9911796707
TMI Blog1953 (5) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000 per year to the Bhagalpur Municipality since 1943-44 besides medicines worth many thousand rupees to the Bhagalpur District Board. The assessee (dealer) tried to deny liability for registration and payment of tax on the ground that the goods in question were supplied under the orders of the Bhagalpur Municipality sent by post to the company in Calcutta and payment was made by cheque in Calcutta. The dealer's letter to the Sales Tax Officer stated that sale of goods is effected on the transfer of property therein and in the sale of alum to the Bhagalpur Municipality the transfer of property in goods was effected where the goods were separated and appropriated against the order of the Bhagalpur Munici- pality on the company's factory at Panihati, 24 Parganas, Bengal. Hence sale cannot be said to have taken place in Bihar and the assessee cannot be said to be a dealer as defined in the "Act". The Sales Tax Officer after personal enquiries found that the goods are always consigned by the company in the name of the Chairman or Vice-Chairman or some such officer of the Municipality or District Board at Bhagalpur or any other station within Bhagalpur District and payments have always ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are made to the company through some agency in Bihar. Even admitting that the company has no office in Bihar there is no doubt that there is a system for the company of taking delivery of its goods des- patched from Bengal to Bihar. Had it not been so, the railway consign- ments could not have been to 'self'. The argument of the learned lawyer for the company that the goods are consigned to 'self' only as security against the price of goods sold, and that this fact does not indicate that the ownership of the goods does not pass on to the purchaser in Bihar soon after the despatch is made from Calcutta, is an argument in self contradiction. The consignments are to "self" to secure payments, which amounts to saying that the realisation of prices are obtained before the goods are transferred. The transfer being either by the passing of the goods to the ownership of a purchaser or the endorsement of the R.R. to the purchasers on receipt of the value. It was also found that in many cases of purchases by different dealers in Bihar the railway receipts were sent to Lalji Sah and Sons of Bhagalpur who realized the price from parties concerned and then handed over the railway receipts. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bihar and the company was a dealer as defined in the Bihar Sales Tax Act. He therefore by his order dated 20th October, 1949 (Exhibit E) dismissed the petitions. The assessee on 23rd November, 1949, filed eight petitions in 2nd revision before the Board (one petition is enclosed Exhibit F) (all petitions being on the same points). The Board heard the parties on 25th April, 1950, and held that the reasons for which the Courts below have held that the sales took place in Bihar seem to be valid. Board's order dated 1st May, 1950, rejecting the petitions in enclosed, Exhibit C. Before the Board, the same points were taken as before the Commis- sioner and the Assistant Commissioner. The learned Advocate for the assessee wanted to draw an interpretation on the definition of "dealer" that it meant supplying in Bihar goods that were in Bihar. On this interpretation, he argued that the B.C. P.W. Ltd. would not be a dealer as they were not supplying goods that were in Bihar. Stress is also placed on the second proviso to Section 2(g), where it says that if a contract of sale is made anywhere for goods which are actually in Bihar at the time of contract, then the sale of goods will be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quarters commencing from 1st October, 1944, the Sales Tax Officer, Bhagalpur Circle, made an assess- ment of sales tax amounting to Rs. 250 plus a penalty of Rs. 375 for each of the eight quarters. The assessee contended that the Sales Tax Officer had no jurisdiction to tax on the ground that the sale of the chemicals took place in Calcutta and not in Bihar, and that the assessee was not a "dealer" as contemplated by the Act. In a letter dated the 9th December, 1946, the assessee stated: "The goods in ques- tion were supplied under orders of the Bhagalpur Municipality sent by post to his company in Calcutta and payment was made by cheque in Calcutta. Sale of goods is effected on the transfer of property therein. In our sale of alum to the Municipality the transfer of property in the goods (viz., alum) was effected when the goods (viz., alum) were separat- ed and appropriated against the order of the Bhagalpur Municipality at this company's factory at Panihati (District 24 Parganas Bengal). Hence the sale did not take place in Bihar. Further, company cannot be said to be dealer as defined in the Act." The Sales Tax Officer thereafter made enquiries at the Bhagalpur Municipal and D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id not pass in Cal- cutta but the title passed in Bhagalpur when the railway receipts were handed to the various dealers after payments of cash. Mr. Dutt, there- fore, did not