STANES AMALGAMATED ESTATES LIMITED Vs. STATE OF MADRAS

JUDGEMENT

(1.) THE Order of the Court was made by RAMACHANDRA IYER, J.THEse two revision cases, which have been filed respectively by the Stanes Amalgamated Estates Ltd., and the United Nilgiri Tea Estates Co., Ltd., relate to the assessments to sales tax for 1953-54. THE assessees are dealers in tea. In addition, they also own or otherwise have an interest in lands on which tea is grown. THE disputed portions of the turnover in the two cases are respectively Rs. 54, 053-15-6 and Rs. 1, 89, 714-1-9. THEy represent the sale price of tea grown on the lands owned by the assessees which was sold to M/s. the United Coffee Supply Co., Ltd. THE agreement for sale fixed the price F.O.R. Kettery, a railway station in the Madras State, and stipulated that the sellers should have the goods packed, marked and despatched to destinations, in accordance with the instructions which the buyers were to give from time to time. After entertain into the contract with the assessees, the buyers, the United Coffee Supply Co., Ltd., in turn, entered into contracts for sale of tea with various persons outside the Madras State. THEy then instructed their sellers to pack and send portions of the tea purchased by them to places where they had agreed to deliver to their own purchasers. THE goods were accordingly consigned and despatched to destinations outside the State of Madras addressed to the United Coffee Supply Co., Ltd., the relevant railway receipts were also taken in their names and delivered over to them.

(2.) THE consignment bore a mark to identify the purchasers from the United Coffee Supply Co., Ltd., for whom it was intended. From a typical case placed before us by the Government Pleader, it is seen that, after the despatch of the goods to the various places, the assessees issued an invoice to the United Coffee Supply Co., Ltd., for the price and incidental charges presumably they were paid only thereafter. THEre can be no doubt that constructive delivery of the goods had been given by the assessees to their buyers within the State of Madras.THE claim of the assessees was that the turnover in respect of such sales should be exempted under the provisions of section 5(v) of the Madras General Sales Tax Act, 1939 from being included in the assessable turnover, as they represented the price of tea grown in their lands sold to the United Coffee Supply Co., Ltd., which was intended to be and actually delivered outside the Madras State. Section 5(v) which was in force during the year to which the assessment related stated :

(3.) THE only question to be determined in order to entitle the assessees to the exemption sought is whether the sale was made for the purpose of delivery being made outside the State of Madras. Both the Deputy Commercial Tax Officer as well as the Commercial tax Officer on appeal negatived the claim of the assessees. On further appeal the Sales Tax Appellate Tribunal held that the delivery in the instant case at the places outside the Madras State should be deemed to be a delivery in pursuance of the contract which the United Coffee Supply Co. Ltd., made with its own buyers and not one which was made by the assessees. THEy held that the property in the goods passed when they were unconditionally appropriated towards the purchases by the buyers from the assessees, he delivery should be deemed to have taken place within the Madras State immediately after that appropriation was made.In our opinion, for the application of section 5(v), the question to be considered is not where the property passed to the buyer, but where the actual delivery was intended and made. THE circumstances, that the buyer agreed to give delivery to his purchaser at a particular place, will not exclude that place being the place of actual delivery contemplated by the assessees when they entered into a contract with the United Coffee Supply Co., Ltd. A simple case would afford an illustration. Suppose the United Coffee Supply Co., Ltd., had a branch of their own at "A", a place outside the State of Madras and there was an agreement to effect an actual delivery at that place by the assessees. THE United Coffee Supply Co., Ltd., might have entered into a contract to sell the very goods to their customer and deliver the same there. But that cannot lead to the result that the original contract did not envisage a delivery at place A. In the present case the goods were delivered to the railway addressed to the assessees' buyer at a place outside Madras. THE circumstances that the buyers' buyer was also at that place cannot prevent that place being the contemplated place of delivery as between the assessee and the buyer from the assessee.