for the respondent-State.
2. The case of the writ petitioner is that they are the indentors and importers of newsprint reels rendering their services to the leading newspapers of the country by importing newsprint reels from foreign countries on their behalf. Under the relevant rules, the newsprint reels are to be delivered to concerned newspapers and the indentors being importers of newsprint reels, registration is a must for import of newsprint reels. The petitioner being an agent makes the import on behalf of the registered newspapers and the imported newsprint reels are thereafter delivered to the newspapers on payment. Accordingly the petitioner imported the newsprint reels for and on behalf of the Assam Tribune, Guwahati, Assam, and the newsprints were brought from Russia and 228 newsprint reels were stored at Central Warehousing Corporation, Maligaon, Guwahati, for delivery to the Assam Tribune. Out of the 228 newsprint reels, 134 numbers were delivered to Assam Tribune and balance 94 news-print reels were lying in the Central Warehousing Corporation. The said 94 numbers of newsprint reels were seized on May 27, 1995 by the respondent No. 3, Inspector of Taxes, Sales Tax Department, Guwahati, and show cause notice was issued to the petitioner to this effect. Thereafter, the petitioner filed a reply stating, inter alia, that they were a mere agent of the Assam Tribune and the newsprint reels were imported and stored in the Central Warehousing Corporation for delivery to Assam Tribune on payment. As the payment for the balance 94 reels were not made, the reels could not be delivered and these were kept in the Central Warehousing Corporation. The respondent-authorities did not accept the statements of the petitioner and the order dated October 23, 1997 was passed by the respondent No. 4 demanding Rs. 85,217 on account of tax and interest and also imposed penalty of Rs. 1,89,888 under Section 44(5)(b) of the Assam General Sales Tax Act. The petitioner thereafter, approached this Court and the writ petition was disposed of with the direction to approach the appellate authority. Accordingly the petitioner approached the appellate authority, but the revision petition was dismissed confirming the order of the assessment officer. Hence the present writ petition. It may be mentioned here that the respondent-authorities issued a public notice for auction sale of the said newsprint reels in a public auction on the ground of failure of the petitioner to deposit the amount of penalty. Subsequently on submission of required bank guarantee, the seized reels were released to the petitioner.
3. The case of the respondent-State on the other hand is that the petitioner imported 228 reels of newsprint from outside the State of Assam and had effected delivery of 134 numbers of reels during the period from May 9, 1997 to May 27, 1997 by way of sale. The petitioner is not a registered dealer under the Assam General Sales Tax Act, 1993 (for short 'the Act') and he did not apply for registration as required and as such the petitioner was liable to pay tax on the sale of 134 reels of newsprint and hence the seizure.
4. To the claims of the petitioner that the goods were imported for and on behalf of the Assam Tribune and 134 reels were sold to Assam Tribune on payment and the 94 reels of newsprint were kept in the Central Warehousing Corporation on the ground that the balance amount was not paid by the Assam Tribune, it is submitted that the goods were not stored showing the name of Assam Tribune but it was stored showing the name of the petitioner and as such the petitioner was the owner of the goods and the Assam Tribune was in no way involved in the matter.
5. Mr. G.K. Joshi, learned Senior Counsel for the petitioner, has submitted that the company was acting as an agent of the Assam Tribune (Pvt.) Ltd. as the newsprint reels were allowed to be imported by the newspapers only and in this case the Assam Tribune having the RNI registration and excise import licence accepted the offer of the petitioner's company to act as their agent for importing their goods and it was also categorically provided that the petitioner will only hold a lien over the goods and the goods will be released to them on receipt of payment only. Accordingly, the newsprint reels were imported from Russia and these were brought and were kept in the Central Warehousing Corporation, where from these were released from time to time to the concerned newspaper on receipt of payment. Mr. Joshi has further submitted that this being a transaction for import of goods and delivery within the area of India and within the meaning of Section 7(4)(iii) of the Act, for the said transaction, the company is not liable for payment of tax under the provisions of the Act.
6. The petitioner in this case produced a copy of their offer, dated March 21, 1997 that contains the stipulation that imported goods will be delivered against payment only. In terms of the conditions offered, the Assam Tribune, Guwahati, accepted the same by their letter dated March 25, 1997 which has been produced by the petitioner. Petitioner also produced the copies of invoices, which show the name of Assam Tribune. Even the bill was in the name of Assam Tribune along with the importers code and excise import licence numbers. The petitioner had given the above details in their reply to the show cause notice. The then Superintendent of Taxes rejected the claim of the petitioner solely on the ground that the goods were not stored in the name of Assam Tribune. The goods were not delivered to Assam Tribune but the petitioner stored the same in the Warehousing Corporation.
7. Admittedly, as no payments were released the goods were kept in the warehouse in the name of the petitioner only. Section 221 of the Indian Contract Act, reads as follows :
'221. Agent's lien on principal's property.--In the absence of any contract to the contrary, an agent is entitled to retain goods, papers and other property, whether movable or immovable, of the principal received by him, until the amount due to himself for commission, disbursements and services in respect of the same has been paid or accounted for to him.'
