TMI Blog1952 (8) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... the period of assessment concerned in these proceedings the turnover of such tran- sactions amounted to Rs. 37,75,357. The point for decision is whether sales tax is leviable on this amount. The contention of the assessee is that the title to the goods sold passed only in Calcutta because the documents of title were taken in the name of the sellers and delivered to the purchaser on payment of the price at Calcutta and that consequently there was no sale within the Province of Madras and, therefore, no liability to pay the tax arises under the Act. The Deputy Commercial Tax Officer passed an order on 12th February, 1949, rejecting this contention and assessing the firm to sales tax on the transactions and this decision was affirmed on appeal by the Commercial Tax Officer by his order dated 29th May, 1949. On 2nd June, 1949, notice of the final assessment and demand for payment of the amount of tax was issued to the firm. The assessees preferred a revision to the Board and that was dismissed on 23rd May, 1950. On 14th August, 1950, the assessees filed a suit O.S. No. 903 of 1950 on the file of the City Civil Court, Madras, for a declaration that the imposition of the tax was not j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nse it imports passing of property in the goods. In its popular sense it signifies the transaction which results in the passing of property. To a lawyer the legal sense would appear to be the correct one to be given to the word in the Sales Tax Act. That is the conception which is familiarised in the provisions of the Sale of Goods Act. If one leaves out of account sales tax legislation which is of comparatively recent origin, questions relating to sale of goods usually come up before Courts only in connection with disputes between the sellers and purchasers. If the goods perish, on whom is the loss to fall? If the purchaser becomes insolvent before payment of price can the goods be claimed by the trustee in bankruptcy? For deciding these and similar questions it is necessary to determine at what point of time the property in goods passed to the purchaser. Sometimes when the point for determination is as to jurisdiction of Court to entertain suits based on contract, it may be material to consider where property in the goods passed, that being part of the cause of action. These being the questions which are accustomed to be debated in connection with sale of goods, it is natural tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als. In Norfolk and W.R. Co. v. Sims(1) the facts were that Messrs. Sears Roebuck and Company who were manufacturers of sewing machines in Chicago in the State of Illinois sold a machine to Mrs. Satterfield of Roxboro in the State of North Carolina and consigned the same through a common carrier. The sellers took out a bill of lading and sent the same to an agent at Roxboro who delivered the same to Mrs. Satterfield on receipt of the price. Before Mrs. Satterfield could take delivery of the machine, the local authorities seized it for payment of a tax alleged to be due from the sellers by virtue of a statute of North Carolina which imposed a licence tax on all persons "engaged in the business of selling" within the State. The question was whether on the facts found, the sellers could be held to have carried on business of selling in Roxboro. The contention of the local authority was that the property in the machine passed only at Roxboro where the bill of lading was delivered on payment of price and therefore there was "business of selling" within the State. In negativing this contention the Court observed: "While it may be entirely true that the property on the thing sold does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s would equally be applic- able on a question as to where the sale actually takes place in a tran- saction of an inter-State character. The following observations of Black, J., in Richfield Oil Corporation v. State Board of Equalization(2) may be appositely quoted: "This purely intra-State sale transaction cannot properly be held to have lost its intra-State pre-exportation status by reason of the fact that the parties did not intend 'title to pass' until the oil was deliver- ed at the purchaser's ship. For formal 'passage of title' is not an adequate criterion for measuring a state's constitutional power to tax sales made within the state. Private parties are free to decide, so far as their own interests are concerned, when legal title shall be consider- ed to 'pass'. But a State surely is not required by the Constitution (1) 108 U.S. 133; 49 L.Ed. 417 at 422. (2) 329 U.S. 69; 91 L.Ed. 80 at p. 95. to forbear from taxing that part of a sale transaction which precedes the particular moment the parties have arbitrarily selected for a con- ceptual transfer of title. Nor need a State withhold the exercise of its power to tax sales until an article is delivered or paid for. That deli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .W. 793. (2) [1952] 3 S.T.C. 19. shall be deemed, for the purposes of this Act, to have taken place in this Province, wherever the contract of sale or purchase might have been made: (a) if the goods were actually in this Province at the time when the contract of sale or purchase in respect thereof was made, or (b) in case the contract was for the sale or purchase of future goods by description, then, if the goods are actually produced in this Province at any time after the contract of sale or purchase in respect thereof was made." It was argued that this Explanation recognizes that under the Act as it stood prior to the amendment, the question as to where the sale took place should be determined in accordance with the principles laid down in the Sale of Goods Act and as the Explanation came into force only on 1st January, 1948, it has to be ignored for the purpose of the present proceedings which relate to the assessment for the period from 1st April, 1947, to 31st December, 1947. This argument proceeds on the assumption that the object of the amendment was to effect a change in the law. That, however, is not necessarily the case. Explanations are inserted for removing doubts and d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended that Section 42(1) of the Income-tax Act under which the assessment was sought to be made was extra-territorial in its operation and, therefore, ultra vires of the Indian Legislature. It was held by the majority that on the facts there was sufficient connection to clothe the Indian Legislature with competence to impose the tax and that, there- fore, the assessment was not illegal. In Commissioners of Taxation v. Kirk(2), the question arose with reference to ores extracted in New South Wales and sold as finished products outside the State. The sale pro- ceeds were realised outside the State. The State of New South Wales sought to levy income-tax on the profits made on such sales. The Privy Council held that it was within the competence of the Legislature of New South Wales to impose tax even though the profits were received outside the State, as part of the process was within the State. In International Harvester Company of Canada Ltd. v. Provincial Tax Commission(3) the Privy Council after quoting with approval the above decision observed that "regarding profit as arising solely at the place of sale" is fallacious. Vide also the decision of this Court in Vakkan v. Province o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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