seriously dispute that the assessee was a dealer within the meaning of Section 2(c) of the Sales Tax Act and that the first question should be answered in the affirmative. The second question is more difficult to answer. On behalf of the assessee, Mr. Dutt presented the argument that the sales of chemicals to Bhagalpur Municipality and Bhagalpur District Board were effected not in Bhagalpur but in Calcutta, that the transaction did not fall within the ambit of Section 2(g) of the Sales Tax Act and that the Sales Tax Officer had no authority to impose a tax on these sales. The learned counsel based his argument upon the findings of the Sales Tax Officer reproduced by the Board of Revenue in the statement of the case. "The Sales Tax Officer after personal enquiries found that the goods are always consigned by the company in the name of the Chairman or Vice-Chairman or some such officer of the Municipality or District Board at Bhagalpur or any other station within Bhagalpur District and payments have always be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... position is correctly stated by Lord Justice Bowen in Carlill v. Carbolic Smoke Ball Co.(1): "One cannot doubt that, as an ordinary rule of law an acceptance of an offer made ought to be notified to the person who makes the offer, in order that the two minds may come together.........But there is this clear gloss to be made upon that doctrine, that, as notification of acceptance is required for the benefit of the person who makes the offer, the person who makes the offer may dispense with notice to himself if he thinks it desirable to do so, and I suppose that there can be no doubt that where a person, in an offer made by him to another person, expressly or impliedly intimates a particular mode of acceptance as sufficient to make the bargain binding, it is only necessary for the other person to whom such offer is made to follow the indicated method of (1) (1893) 1 Q.B. 256 at page 269. acceptance; and if the person making the offer expressly or impliedly intimates in his offer that it would be sufficient to act on the proposal without communicating acceptance of it to himself, performance of the condition is a sufficient acceptance without notification". In Brodgen v. Metropolitan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the present case the assessee did not reserve the right of disposal and since there is an unconditional appropriation of the goods to the contract, the title to the goods passed as soon as the appropriation took (1) (1877) 2 App. Cas. 666 at page 691. place in West Bengal. It is manifest that the delivery also in the present case took place at Panihati as soon as the assessee made over the goods to the carrier. Section 39(1) of the Sale of Goods Act states that where, in pursuance of a contract of sale, the seller is authorised or required to send the goods to the buyer, delivery of the goods to a carrier, whether named by the buyer or not, for the purpose of transmission to the buyer, or delivery of the goods to a wharfinger for safe custody, is prima facie deemed to be a delivery of the goods to the buyer. In the present case, the railway receipts were made out in the name of the District Board or Municipality as consignee and the seller had not reserved any right of disposal since the railway receipts were not sent by V.P.P. or against cash payments. It is clear that as regards the transactions with the Bhagal- pur District Board or Bhagalpur Municipality delivery of the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent. The question in that case was whether the second proviso to Section 2(g) as amended by Bihar Act VII of 1951 was constitutionally valid. The amendment was to the following effect: "The sale of any goods actually delivered in Bihar as a direct result of such sale for the purpose of consumption in Bihar shall be deemed for the purpose of this Act to have taken place in Bihar, notwithstanding the fact that under the general law relating to sale of goods, the property in the goods has, by reason of such sale passed in another State". It was held by this Court that this amendment was valid in view of the provision of Article 286(1)(a) of the Constitution and also upon a general consideration of the scope of the jurisdiction of a legislature in the matter of taxation. In the present case, however, the question at issue is different. The ques- tion is not whether the Bihar Legislature has constitutional authority to tax a sale in Bengal when the goods are despatched to Bihar. The ques- tion at issue is a matter of construction and not a matter of constitutional validity. The question is what is the intention of the framers of the 1944 Act. Whether upon a proper construction of the 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sale and despatch and there can be no supply of goods in this sense unless there is a sale. As regards the meaning of "sale", Section 4(3) of the Sale of Goods Act may be compared with Section 2(5) of the Bihar Sales Tax Act. Section 4(3) of the Sale of Goods Act states that where under a contract of sale the property in the goods is transferred from the seller to the buyer the contract is called a sale. The section is similar