8. The question of agent importing goods was something like that of a transport agent who has got right to retain the goods till the payment/freight charges are paid to him for receipt of goods.
9. In the instant case the broad facts are not in dispute as is evident from the observations of the revisional authority in its order, dated October 3, 1997. The relevant portion of the observation, reads as follows :
'On examination of assessment orders and grounds of revision I come to know that the petitioner used to indent newsprint from some foreign countries on the strength of RNI Registration No. 1127/ 57 and excise import code No. 1488001227 dated September 5, 1988 of M/s, Assam Tribune (Pvt.) Ltd., since as per certain stipulation foreign newsprint can only be imported in the name of newspapers only and to the extent of fixed quota. Payment of price and all expenses were made by the petitioner who stored such goods in warehouses belonging to the Central Warehousing Corporation, Maligaon, Guwahati, and paid storage charges. Upto this point of operation M/s. Assam Tribune (Pvt.) Ltd., had nothing to do with the import and didn't come into picture at all. Only when they required newsprint from time to time they took it from warehouse after paying the price of it. Invoices from foreign countries were however issued in the name of M/s. Assam Tribune (Pvt.) Ltd. One thing was found pertinent to mention here. There was no agency to supervise the entire operation of the petitioner, certain aspects such as whether the entire import was brought into Assam for use for Assam Tribune or some stocks were diverted outside Assam, whether Assam Tribune purchased and consumed entire stock brought into Assam or certain left-over were sold to other parties were doubtful so from discussion above, it is seen that though initially goods were imported in the name of M/s. Assam Tribune (Pvt.) Ltd., yet the ownership and title of goods were held for all practical purposes by the petitioner. This is amply corroborated by the facts that goods were never booked in the warehouse in the name of Assam Tribune and that the Assam Tribune had right to lift only that quantity of newsprint from the store of the petitioner for which payment was already made and as per statement of Superintendent of Taxes one Shri S.P. Agarwalla was authorised by the petitioner to issue delivery orders of newsprint and this wouldn't have been possible unless petitioner had ownership of goods, i.e., newsprint.'
10. From the above it is seen that the respondent-authorities had the knowledge that the goods were imported in the name of Assam Tribune. However, they had some doubts whether any diversion has taken place. Respondents were also at liberty to verify the same but without coming to a definite conclusion that any diversion has taken place, the petitioner could not have been made to pay tax and penalty.
11. The law on the point stands well-settled by the decision of the apex. Court in the case of Deputy Commissioner of Agricultural Income-tax and Sales Tax, Ernakulam v. Indian Explosives Ltd. reported in [1985] 60 STC 310. The facts in that case are more or less identical and the apex Court observed as follows :
'Having regard to the terms and conditions on which the respondent-assessee imported the goods and the manner in which the transactions were put through, it cannot be disputed that there was an integral connection between the sale to the local purchaser and the actual import of the goods from the foreign supplier. In other words it is clear that the movement of the goods from the foreign country (here the United States) to India was in pursuance of the conditions of the pre-existing contract of sale between the respondent-assessee and the local purchaser. If that be so the view of the Tribunal and the High Court that the sales in question were in the course of import will have to be upheld.'
12. In another case of Picker X-Ray (India) Limited v. State of Tamil Nadu [1991] 83 STC 477, the Madras High Court relying on the ratio laid down in Deputy Commissioner of Agricultural Income-tax and Sales Tax [1985] 60 STC 310 (SC), held that title remains with the agent until the payment of purchased goods are made and the importer could not have imported the goods but for the actual user's export licence and authority. The petitioner could not have imported the goods without the authority of the Assam Tribune and their excise import licence and as such the subsequent sales to Assam Tribune were in the course of import and as such the petitioner was entitled to exemption under Section 5(2) of the Central Sales Tax Act.
13. In view of the facts stated above, it is held that the goods were imported and stored by the petitioner for and on behalf of the Assam Tribune and the Assam Tribune also informed the respondents claiming the goods seized and the State authority was not justified to auction sale on the ground that the goods were not stored in the name of Assam Tribune. Petitioner has also raised another plea that the Assam Tribune (Pvt.) Ltd., is the publisher of the newspaper having a circulation of more than 15,000 copies at the relevant time and as such it comes under the definition of 'medium newspaper' which can import newsprint reels and for that purpose a copy of the certificate granted by the concerned authority was also furnished. It is therefore, submitted that in view of the provisions of Sub-clause (3) of rule 13 read with Section 8(3)(v) of the Act, such sale was exempted from tax.
14. In view of the findings that the petitioner served as an importing agent only and the goods were imported into Assam and was stored for on behalf of the Assam Tribune and as such the petitioner is not liable to pay tax and the subsequent order imposing penalty is quashed.
15. In view of the above, the impugned order as well as the order of the revisional authority is quashed. The goods have already been released in view of the bank guarantee submitted by the pet-tioner. The bank guarantee submitted by the petitioner stands released.