Outside-State delivery of tea sales determined sales tax exemption where the contract allowed buyer-directed delivery.

Sales of tea grown by the seller qualified for exemption under section 5(v) of the Madras General Sales Tax Act where the contract contemplated delivery outside Madras and delivery was actually made there. The place where property passed was not the controlling test. Because the agreement allowed the buyer to nominate the place of delivery, and the buyer later directed dispatch to destinations outside the State, the contract was treated as one for actual outside-State delivery. The buyer's subsequent resale of the tea did not alter the character of the original delivery between the parties.

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Issues: Whether the sales of tea grown by the assessees were exempt from sales tax under section 5(v) of the Madras General Sales Tax Act on the ground that the sale was for delivery outside the State and delivery was actually so made.

Analysis: The exemption depended on three requirements: the tea must have been grown by the seller on land in which the seller had an interest, the sale must have been for delivery outside the State, and delivery must have been actually made outside the State. The first and third requirements were satisfied. The decisive question was whether the contract contemplated delivery outside Madras. The place where property passed was not the controlling test. The agreement permitted the buyers to direct the place of delivery, and the buyers later instructed that the goods be sent to destinations outside Madras. Once that option was exercised, the original contract was treated as one contemplating actual delivery at the designated outside places. The fact that the buyers thereafter resold the tea to their own purchasers did not alter the character of the delivery between the assessees and their buyers.

Conclusion: The sales were intended to be and were actually delivered outside the State of Madras, so the assessees were entitled to exemption under section 5(v).

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