Appropriation of controlled sugar for despatch completed the sale in Bihar and made the transfers taxable there.

Sugar despatched outside Bihar under allotment orders issued under the Sugar and Sugar Products Control Order, 1946 was treated as sold in Bihar for sales tax purposes. The Court held that once the allotment order was communicated and the assessee appropriated the sugar in its factory in accordance with the allotment and despatch instructions, the contract of sale was completed in Bihar. It further held that appropriation of the sugar in a deliverable state, or at the latest when loaded for despatch, unconditionally passed property under the Sale of Goods Act, leaving no retained right of disposal. The despatches were therefore liable to tax under the Bihar Sales Tax Act, 1947.

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Issues: Whether the despatches of sugar outside Bihar under allotment orders issued under the Sugar and Sugar Products Control Order, 1946 were liable to sales tax under the Bihar Sales Tax Act, 1947, on the footing that the contract of sale was completed in Bihar and property in the goods passed there.

Analysis: The despatches were made pursuant to allotment orders and despatch instructions under the control order, which required the producer to supply the allotted quantity and regulated the manner of supply and transport. On those facts, the Court held that once the allotment order was communicated and the assessee appropriated the sugar in its factory in accordance with the allotment and despatch instructions, the contract of sale stood completed in Bihar. The Court further held that, independently, the appropriation of the sugar in a deliverable state, or at the latest when loaded for despatch at Hasanpur railway station, effected an unconditional passing of property under the Sale of Goods Act, and the seller retained no right of disposal inconsistent with transfer of title.

Conclusion: The despatches of sugar were liable to tax under the Bihar Sales Tax Act, 1947, and the question was answered in favour of the Revenue.

Ratio Decidendi: Where goods are allotted under a controlling statutory order and are unconditionally appropriated for despatch in accordance with the allotment and delivery instructions, the contract of sale and the passing of property occur at the place of appropriation, making the sale taxable there.

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