Court affirms transactions as sales, includes in turnover. Appeal dismissed with costs, Advocate's fee fixed at Rs. 150.

The court upheld the Commissioner of Commercial Taxes' order, affirming that the transactions were sales and correctly included in the appellants' turnover. The appeal was dismissed with costs, and the Advocate's fee was fixed at Rs. 150.

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Issues Involved:
1. Validity of the order of the Commissioner of Commercial Taxes.
2. Correctness of the assessment to sales tax on certain transactions.
3. Determination of whether the transactions constituted one or two sales.
4. Consideration of whether there was an assignment of rights or a novation of the original contract.

Issue-wise Detailed Analysis:

1. Validity of the Order of the Commissioner of Commercial Taxes:
The appeal challenges the order of the Commissioner of Commercial Taxes, who revised the Deputy Commissioner of Commercial Taxes' order. The Commissioner reversed the Deputy Commissioner's decision and restored the Commercial Tax Officer's assessment, which treated the transactions as a "sale" and included them in the appellants' turnover.

2. Correctness of the Assessment to Sales Tax on Certain Transactions:
The assessment in question pertains to the sales tax on transactions amounting to Rs. 64,721-2-8 for the assessment year 1953-54. The Commercial Tax Officer included these transactions in the appellants' turnover, treating them as sales. The Deputy Commissioner initially set aside this order, agreeing with the appellants that the transactions were merely sales of contracts, not goods. However, the Commissioner of Commercial Taxes later reversed this decision.

3. Determination of Whether the Transactions Constituted One or Two Sales:
The primary issue is whether the transactions between the appellants and the mills, and subsequently between the appellants and third parties, constitute two separate sales or a single sale. The court noted that the appellants bought jute bags on forward contracts and sold them to third parties at higher rates before the goods were ready. The appellants issued kutcha delivery orders to the mills, which delivered the goods to the holders of these orders.

The court held that the appellants' transactions involved two capacities: one as buyers from the mills and the other as sellers to third parties. When the mills delivered goods to the third parties, it was on behalf of the appellants, not in their own right. This mode of delivery, although eliminating the need for the appellants to take physical possession, still constituted two transactions: the mills to the appellants and the appellants to the third parties.

4. Consideration of Whether There Was an Assignment of Rights or a Novation of the Original Contract:
The appellants argued that their transactions with third parties were merely assignments of their rights under the original contract with the mills, not sales of goods. They contended that since the goods were not in existence at the time of the contracts, they could not transfer property in the goods to their nominees. The court, however, found that once the goods came into existence and were appropriated, the property passed to the appellants, who then transferred their rights to their vendees.

Regarding novation, the court examined whether the delivery of mill letters to third parties amounted to a novation. The court concluded that the mill letters were merely instructions for delivery and did not constitute a new contract. The original contract between the mills and the appellants remained intact, with the mills delivering goods to the appellants' nominees as per the original agreement. The court emphasized that for novation to occur, there must be a new contract substituting the original one, which was not the case here.

Conclusion:
The court upheld the order of the Commissioner of Commercial Taxes, affirming that the transactions in question constituted sales and were correctly included in the appellants' turnover. The appeal was dismissed with costs, and the Advocate's fee was fixed at Rs. 150.

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