TaxTMI 
TaxTMI 
TaxTMI 
1958 (8) TMI 46
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....id to be the turnover in respect of certain transactions which the petitioners are alleged to have had with the Madura Sugars and Allied Products Limited, Pandiarajapuram, a concern which will hereafter be referred to in this judgment as the Madura Mills. The petitioners objected to the proposed revision and enhancement, but, after taking evidence and hearing them again, the Commercial Tax Officer held that the petitioners were doing business with the Madura Mills and that a sum of Rs. 6,34,033-12-6, being the turnover in respect of that business, had escaped assessment and they were liable to be taxed on that amount also. He also held that the original turnover of Rs. 11,44,346-15-1 fixed by the Deputy Commercial Tax Officer had to be reduced by Rs. 69,612-14-10. In pursuance of these findings he revised the petitioners' assessment fixing their assessable turnover at Rs. 17,08,767-12-9 and passed an order accordingly on 30th March, 1955. Against the Commercial Tax Officer's order the petitioners filed an appeal, Tribunal Appeal No. 441 of 1955, before the Sales Tax Appellate Tribunal, Madras, complaining inter alia about the inclusion of the amount of Rs. 6,34,033-12-6 the turnove....
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.... the Madura Mills from time to time and costs of transportation of the same. The accountant of the Madura Mills, examined by the Commercial Tax Officer as a witness on the side of the Department, says that the advances were made by the representatives of P.K. Moidoo Bros., Chandrasekhara Chettiar and one P.C. Ummer, and that on their instructions consignments of sugar were sent to different persons from time to time and the prices of those consignments adjusted against the advances. He says further that as and when each advance was received the Madura Mills was setting apart a quantity of sugar worth that amount and it was out of the sugar so set apart that the consignments were sent to the different persons on the instructions of the petitioners' representatives. His evidence on this matter reads: "Against the advances made by the firm of Haji P.K. Moidoo Bros, equivalent quantity of sugar was set apart and out of that sugar was despatched to some of the persons as instructed by the representatives. Advances were made by the representative of P.K. Moidoo Bros. Chandrasekara Chettiar and P.C. Ummer approached us as the representatives of P.K. Moidoo Bros." The case of the Sales Ta....
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.... on their behalf by Chandrasekhara Chettiar and P.C. Ummer (payments, which, in view of the concurrent finding of the Commercial Tax Officer and the Sales Tax Appellate Tribunal, may be taken as payments made by the petitioners themselves), and as there has been no sale at all by the petitioners they are not liable to pay any sales tax. He stated that in respect of the sales effected by the Madura Mills, whether the sales were to the petitioners as alleged by the sales tax department or to the "ultimate purchasers" as contended by the petitioners, sales tax has been collected by the Mills from their buyers and also paid by them to the department and that what is now being demanded by the department from the petitioners is the tax on the sale price alleged to have been realised by the petitioners for the so-called second sale by them in their turn to the "ultimate purchasers". The correctness of the statement that sales tax in respect of the sales by Madura Mills was collected by the Mills and has been paid to the department was not disputed by the learned Government Pleader, and it is clear from the orders of the Commercial Tax Officer and the Sales Tax Appellate Tribunal-and it wa....
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....age, hypothecation, charge or pledge". (Explanations are omitted as they are immaterial for purposes of this case). Section 4(1) of the Indian Sale of Goods Act, 1930, defines a contract of sale of goods as "a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price". Clause (3) of the same section enacts: "Where under a contract of sale the property in the goods is transferred from the seller to the buyer, the contract is called a sale, but where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell". It is clear from these provisions that without an actual transfer of the property in the goods, that is to say, without an actual transfer of the ownership in the goods, by the seller to the purchaser, there can be no sale at all. In the face of these provisions it is idle to contend that the question whether there has been a sale or not is a pure question of fact. The question whether there has been a sale or not cannot be answered without considering whether the property in the goods has been transferred by the....
