Statutory situs of purchase governs sales tax; contractual deeming clause cannot override fiscal rules for cotton purchases.

For sales tax purposes, the situs of a purchase depends on the statutory rules in the Tamil Nadu General Sales Tax Act: specific goods are purchased where they are when the bargain is concluded, while unascertained goods are purchased where they are appropriated to the contract. Egyptian cotton was not shown to have been identified as specific goods, and the purchaser did not prove appropriation in the United Arab Republic, so the transaction was treated as a local purchase within Tamil Nadu. A contractual clause deeming property to pass on signing could not override the fiscal statute's rules on taxable situs, because private agreement cannot displace statutory incidence of tax.

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Issues: (i) Whether the purchases of Egyptian cotton were effected in the United Arab Republic or within Tamil Nadu for the purpose of sales tax, having regard to the character of the goods as specific or unascertained goods. (ii) Whether a contractual clause deeming property to have passed on signing could override the statutory rules fixing the situs of the purchase.

Issue (i): Whether the purchases of Egyptian cotton were effected in the United Arab Republic or within Tamil Nadu for the purpose of sales tax, having regard to the character of the goods as specific or unascertained goods.

Analysis: The situs of a purchase under the Tamil Nadu General Sales Tax Act was governed by Explanation (3) to Section 2(n). For specific goods, the place of purchase is where the goods are when the bargain is concluded. For unascertained goods, the place is where the goods are when appropriated to the contract. On the terms of the letters relied on by the purchaser, the goods were described only as lying in some port or other of the UAR, which did not identify them with sufficient certainty. The purchaser also failed to prove any appropriation in the UAR. The burden of establishing that the transaction fell outside the State lay on the purchaser, and the materials produced did not discharge that burden.

Conclusion: The goods were not shown to be specific goods, and the purchase was not proved to have taken place in the UAR. The transaction was rightly treated as having taken place within Tamil Nadu, in favour of Revenue.

Issue (ii): Whether a contractual clause deeming property to have passed on signing could override the statutory rules fixing the situs of the purchase.

Analysis: While the Sale of Goods Act regulates the inter se rights of parties, the sales tax statutes contain special and overriding rules for determining the taxable event and the situs of sale or purchase. Private parties cannot by contract control the incidence of tax or displace the statutory test for situs. The deeming clause in the contract therefore could not defeat the operation of the fiscal provisions.

Conclusion: The contractual deeming clause was ineffective against the taxing statute and did not alter the taxable situs, in favour of Revenue.

Final Conclusion: The revision failed, the assessment was sustained, and the purchase of Egyptian cotton was held taxable as a local purchase within the State.

Ratio Decidendi: For sales tax purposes, the situs of a purchase is determined exclusively by the statutory rules governing specific or unascertained goods and appropriation, and a private contractual clause cannot override those fiscal provisions.

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