1958 (11) TMI 18 - HC - VAT and Sales Tax

Summary

Issues:
- Whether the sale of tea made under the contracts is exempt from sales tax under section 5(v) of the Madras General Sales Tax Act.
- Whether the delivery of the tea was made outside the State of Madras.
- Whether the term "delivery" in section 5(v) includes delivery in law or is restricted to physical delivery.

Analysis:
The judgment concerns the sale of tea by a plaintiff company to buyers in Europe, Ireland, and the United States, with a contract term of F.O.B. Cochin. The key issue is whether the sale of tea under these contracts is exempt from sales tax under section 5(v) of the Madras General Sales Tax Act. The court establishes that the property in the tea passed to the buyer at Madras, as confirmed in previous trials and not disputed by the plaintiff. The plaintiff attempted to argue that the National Bank of India in Madras acted as the seller's agent, not the buyer's, to prove that title passed in a foreign country. However, evidence to reconsider the passing of property at Madras was deemed inadmissible.

The next issue is whether the delivery of the tea was made outside the State of Madras. The court determines that while there was no physical delivery in Madras, the property passed to the buyer at Madras through the delivery of documents to the National Bank, making the bank the buyer's agent. The court concludes that delivery in law of the tea was effectively made in Madras, aligning with the terms of the contract. The judgment delves into the interpretation of the term "delivery" in section 5(v) and whether it encompasses delivery in law or is limited to physical delivery.

The court analyzes the legislative intent behind section 5(v) to promote tea exports and concludes that the word "delivery" in the statute refers to physical delivery of the tea sold, not delivery by documents. It emphasizes that the exemption from taxation applies to sales made for delivery outside the state, focusing on the actual delivery of the goods, not just the transfer of documents. The judgment ultimately finds that all the sales subject to the assessments were exempt from taxation under section 5(v) of the Madras General Sales Tax Act.