in terms to Section 2(g) of the Bihar Sales Tax Act which defines "sale" to mean "any transfer of property in goods for cash or deferred payment or other valuable consideration". Upon a review of the various provisions of the Bihar Sales Tax Act it is clear that the intention of the framers of the Act was to impose a tax on trans- actions where the transfer of title took place in Bihar and there was no intention that tax should be imposed on sales which took place outside Bihar though the goods were despatched for the purpose of consumption in Bihar. The argument of the learned Government Pleader on this part of the case must therefore fail. In the course of his argument the Government Pleader laid great stress on the fact that the assessee had failed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icipality. The question raised is a ques- tion of law within the meaning of Section 25(1) of the Bihar Sales Tax Act and the Board of Revenue may properly refer such question for the determination of the High Court. It was also submitted by the Government Pleader on behalf of the State of Bihar that there was no material in this case to properly deter- mine the question of law raised by the Board of Revenue. It was con- tended that the assessee did not produce the actual correspondence with the Bhagalpur Municipality and the Bhagalpur District Board and the exact terms of the contract of sale were therefore not available. There is not much point in this argument for it is the admitted case that the Sales Tax Officer inspected the records in the Municipal and District Board Offices and as a result of such inspection he reached the following findings: "It has been found that the goods, viz., alum, bleaching powder and medicines, etc., are always consigned by the company in the name of Chairman and Vice-Chairman and some such officer of the Muni- cipality or District Board at Bhagalpur or any other station within Bhagalpur District and the payments have always been made by cheques o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Tax Officer. It is stated by Mr. Dutt on behalf of the assessee that the sale of chemicals to the Bhagalpur Municipality and the Bhagalpur District Board constitute the major part of the taxable turnover determined by the Sales Tax Officer in this case. The Sales Tax Officer made enquiries from the Bhagalpur District Board and the Bhagalpur Municipality on the ques- tion whether the sales took place in Bengal as claimed on assessee's behalf. The question is also expressly dealt with by the Board of Revenue in for- mulating the statement of the case. In their application under Section 25 the assessee asked that a reference should be made of nine questions including question No. (4), "Can the transaction of the assessee with the Bhagalpur Municipality and the Bhagalpur District Board be termed to be a sale which has taken place in Bihar?" The Board did not refuse to refer this question but after hearing the parties consolidated all the points raised by the assessee into two questions-(1) "Whether on the facts and in the circumstances, the assessee is a dealer within the meaning of Section 2(c) of the Bihar Sales Tax Act?" and (2) "Whether on the facts and in the circumstances of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p. 45. Deo v. Commissioner of Income-tax, Bihar Orissa(1), the Judicial Com- mittee refused to answer the question on the ground that it was purely academic. In the second case, Chatturam Horilram Ltd.(2), the assessee had asked the Appellate Tribunal to refer the question whether there was evidence to support the finding of the Tribunal that cash credits were secreted profits of the assessee. The Tribunal had refused to refer the question on the ground that there was no point of law involved. The assessee attempted to raise the same question in the High Court. But the High Court refused to entertain the question on the ground that the necessary facts have not been stated by the Tribunal. In the present case, the position is manifestly different. The material facts have been stated by the Board of Revenue in the order of reference with respect to the sales made by the assessee to the Bhagalpur Munici- pality and the Bhagalpur District Board. The question is, in my opinion, directly raised by the Board of Revenue in the statement of the case and it is not only competent to the High Court but it is the duty of the High Court to answer the question. RAI, J.