1954 (6) TMI 12 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the agreements constituted contracts of sale for sawar wood.
2. Whether the contracts related to specific or unascertained/future goods.
3. When and where the property in the goods passed to the buyer.
4. Applicability of the definition of 'goods' in the context of the Sales Tax Act.

Detailed Analysis:

Issue 1: Whether the agreements constituted contracts of sale for sawar wood.
The court examined two agreements dated 18th October 1940 and 2nd March 1945 to determine if they constituted contracts of sale for sawar wood supplied by the assessee to Wimco. The court concluded that the agreements were express agreements to sell sawar logs to Wimco. However, it was determined that there was neither an express nor an implied contract each time goods were railed.

Issue 2: Whether the contracts related to specific or unascertained/future goods.
The court analyzed the nature of the goods under the contract. It was determined that the contract was not for the delivery of specific goods but for unascertained or future goods by description. The logs were not identified at the time of the contract and could be acquired by the seller at any time before delivery. Therefore, the agreement related to the sale of sawar logs which were unascertained or future goods on the date of the contract.

Issue 3: When and where the property in the goods passed to the buyer.
The court referred to sections 23 and 24 of the Sale of Goods Act to determine when and where the property in the goods passed to the buyer. It was concluded that the property in the goods did not pass to the buyer by delivery to the railway for carriage. Instead, it passed at Ambernath where the goods were appropriated by the buyer to the contract with the assent of the seller. The appropriation under section 23 was not complete until the goods reached Ambernath and were accepted by the buyer.

Issue 4: Applicability of the definition of 'goods' in the context of the Sales Tax Act.
The court considered whether the definition of 'goods' in section 2(7) of the Sale of Goods Act should be applied when interpreting Explanation II to section 2(g) of the Sales Tax Act. It was determined that the definition of 'goods' in the Sales Tax Act should be interpreted according to its definition in section 2(d) of the Act and not according to the definition in section 2(7) of the Sale of Goods Act. The standing sawar trees were not considered goods within the meaning of the Sales Tax Act.

Conclusion:
The court concluded that the sales in question were not sales under the Sales Tax Act and were not liable to tax. The answers to the questions referred for decision were:
1. The agreement in question was an express agreement to sell sawar logs to Wimco.
2. The contract was for unascertained or future goods by description.
3. The property in the goods passed at Ambernath where the goods were appropriated by the buyer to the contract with the assent of the seller.
4. The definition of 'goods' in the Sales Tax Act must be interpreted according to its definition in section 2(d) of the Act, and the standing sawar trees are not goods within the meaning of the Act.

The reference was answered accordingly, and the applicant was awarded costs.