Conditional delivery and payment determine where sale proceeds are received; income arises where price is paid and goods are delivered.

Where sale proceeds are realised under a conditional delivery arrangement, the receipt occurs at the place where payment is made and the goods are delivered, because title does not pass until the price is paid. In a V.P.P. transaction, the post office collects the price for the seller, so the income is received at the place of delivery and payment, not merely where the seller resides or dispatches the goods. The same principle applies when railway receipts are released through a bank only against a demand draft: receipt of the price and delivery of the receipts are completed only on payment at the bank's place of action.

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Issues: (i) Whether sale proceeds realised through the V.P.P. system were received at Ratlam in Part B State or in Part A/C States. (ii) Whether amounts received through bank drafts against railway receipts were received at Ratlam in Part B State or in Part A/C States.

Issue (i): Whether sale proceeds realised through the V.P.P. system were received at Ratlam in Part B State or in Part A/C States.

Analysis: Under the V.P.P. arrangement, delivery to the buyer was conditional upon payment at the place of delivery. The post office recovered the price on behalf of the seller, and the appropriation of the goods was not complete until the condition of payment was fulfilled. The property in the goods therefore passed only at the place where the price was paid and the goods were delivered.

Conclusion: The receipt was in Part A/C States and not at Ratlam. This issue was decided against the assessee and in favour of the Revenue.

Issue (ii): Whether amounts received through bank drafts against railway receipts were received at Ratlam in Part B State or in Part A/C States.

Analysis: Where railway receipts in favour of self were sent through a bank with instructions to deliver them only against payment of the demand draft, the delivery of the goods and the receipt of the price were conditional upon payment at the place where the bank acted for the seller. The contract was performed only when the money was paid and the railway receipts were delivered, so the income was received at the place of payment and not at Ratlam.

Conclusion: The receipt was in Part A/C States and not at Ratlam. This issue was decided against the assessee and in favour of the Revenue.

Final Conclusion: The income from both classes of transactions was received outside Part B State territory, so the assessee was not entitled to the concessional Part B State rate and the appeal succeeded.

Ratio Decidendi: Where delivery of goods is made conditional on payment, the receipt of sale proceeds occurs at the place where payment is made and the goods are delivered, because the appropriation remains conditional until the price is paid.

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