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TMI Blog1956 (11) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... ransfer of the rights to get the goods. Aggrieved by the order of the Deputy Commercial Tax Officer rejecting their contentions, the assessees went in appeal to the Deputy Commissioner of Commercial Taxes, Guntur. This appeal was dismissed. They then filed a further appeal before the Andhra Sales Tax Appellate Tribunal, Guntur. This appeal was also dismissed; hence these revisions. Sri Venkatesam and Sri Venkatarama Sastri, the learned counsel for the petitioners, contend that the Appellate Tribunal erred in holding that the transactions between the assessees and the mills on the one hand, and the assessees and the third parties on the other constituted two distinct and separate sales. They contend that it was only one sale and when taxes were already collected from the mills, no second tax could be levied and collected from the assessees. It was next contended that the issue of a mill letter or kucha delivery order was only an authorisation for the purchaser to take delivery of the goods and it was only a transfer of a right, i.e., a chose in action and did not constitute a sale. The third argument advanced is that when the goods were not in existence at the time of issue of kuc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the arguments. The petitioners entered into an agreement with the jute mills for the purchase of gunnies at a specified rate which are to be delivered on a particular date and they paid some amount by way of an advance to the mills. Before the date fixed for the delivery, the petitioners entered into separate contracts with third parties for the sale of the goods contracted to be purchased by the petitioners from the mills. In pursuance of such contracts of sale, the third parties took delivery of the goods direct from the mills, paying the balance of the price to the mills on the strength of mill-letters passed on to them by the petitioners. It is not denied by the petitioners that the third parties took delivery of the goods from the mills after paying the stipulated price. Exhibit A-1 is the first agreement between the mills and the assessees. Exhibits A-2 and 2(a) are the applications for delivery facility and the agreement in that connection. Exhibit A-3 is the contract entered into by the assessee and Ramachandra Shivanarayan of Rajahmundry for the purchase of 6000 gunnies. Exhibit A-4 is the kucha delivery order. Exhibit A-5 is the bill of lading for the amounts. Exhibit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as follows: "(1) A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. There may be a contract of sale between one part-owner and another. (2) A contract of sale may be absolute or conditional. (3) 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, but where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell. (4) An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred." It will be noticed that though the section groups both sales and agreements to sell under the single generic name of "contracts of sale", following in this respect the scheme of the English Sale of Goods Act, 1893, it treats them as separate categories, the vital point of distinction between them being that whereas in a sale there is a transfer of property in the goods from the seller to the buyer, there is none in an agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eller and he can dispose of them. They may be taken in execution for his debts, and if he becomes bankrupt they pass to his trustee in bankruptcy. But if there has been a sale, and the seller breaks his engagement to deliver the goods, the buyer has not only a personal remedy against the seller, but also the usual proprietary remedies in respect of the goods themselves, such as the actions for conversion and detinue. Again, if there be an agreement for sale and the goods perish, the loss as a rule falls on the seller, while if there has been a sale the loss as a rule falls upon the buyer." Now "turnover" has been defined in the Sales Tax Act to mean aggregate amount for which goods are either bought by or sold by a dealer whether for cash or for deferred payment or other valuable consideration provided that the proceeds of the sale by a person of agricultural or horticultural produce grown by himself or grown on any land in which he has an interest whether as owner, usufructuary mortgagee, tenant or otherwise, shall be excluded from his turnover. "Forward contract" has been defined in the Forward Contracts (Regulation) Act, LXXIV of 1952, to mean a contract for the delivery of go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d party as a result of express agreement between the parties." In view of the above observations of the Tribunal, it is very difficult to hold as has been contended by the learned counsel for the assessees that the main ingredients, i.e., the existence of goods and the passing of title, are absent in the transaction. The fact that the goods were in existence is quite clear from Exhibit A-1. Only the delivery of the goods is postponed. The learned counsel for the assessee relying on the entry relating to the option in the right hand side column of the agreement tried to persuade us that the goods could not be regarded as being in existence. We are not prepared to accept this argument either. In the left hand side of the same column the size, quality, quantity and the weight of the goods have been mentioned. It follows therefore that if the buyer did not exercise the option given to him under the agreement, the size, the weight and the quality mentioned in the left hand column would stand. It cannot be said from this that the goods were not in existence at the time of the contract. It is also clear from the said agreement that the goods were ascertained and the delivery of the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not do so. We cannot accept this argument, either. It is true that on the basis of Exhibit A-3, the third party could not sue the mills, for there is no privity of contract between him and the mills, but on this account it cannot be said that the alleged agreement is an assignment and not a sale. From the above discussion, it would appear that there are two independent contracts of sale. The theory of a single sale cannot be reconciled with the existence of two distinct contracts in which the assessee played two different roles, in one capacity as a buyer and in the other as a seller. Sales Tax Officer, Pilibhit v. Budh Prakash Jai Prakash [1954] 5 S.T.C. 193. was an appeal under the certificate of the High Court under Article 133(1) of the Constitution arising out of a writ petition under Article 226 of the Constitution. In this case, the legality of the proceedings of the assessment of tax and the assessment orders were challenged on the ground that the U.P. Sales Tax Act, XV of 1948, in so far as it imposed a tax on forward contracts was ultra vires the powers of the Provincial Legislature. This contention was accepted by the High Court and a writ of certiorari was issued. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a transaction under the (then) provisions of the Act. A contract of sale becomes a sale under the Sale of Goods Act only when the property in the goods is transferred to the buyer under the terms of the contract itself." The learned counsel for the assessees places reliance on this authority to show that their Lordships have observed that the sale is not complete unless all the ingredients, i.e., bargain or contract of sale, the payment or promise of payment of price, the delivery of goods and the actual passing of the title, are present in the transaction. We agree with this contention, but as we have already held that in the contract of the assessees all these elements are present, we need not pursue the point any further. In the case of State of Bombay v. United Motors Ltd.(2), cited to us, the validity of the right to tax sales or purchases outside the State was questioned and their Lordships of the Supreme Court have laid down the same principle so that this ruling also does not help the petitioners as stated earlier. In the result, we do not find any substance in these revisions. They are therefore dismissed with costs. Petitions dismissed. - - TaxTMI - TMITax - CST ..... 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