Passing of property in unascertained goods depends on contractual inspection rights and appropriation at destination.

Property in unascertained sawar logs was held to pass only on ascertainment and appropriation at Ambernath, because the contract reserved inspection, measurement and rejection there; delivery to carriers from stations in the Central Provinces was not an unconditional transfer of title. Explanation II to section 2(g) of the Central Provinces and Berar Sales Tax Act applied only if the goods were actually in the Province when the contract was made, and that requirement was not proved. The deemed intra-Provincial sale therefore could not be invoked.

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Issues: (i) Whether property in the sawar logs passed to the buyer at the railway stations in the Central Provinces or only at Ambernath after inspection, measurement and acceptance under the contract. (ii) Whether Explanation II to section 2(g) of the Central Provinces and Berar Sales Tax Act, 1947 applied so as to deem the transaction a sale within the Province.

Issue (i): Whether property in the sawar logs passed to the buyer at the railway stations in the Central Provinces or only at Ambernath after inspection, measurement and acceptance under the contract.

Analysis: The transaction related to unascertained goods, so property could pass only on ascertainment and appropriation. Under section 23 of the Sale of Goods Act, 1930, delivery to a carrier may amount to appropriation, but the contract as a whole may show a contrary intention. The later contract reserved to the buyer a right to inspect and reject the logs at Ambernath, provided for measurement under supervision there, and fixed payment on that basis. These terms showed that the tentative loading and despatch from stations in the Central Provinces did not effect an unconditional transfer of property.

Conclusion: Property did not pass at the railway stations and passed only at Ambernath after the buyer's appropriation and acceptance.

Issue (ii): Whether Explanation II to section 2(g) of the Central Provinces and Berar Sales Tax Act, 1947 applied so as to deem the transaction a sale within the Province.

Analysis: Explanation II applies only where the goods in respect of which the contract of sale is made are actually in the Province at the date of the contract. The record did not show that the particular logs were so situated at that date, and there was no basis to treat the contract as one in respect of standing timber agreed to be severed before sale. In the absence of proof that the goods existed in the required form within the Province when the contract was made, the deeming provision could not be invoked.

Conclusion: Explanation II did not apply and the sale could not be deemed to have taken place within the Central Provinces.

Final Conclusion: The assessment could not be sustained because the taxable sale took place outside the Province and the deeming fiction was inapplicable.

Ratio Decidendi: Where a contract for unascertained goods reserves inspection and rejection at destination, the contract must be construed as postponing passing of property until acceptance there; a deeming provision taxing sales within a territory applies only when the statutory preconditions as to the goods' existence and location at the date of contract are strictly proved.

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