Passing of property and escaped-turnover limits: contractual intention controls sales tax situs, and revision cannot bypass limitation.

Transfer of property for sales tax purposes depended on the parties' intention as shown by the contracts and course of dealing; where delivery, inspection, rejection rights, and final payment were tied to Marmagoa, the sale was completed there and not in Madras. A railway receipt naming the seller as consignor did not override the contractual terms governing passing of property. The article also states that a specific procedure and limitation period for escaped-turnover assessments could not be bypassed by using general revisional power under Rule 14(2), and that the revenue-jurisdiction objection under Section 226 did not bar the suit.

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Issues: (i) Whether the transfer of property in the goods took place within the Province of Madras so as to attract sales tax. (ii) Whether the Commercial Tax Officer could invoke revisional power under Rule 14(2) to assess escaped turnover after the period prescribed for assessment of escaped turnover had expired, and whether the suit was barred by the revenue-jurisdiction restriction in Section 226 of the Government of India Act.

Issue (i): Whether the transfer of property in the goods took place within the Province of Madras so as to attract sales tax.

Analysis: The decisive test was the intention of the parties, as gathered from the contracts and the course of dealing. Under both sets of contracts, delivery was to be completed at Marmagoa, the buyers retained the right to inspect and reject the goods there, and the balance price was payable only after approval at that place. The use of the plaintiffs' name as consignor in the railway receipts was explained as a practical requirement to secure movement through the customs station and did not, by itself, establish that property had passed within Madras. The railway receipt as a document of title did not override the contractual terms governing passing of property.

Conclusion: The transfer of property in the goods did not take place within Madras. The sale was completed only at Marmagoa, and this issue was decided in favour of the assessee.

Issue (ii): Whether the Commercial Tax Officer could invoke revisional power under Rule 14(2) to assess escaped turnover after the period prescribed for assessment of escaped turnover had expired, and whether the suit was barred by the revenue-jurisdiction restriction in Section 226 of the Government of India Act.

Analysis: Rule 17(1) provided a specific procedure and time limit for assessment of escaped turnover, and that period had expired. The revisional power under Rule 14(2) was confined to examining the legality or propriety of the existing order and did not authorise a fresh enquiry or the reopening of escaped turnover beyond the statutory period. The assessment was therefore made without jurisdiction and in circumvention of the specific limitation scheme. On jurisdiction, Section 226 of the Government of India Act was treated as a restriction on the exercise of original jurisdiction, not an absolute want of power to receive the plaint; the constitutional proviso removed that restriction, and the objection did not defeat the suit.

Conclusion: The reassessment was illegal and ultra vires, and the revenue-jurisdiction objection did not bar the suit. This issue was decided in favour of the assessee.

Final Conclusion: The tax collected on the disputed turnover was recoverable because the sales were completed outside Madras and the reassessment was made without authority after the statutory period for escaped turnover had lapsed.

Ratio Decidendi: In a sales tax dispute, the place where property passes depends on the true intention of the parties as manifested by the contract, and a specific statutory provision governing escaped turnover cannot be circumvented by invoking a general revisional power to reopen an assessment after the prescribed limitation has expired.

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