- This is a refere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. It is agreed on all hands that the questions referred to this Court are to be answered with reference to the provisions of the Bihar Sales Tax Act, 1944. In order to appreciate the points raised at the Bar it is necessary to quote the relevant portion of some of the definitions provided in the Act: "Section 2. In this Act, unless there is anything repugnant in the subject or context- (c) "dealer" means any person who carries on the business of selling or supplying goods in Bihar, whether for commission, remuneration or otherwise and includes any firm or a Hindu joint family, and any society, club or association which sells or supplies goods to its members: (g) "sale" means, with all its grammatical variations and cognate expressions, any transfer of property in goods for cash or deferred pay- ment or other valuable consideration, including a transfer of property in goods involved in the execution of contract but does not include a mortgage, hypothecation, charge or pledge: Provided that a transfer of goods on hire-purchase or other instal- ment system of payment shall, notwithstanding the fact that the seller retains a title to any goods as security for payment of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emed to have been completed. He submitted that the sale will be deemed to have taken place at Panihati in Bengal where the factory of the assessee is situated and where the consignment was delivered to the railway com- pany. In this connection he referred to Section 23 of the Indian Sale of Goods Act, 1930, which runs thus: "(1) Where there is a contract for the sale of unascertained or future goods by description and goods of that description and in a deliverable state are unconditionally appropriated to the contract, either by the seller with the assent of the buyer or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer. Such assent may be express or implied, and may be given either before or after the appropriation is made. (2) Where, in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier or other bailee (whether named by the buyer or not) for the purpose of transmission to the buyer, and does not reserve the right of disposal, he is deemed to have unconditionally appropriated the goods to the contract". In support of his contention Mr. Dutt also relied on the decisions in the cases of Grainger ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act. Before the Commissioner of Commercial Taxes also, the same position was taken by the assessee. The relevant portion of the order of the Commissioner of Commercial Taxes runs thus: "The main points taken before me were (1) that Messrs. Bengal Chemical and Pharmaceutical Works Ltd. are not 'dealers' as defined in the Sales Tax Act; (2) that the sales for which tax has been imposed in this case were effected in Calcutta, and therefore not liable to assessment in Bhagalpur; (3) that in similar cases of import of medicines, drugs, etc. by other firms functioning outside Bihar no tax is assessed." Similar position appears to have been taken by the assessee before the Member of the Board of Revenue, Bihar, also as appears from the following portion of the resolution of the Board: "In this revision application in a sales tax case the main contentions of the petitioners are: (1) That Messrs. Bengal Chemical and Pharmaceutical Works Ltd. are not 'dealers' as defined in the Sales Tax Act, and (2) That the sales for which tax has been assessed in this case were effected in Calcutta, and as such were not liable to assessment in Bhagalpur." It appears that, for the first time, in their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad, J., had agreed, observed as follows: "On behalf of the assessee Mr. Baldeva Sahay addressed the argu- ment that there was no evidence on which the Tribunal could have held that the cash credits were secret profits of the assessee. But this question has not been formulated by the Appellate Tribunal and no statement of the case has been made thereon. It is therefore not open for the High Court to examine this question in this case. It is of importance to state that the jurisdiction with which the High Court is invested under the Income-tax Act is of an exceptional nature and in hearing the reference the High Court has seisin only of such question of law as has been duly raised before the Appellate Tribunal and upon which there is state- ment of the case." The assessee cannot at this stage ask us to raise fresh questions and ask for a statement of the case on that question, because that right of the assessee is barred by limitation. With all respect to my learned brother, I am afraid I am not in a position to give my assent to the answer proposed by him to the second question. I would therefore answer both the questions in the affirmative. DAS, J.-This case has come to me on a d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xed in Bihar under the provisions of the Bihar Sales Tax Act of 1944. As regards the other transactions of sale, for which the railway receipts were sent to Messrs. Lalji Sao of Bhagalpur, I am of opinion that they have been properly taxed as they constitute 'sales' within the meaning of the Bihar Sales Tax Act of 1944." Rai, J., however, was of the view that no answer should be given with regard to particular sales, because the second question as framed did not relate to individual sales; nor was it necessary for the Court to give an answer with regard to individual sales, because in his opinion, such a question did not arise out of the order of assessment or the order passed on appeal and revision. He said: "Thus, I am of opinion that the assessee is not entitled to ask us to give any answer in respect of sales and supplies to the District Board and the Municipal Board of Bhagalpur alone as distinct from sales and supplies to other customers within the Province of Bihar. In my opinion, this question does not arise out of