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....ds". But this is no consideration of the question of law raised by the petitioners' counsel. Even as regards the alleged enquiries by the Commercial Tax Officer, his order does not show that for coming to the conclusion he has arrived at he had had any materials before him beyond the statement of the accountant of the Madura Mills and the documents produced by him. In his order the Commercial Tax Officer has not relied on anything more. All that he has said about the alleged purchases and sales by the petitioners is contained at page 12 of the typed case book; and the material portion of his order reads: "The sum and substance of his (the accountant's) evidence was that the appellants had bought sugar from them (the Madura Mills) through the agency of Chandrasekhara Chettiar and also P.C. Ummer. The above agents used to go to the seller firm, and arrange purchase of sugar and for sales on behalf of the appellants. The witness has filed copies of the telegram and the post copy of the telegram dated 17th September, 1951, signed by Haji P.K. Moidoo, a partner which relate to the purchase of 3000 bags of sugar against an advance of Rs. 60,000 remitted to them by T.T. In cross-examinat....
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................The advances made by Haji P.K. Moidoo Bros. were only for the purchase of sugar. They have placed orders with the company. The telegram will prove it. The company has complied with the telegram. Against the advances made by the firm of Haji P.K. Moidoo Bros. equivalent quantity of sugar was set apart and out of that sugar was despatched to some of the persons as instructed by the representatives. Advances were made by the representatives of P.K. Moidoo Bros. Chandrasekhara Chettiar and P.C. Ummer approached us as the representatives of P.K. Moidoo Bros. (these statements occur in reexamination.)" It was contended that these passages in the accountant's evidence would show that the petitioners had ordered and purchased sugar from the Madura Mills through their agents, Chandrasekhra Chettiar and P.C. Ummer, that the purchases were effected by appropriation from time to time of specific goods from the stock available at the Madura Mills, that the goods so appropriated for the petitioners were kept in the godowns of the Madura Mills itself, and that they were subsequently despatched to the "ultimate purchasers" as per the instructions of the petitioners conveyed through th....
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....hed to the "ultimate purchasers"whether through the petitioners or by Madura Mills direct-there is evidence only as regards 1000 bags. Regarding these bags the accountant says: "I am producing copies of voucher for the debit of Rs. 250 and the connected supporting bills of R.N. Ramachandran for unloading, loading and booking charges. The above cover the despatch of 1000 bags of sugar to Kozhikode consigned to 'self'. The railway receipts are endorsed and transferred to the buyer. The sale was in respect of free market sugar." 9.. Shri M.K. Nambiar contended that mere appropriation of specific goods by the seller for the buyer without the latter's consent would not effect transfer of the property in the goods to the buyer and would not be sufficient to effect a sale and that the evidence furnished by the accountant himself as regards the despatch of the 1000 bags mentioned above would show that the Madura Mills were treating the goods even after the so-called appropriation as their goods and were despatching the goods to the "ultimate purchasers" as if they belonged to them and not to the petitioners. According to him, the property in the goods belonged to the Madura Mills until th....
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....behalf, it is held that he thereby reserves to himself a power of disposing of the property, and that consequently there is no final appropriation, and the property does not on shipment pass to the purchasers. When the vendor on shipments takes the bill of lading to his own order, he has the power of absolutely disposing of the cargo, and may prevent the purchaser from ever asserting any right of property therein; and accordingly in Wait v. Baker(1), Ellershaw v. Magniac(2) and Gabarron v. Kreefi(3), (in each of which cases the vendors had dealt with the bills of lading for their own benefit), the decisions were that the purchaser had no property in the goods, though he had offered to accept bills for or had paid the price. So, if the vendor deals with or claims to retain the bill of lading in order to secure the contract price, as when he sends forward the bill of lading with a bill of exchange attached, with directions that the bill of lading is not to be delivered to the purchaser till acceptance or payment of the bill of exchange, the appropriation is not absolute, but, until acceptance of the draft, or payment, or tender of the price, is conditional only, and until such accept....