Conditional transfer of property in goods defeated sales tax on refused consignments under the invoiced sale terms.

Turnover from goods returned or refused by purchasers was held not exigible to sales tax where the invoice terms provided that property in the goods would remain with the seller until payment was received. The court applied the statutory definition of sale only subject to any contrary contractual stipulation, and held that the appropriation was conditional. Because the condition precedent to transfer of property was never fulfilled for the refused goods, the transaction never matured into a completed sale and could not be taxed. The contrary view of the assessing authority and Appellate Tribunal was rejected.

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Issues: Whether the turnover relating to goods returned or refused by purchasers was liable to sales tax under the Kerala General Sales Tax Act in view of the contractual condition in the invoice that property in the goods would remain with the assessee until payment was received.

Analysis: The definition of sale in section 2(xxi) read with explanation (4) applies only where there is no contra-indication in the contract. The invoice terms expressly provided that property in the goods would remain with the assessee until payment was received by it or by its bankers against retirement of documents of title. On that footing, any appropriation of the goods was only conditional. Since the condition was not fulfilled in respect of the goods refused by the consignees, the purported sale did not fructify. A transaction which never matured into a completed sale could not be treated as exigible to tax. The view of the assessing authority and the Appellate Tribunal that there was an appropriation attracting levy was incorrect.

Conclusion: The turnover relating to the refused goods was not taxable and the assessee succeeded.

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