SRI BAYYANNA BHIMAYYA Vs. GOVERNMENT OF ANDHRA

JUDGEMENT

(1.) THESE are four T.R. Petitions Nos. 17, 18, 19 and 20 filed on behalf of the assessees Bayyanna Bhimayya, Sukhadev Rathi, Ramalinga Gada and Potti Venkiah and Sons and Co., for the revision of an order of the Sales Tax Appellate Tribunal, Andhra, at Guntur dated 12th September, 1955. The assessee are carrying on business in Vijayawada as wholesale dealers in gunnies, a product manufactured by Chittivalasa and Nellimarla Jute Mills in Vizagapatnam District which are managed by M/s. Mcleod Ltd., Calcutta. The assessing authority assessed them for 1952-53 and levied a tax on the turnover. The assessees disputed the assessment and challenged the legality on the grounds that the transactions did not amount to sales, that they did not purchase and sell any goods, that the issue of a mill letter was not sale of goods but only authorisation for the purchaser to take delivery of the goods, and that it was only transfer of the rights to get the goods. Aggrieved by the order of the Deputy Commercial Tax Officer rejecting their contentions, the assessees went in appeal to the Deputy Commissioner of Commercial Taxes, Guntur. This appeal was dismissed. They then filed a further appeal before the Andhra Sales Tax Appellate Tribunal, Guntur. This appeal was also dismissed; hence these revisions.

(2.) SRI Venkatesam and Sri Venkatarama Sastri, the learned counsel for the petitioners, contend that the Appellate Tribunal erred in holding that the transactions between the assessees and the mills on the one hand, and the assessees and the third parties on the other constituted two distinct and separate sales. They contend that it was only one sale and when taxes were already collected from the mills no second tax could be levied and collected from the assessees. It was next contended that the issue of a mill letter or kucha delivery order was only an authorisation for the purchaser to take delivery of the goods and it was only a transfer of a right, i.e., a chose in action and did not constitute a sale. The third argument advanced is that when the goods were not in existence at the time of issue of kucha delivery orders, no property could pass to the third parties and the said transaction could not be said to be a sale within the meaning of the Sale of Goods Act. In other words, it is contended that the issuing of a kucha delivery order was not a document or title and does not by itself transfer possession of, much less title, to the goods and unless the title to the goods is transferred, it does not become a sale. The learned counsel in this connection drew our attention to section 2(4), 6(3), 7 and 11 of the Sales of Goods Act, section 2(b), (c), (h) and (i) of the Sales Tax Act, section 2(c) of the Forward Contracts (Regulation) Act, 1952, and placed reliance on State of Bombay v. United Motors (India) Ltd. ([1953] 4 S.T.C. 133) and Sales Tax Officer v. Budh Prakash Jai Prakash ([1954] 5 S.T.C. 193). Lastly it was contended that sales tax could only be levied on a turnover represented by sale of goods and not on the sale of a right to obtain delivery of goods.

(3.) IN order to appreciate the arguments of the learned counsel, a reference to the relevant provisions of the Sale of Goods Act, the Sales Tax Act and Forward Contract (Regulation) Act is necessary; but before dealing with the said provisions, we would like to state certain facts necessary for the correct appreciation of the arguments. The petitioners entered into an agreement with the jute mills for the purchase of gunnies at a specified rate which are to be delivered on a particular date and they paid some amount by way of an advance to the mills. Before the date fixed for the delivery, the petitioners entered into separate contracts with third parties for the sale of the goods contracted to be purchased by the petitioners from the mills. In pursuance of such contracts of sale, the third parties took delivery of the goods direct from the mills, paying the balance of the price to the mills on the strength of mill-letters passed on to them by the petitioners. It is not denied by the petitioners that the third parties took delivery of the goods from the mills after paying the stipulated price. Exhibit A-1 is the first agreement between the mills and the assessees. Exhibits A-2 and 2(a) are the application for delivery facility and the agreement in that connection. Exhibit A-3 is the contract entered into by the assessee and Ramachandra Shivanarayan of Rajahmundry for the purchase of 6000 gunnies. Exhibit A-4 is the kucha delivery order. Exhibit A-5 is the bill of lading for the amounts. Exhibit A-6 is the delivery note in the bills. Exhibit A-7 is the buyer's copy of bill No. 596 issued by Chittivalasa Jute Mills Co., Ltd.