Auction sales of identified tea lots passed on the fall of the hammer, making the transactions outside sales tax jurisdiction.

Tea sold by public auction was held to be an outside sale because the goods were ascertained, graded and packed in identified lots, and property passed when the auctioneer declared the sale complete on the fall of the hammer. Later inspection or claims for defects affected only contractual remedies and did not defer transfer of title. On the proper construction of the contract and the Sale of Goods Act principles governing specific goods and auction sales, the place where title passed was decisive, so the sales were not taxable as inside sales in the respondent State.

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Issues: Whether the tea sales by public auction were outside sales so as to be beyond the taxing power of the respondent State, or inside sales taxable in that State.

Analysis: The goods sold were ascertained goods already graded, packed and identified in lots, and the governing question was when property passed under the Sale of Goods Act. The sale conditions showed that the auction was completed on the fall of the hammer, that each chest formed part of a concluded sale, and that later inspection or claims for defect operated only as contractual remedies after sale. On the true construction of the contractual terms and the relevant provisions governing specific goods and auction sales, title passed at Fort Cochin when the auctioneer declared the sale complete. The earlier view that the sales were inside sales was no longer sustainable in light of the later decisions of the Court.

Conclusion: The sales were outside sales as far as the respondent State was concerned and were not liable to sales tax there.

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