Substance over agency form: bidi despatches were treated as taxable sales because property passed on despatch.

Despatches of bidis under the agreement were held to constitute sales for purposes of the C.P. and Berar Sales Tax Act, 1947, because the substance of the arrangement showed a transfer of property in goods for valuable consideration. The bidis were debited to the consignee's account on despatch, the price was realised later, the assessee retained vendor-like rights, and the consignee bore the position of a buyer rather than a true agent. The contractual incidents, including control of rates and no obligation to return unsold stock, showed that property passed on despatch. The sales were therefore taxable under the statutory deeming provision, and the Revenue's contention succeeded.

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Issues: Whether despatches of bidis made under the agreement constituted sales taxable under the C.P. and Berar Sales Tax Act, 1947.

Analysis: Section 2(g) defines sale as a transfer of property in goods for cash, deferred payment, or other valuable consideration, and Explanation II deems a sale to take place in the State where the goods were in the State when the contract was made. On the facts, the bidis were debited to the consignee's account on despatch, the price was realised later, the assessee retained the rights of a vendor, and the consignee bore the position of a buyer notwithstanding the form of the arrangement. The agreement's incidents, including payment of price, control of rates, and absence of liability to return unsold stock, showed that property passed on despatch and that the relationship was not one of true agency.

Conclusion: The despatches amounted to sales taxable under the Act, and the question was answered in the affirmative in favour of the Revenue.

Ratio Decidendi: Where the substance of the transaction shows transfer of property in goods for valuable consideration, the arrangement is a sale notwithstanding its agency form, and the sale is taxable if the statutory conditions under the deeming provision are satisfied.

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