Title passes after customs clearance and ex-docks delivery, so high-seas endorsement does not create an import sale.
Where a contract requires the seller to ship goods to India, obtain customs clearance, permit inspection and weighment on arrival, and deliver ex-docks, title is treated as passing only after those post-arrival steps are completed. Endorsement and delivery of the bill of lading on the high seas, by itself, does not transfer property when the contractual terms and payment structure show that the parties intended title to pass later. On that footing, the transaction is not a sale in the course of import and does not receive constitutional protection from sales tax; it is taxable as an intra-State sale.
Issues: Whether, on the terms of the contract and surrounding circumstances, property in the goods passed on delivery of the endorsed bill of lading while the goods were on the high seas so as to make the transaction a sale in the course of import and immune from sales tax, or whether property passed only after the goods were cleared through the customs barrier and delivered ex-docks in Bombay.
Analysis: The contract required the seller to ship the sugar to Indian ports, afford inspection and weighment on arrival, clear the goods through customs, and deliver them ex-docks. Payment on presentation of shipping documents was only of the c.i.f. value and the final price was to be adjusted later after actual delivery. These terms, read together, indicated that the parties intended the property to pass only after arrival, clearance, inspection, weighment, and ex-docks delivery, and not merely on transfer of the bill of lading. The contractual provisions for inspection, weighment, customs clearance by the seller, and delivery after landing were inconsistent with a transfer of title on the high seas. The transaction, therefore, was not a sale in the course of import and did not fall within the constitutional protection.
Conclusion: The property in the goods did not pass on the high seas, and the sale was taxable as an intra-State sale in Bombay.
Final Conclusion: The reference was answered by holding that the sale was not protected under Article 286(1)(b) of the Constitution of India and the tax liability was upheld.
Ratio Decidendi: Where the contract, viewed as a whole, shows that title is intended to pass only after customs clearance and ex-docks delivery, endorsement and delivery of shipping documents on the high seas do not transfer property so as to make the sale one in the course of import.
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