Agency and place of sale rules kept cloth transactions outside Madras, defeating sales tax liability.

A contract under which intermediaries merely procured offers for mills did not create sales completed in Madras, because the mills alone could accept or reject offers, the intermediaries had no authority to bind them, and delivery was fixed at the mills' premises in Ahmedabad; the property in the goods therefore passed outside Madras, so sales tax was not attracted. The intermediaries were also not persons carrying on the business of buying or selling goods in Madras, as they were restricted to forwarding offers, prohibited from trading on their own account, and entitled only to commission on transactions concluded by the mills; the statutory definition treating such agents as sellers did not apply.

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Issues: (i) Whether the cloth transactions were sales completed within the State of Madras so as to attract sales tax; (ii) whether the plaintiffs were agents carrying on the business of buying or selling goods in the Province of Madras within the meaning of the statutory definition.

Issue (i): Whether the cloth transactions were sales completed within the State of Madras so as to attract sales tax.

Analysis: The agreement showed that the plaintiffs could only secure offers and forward them to the mills at Ahmedabad. The mills alone had the power to accept or reject offers, and the plaintiffs had no authority to bind the mills. Delivery was stipulated to be at the mills' premises at Ahmedabad, and the later despatch of goods was treated as a further movement on behalf of the buyers. The clauses dealing with forwarding of railway receipts and collection of amounts were viewed as incidental arrangements and not as fixing the place of sale in Madras. Applying the statutory concept of sale as involving transfer of property in goods, the property passed at Ahmedabad.

Conclusion: The sale took place at Ahmedabad and not within the State of Madras.

Issue (ii): Whether the plaintiffs were agents carrying on the business of buying or selling goods in the Province of Madras within the meaning of the statutory definition.

Analysis: The agreement authorised the plaintiffs only to obtain offers and forward them to the mills. It expressly prohibited them from dealing on their own account, did not empower them to accept offers on behalf of the mills, and provided only for commission on transactions concluded by the mills. On the terms of the agreement, the plaintiffs were not persons carrying on the business of buying or selling goods in Madras, and the statutory explanation treating such agents as sellers did not apply.

Conclusion: The plaintiffs were not sellers or agents carrying on such business within the statutory meaning.

Final Conclusion: The liability to sales tax was not established, the trial court's decrees were affirmed, and the appeals failed.

Ratio Decidendi: Where the contract shows that offers are merely procured by an intermediary, acceptance and delivery occur at the out-of-State mill premises, and the intermediary lacks authority to bind the seller, the sale is completed where property passes and the intermediary is not a statutory seller merely by reason of commission-based agency.

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