the relevant order as required by Section 21(1) of the Bihar Sales Tax Act, 1944, and Section 25(1) of the Bihar Sales Tax Act, 1947". As some of the sales m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see was assessed on the sales of chemical such as alum, bleaching powder and other medicines to the Bha- galpur Municipality and the Bhagalpur District Board. Paragraph 3 of the assessment order states, in clear terms, that the assessee denied his liability to pay tax on the sales of the aforesaid chemicals to the Municipality and the District Board on the ground that the sales did not take place in Bihar. The Sales Tax Officer said that he had made enquiries in the Municipal Office as also the District Board and it appears from his order that he had seen the necessary correspondence on the subject. He pro- ceeded on the footing, as he has said in his order, that the sales were completed in Bihar. It is obvious, therefore, that the individual sales of chemicals to the Municipality and the District Board of Bhagalpur were the very basis on which the assessment was made, and at the very earliest opportunity the assessee took the point that the sales did not take place in Bihar and he was not, therefore, liable to tax on those sales under the provisions of the Bihar Sales Tax Act, 1944. In this circumstance, it is impossible to accept the contention that the sales of chemicals to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to answer that question merely because the Board of Revenue has chosen to frame the second question in wider terms. I fully agree with Rama- swami, J., that the question of the liability of the assessee to tax on the sales to the Municipality and the District Board of Bhagalpur is covered by the second question and this Court should give an answer to it. Mr. Lal Narayan Sinha has then contended that on such facts as have been found by the taxing authorities, the sales of chemicals to the District Board and the Municipality of Bhagalpur were sales which took place in Bihar; therefore, the answer to the second question should be in the affirmative. Mr. Lal Narayan Sinha has developed his argument on this point in the following way. He has pointed out that the Indian Sale of Goods Act, 1930, does not deal with the "place of sale"; it deals with such subjects as the formation of a contract of sale of goods, effect of such a contract, performance of the contract, rights of the unpaid seller against the goods etc. He has pointed out that Section 19 of the said Act states that where there is a contract for the sale of specific or ascertained goods, the property in them is transferred t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Indian Sale of Goods Act, the property in the goods passed at Panihati in Bengal. The assessee company delivered the goods to the common carrier for the purpose of transmis- sion to the buyer and did not reserve the right of disposal; therefore, he would be deemed to have unconditionally appropriated the goods to the contract. The facts as found by the taxing authorities do not show that there was anything else in the conduct of the parties which showed a contrary intention. The argument based on Section 19 of the Indian Sale of Goods Act, 1930, is not, therefore, available to the State of Bihar. On the question of construction, I should refer to the definition of the word "sale" in Section 2(g) of the Bihar Sales Tax Act, 1944. That definition itself shows that the Bihar Legislature, in their wisdom, defined "sale" to mean "any transfer of property in goods for cash or deferred payment or other valuable consideration". There is a proviso which merely gives an exception, and proves that sale primarily means a transfer of property in goods. Certain amendments were made subsequently in 1947, 1948 and thereafter. We are not, however, concerned with those amendments. Sale, acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Bihar; etc." The charging section, Section 4, states, inter alia that after the appointed date, every dealer whose gross turnover during the year exceeds a particular amount shall be liable to pay tax under the Act on sales effected after the date so notified. It is no doubt true that the definition of a "dealer" includes a person who carries on the business of supplying goods in Bihar, and the definition of the expression "sale-price" means the amount payable to a dealer as valuable consideration for, amongst other things, supply of any goods in Bihar. The question is whether the word "supplying" or "supply" should be interpreted noscitur a *Since reported as Poppatlal Shah v. The State of Madras [1953] 4 S.T.C. 188. sociis, that is, that meaning should be given to the word which it shares with the word "sale" occurring before it, on the principle laid down by Lord Bacon that copulatio verborum indicat acceptationem in eodum sensu; the coupling of words together shows that they are to be under- stood in the same sense. I am in agreement with my learned brother Ramaswami, J., that the word "supply" or "supplying" should be inter- preted in association with the word "sale". As ..... X X X X Extracts X X X X X X X X Extracts X X X X
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