1951 (11) TMI 12 - HC - VAT and Sales Tax

Summary

Issues:
Determining the location of sales for tax assessment purposes in a case involving tea merchants supplying goods from Central India to customers in the period of June 1947 to September 1947.

Detailed Analysis:
The judgment involves a dispute concerning the sales tax liability of tea merchants for supplies made to customers in Central India during a specific period. The technique of supply employed by the merchants involved orders being placed with their Nagpur office, which then directed the delivery of goods from godowns in Central India, stocked directly from the Calcutta factory. The Assistant Commissioner and the Commissioner held that the sales took place in Nagpur, based on the location of order receipt, document delivery, and payment reception. This view was supported by the Sale of Goods Act, specifically Section 19(1) and Section 2(4), defining the transfer of property in goods.

The critical question addressed in the judgment is whether the sales contract can be considered for specific or ascertained goods throughout the supply process. Initially, the order is for specified tea brands, not specific goods. However, as the goods are appropriated to the contract in Central India and the railway receipt is endorsed to the customer in Nagpur after payment, the property in the goods is transferred. The judgment emphasizes that the mere act of property transfer in Nagpur does not constitute the sales location, especially when the goods are physically in Central India during the transfer.

The judgment distinguishes cases where payment is made before receipt of the railway receipt, indicating property transfer outside the province, and cases where the final act of transfer occurs outside the province when the customer receives the receipt after payment. It concludes that the sales cannot be deemed to have occurred in the province due to the absence of goods in the province at any point. The judgment aligns with the applicants' argument that the sales are not taxable under the Sales Tax Act, Explanation II to Section 2(g). Consequently, the order of the Commissioner is set aside, and the application for revision is allowed.

In summary, the judgment clarifies the location of sales for tax assessment purposes in a complex supply chain scenario, emphasizing the physical presence of goods and the timing of property transfer to determine the taxable jurisdiction.