TMI Blog1954 (5) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... lating to sale outside the Province of Madras. The Commercial Tax Officer, North Madras, on 3rd July, 1947, confirmed this order of the Deputy Commercial Tax Officer. On 4th March, 1950, the plaintiff received notices dated 24th February, 1950, from the Commercial Tax Officer, North Madras, appraising the plaintiff of his intention to revise the assessment of sales tax for the years 1945-46 and 1946-47 so as to include these two turnovers referred to above. The plaintiff thereupon submitted their objections by their letter dated 14th March, 1950, viz., (1) the plaintiff pointed out among other things that the Commercial Tax Officer having exercised his power in appeal was not competent to assess this assessee to sales tax in respect of the years ended 31st March, 1946, and 31st March, 1947; (2) that he had no jurisdiction to exercise the powers under section 12 of the Act and rule 14 of the Madras General Sales Tax Rules; (3) that his action was illegal; (4) that the Commercial Tax Officer has not conformed to rule 17(1) of the Madras General Sales Tax Rules even if he intended to treat this as a case of escaped assessment; and (5) the terms of contracts in the years 1945-46 and 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entitled to any deduction or rebate? (3) Whether the sale of groundnut oil was outside the Province as alleged by the plaintiff and, if so, of what quantity? (4) Whether the Commercial Tax Officer has jurisdiction to exercise powers under section 12 of the Act and rule 14 of the General Sales Tax Rules, and whether he has conformed to rule 17(1) in treating the assessment as escaped assessment? (5) To what reliefs are the parties entitled? 5.. Before me the plaintiff examined one of their managers as P.W. 1 in both the suits and the defendant adduced no oral evidence. The plaintiff filed Exhibits P. 1 to P. 17 in C.S. No. 111 of 1951 and Exhibits P. 1 to P. 15 in C.S. No. 112 of 1951. 6.. On a review of the entire circumstances of the case I have come to the conclusion that the sales in question took place within the Province of Madras; secondly, that the Commercial Tax Officer had revisional jurisdiction to impose additional assessment which he has done; that as regards 1945-46 the levy of assessment is hit at by rule 17(1) and that there is no such impediment in regard to 1946-47 and that the plaintiff is entitled to the deduction claimed but not to the rebate asked for. Here ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y depends. In any given case there may be a question whether this condition is fulfilled or not, and it may be that the property will not pass even if it is fulfilled, but until it is, there is no possibility of the property passing; or as put by Lord Blackburn, "It is essential that the article should be specified and ascertained in a manner binding on both parties, for unless that be so the contract cannot be construed as a contract to pass the property in that article.........." It is a question of the construction of the contract in each case at what stage the property shall pass and a question of fact whether that stage has been reached: Seath v. Moore(3). The term "specified (1) [1947] 2 S.T.C. 67; A.I.R. 1947 P.C. 94. (3) (1886) 11 App. Cas. 350 at p. 370. (2) (1939) Mar. L.R. 103 Civ. goods" is defined in the Act as meaning goods identified and agreed upon At the time a contract of sale is made. Chief instances of "unascertained goods" are "future goods", that is to say, articles to be manufactured or acquired, or a certain quantity of goods in general, without a specific identification of them, or an "appropriation" of them to the contract. "Ascertained goods probably mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivery ex-sellers' Royapuram oil factory, (1) [1927] 1 Ch. 606, at p. 630. freight paid on buyers' account at Madras. The expenses such as carting, shipping and harbour dues and other charges were to be incurred on buyers' account. The contract deeds were signed by the Madras Office of the sellers. On shipment of the goods at Madras a telegraphic advice is sent to Calcutta for arranging payment of the price at Madras. The shipments from Madras to Calcutta have gone as export by the buyers and under their export licences, the sellers acting as mere shippers. The goods were shipped to Calcutta to account of the buyers. Insurance for all risks was arranged by buyers commencing from ship's sailings to destination. Any damages or loss to goods during shipment are for account of buyers. On reaching destina- tion payment was to be by cash payment against documents to be presented to buyers in Calcutta through sellers' office there and no Madras saIes tax was to be charged. The delivery was ex-sellers' Royapuram oil factory as per quality and weight ascertained at the mill during specified months as stocks permit but not later than the last day of each month in advance at Calcutta, for whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng three extracts will make the point clear. In Mirabita v. Imperial Ottoman Bank(1), Lord justice Cotton observed: "Under a contract for sale of chattels not specific the property does not pass to the purchaser unless there is afterwards an appropriation of the specific chattels to pass under the contract, that is, unless both parties agree as to the specific chattels in which the property is to pass, and nothing remains to be done in order to pass it. In the case of such a contract the delivery by the vendor to a common carrier, or (unless the effect of the shipment is restricted by the terms of the bill of lading) shipment on board a ship of, or chartered for, the purchaser, is an appropriation sufficient to pass the property. If, however, the vendor when shipping the articles which he intends to deliver under the contract, takes the bill of lading to his own order, and does so not as agent or on behalf of the purchaser, but on his own behalf, it is held that he thereby reserves to himself the power of disposing of the pro- perty, and that consequently there is no final appropriation, and the property does not on shipment pass to the purchasers. When the vendor on shipment takes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property so as to enable him to recover from the third party, notwith- standing that the act of the seller was a clear breach of the contract: Wait v. Baker(5) and Gabarron v. Kreeft(6). This seems to be because the seller's conduct is inconsistent with any intention to pass the property to the buyer by means of the contract followed by the appropriation. On the other hand, if the seller deals with the bill of lading only to secure the contract price, and not with the intention of withdrawing the goods from the contract, he does nothing inconsistent with an intention to pass the property, and, therefore, the property may pass either forthwith subject to the seller's lien or conditionally on performance by the buyer of his part of the contract: Mirabita v. Imperial Ottoman Bank(7), Van Castele v. Broker(8), Browne v. Hare(9), Joyce v. Swann(10). The prima facie presumption in such a case appears to be that the property is to pass only on the performance by the buyer of his part of the contract and not forthwith subject to the seller's lien. Inasmuch as, however, the object to be attained, namely, securing the contract price, may be attained by the seller merely reserving a lien, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but only a lien for unpaid seller's price. That this was the intention is also made clear by P.W. 1 who to a question put that for the balance of payment of price the company held the document or with their agent only for the purpose of security or for the purpose of having a lien on the unpaid purchase money, replied in the affirmative. Therefore, the position was that the seller after the goods left the factory was only the buyer's agent or bailee and delivery terminated the lien of this unpaid seller: see "The Sale of Goods" by Clive M. Schmitthoff (1951 Edn.) pages 109, 131 etc. Therefore, point (1) has got to be decided and is hereby decided in favour of the State, viz., that the sales in question took place within the State of Madras. 14.. Point 2: To appreciate the discussion under this head I have prepared and appended a comparative table of section 12(1), sec- tion 19, rule 14(2) and rule 17(1) in Act IX of 1939, amended Act XXV of 1947, and amended Act VI of 1951, which came into force on 1st October, 1939, 1st January, 1948, and 15th May, 1951, respectively. 14a. In regard to this point there can be no dispute that the Sales Tax Act, as amended by Act VI of 1951, is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olutely necessary in the interests of the State or the safety and well being of its subjects or the exigencies of society. In each case it is a matter for the legislature to decide and one lying entirely in its discretion. Indian decisions have laid down the same rule in unmistakable terms. The Privy Council has laid down in one of the leading cases on the subject, Delhi Cloth and General Mills Co. v. Income-tax Commissioner, Delhi(1), that provisions in a statute which touch a right in existence at the passing of the same are not to be applied retrospectively in the absence of express enactment or necessary intendment of the same. An exception is made in cases of provision dealing with matters of procedure which may properly be retrospective in effect but even here an exception is made in cases where such cons- truction would be textually inadmissible (Ibid). The Privy Council pointed out in the above case that provisions, which if applied retros- pectively would deprive orders, which were final at the date a statute came into force, of their existing finality, were provisions which touch existing rights. Their Lordships based their judgment on the leading case of Colonial Sugar R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le-making powers given under sec- tion 19 of Act IX of 1939 is intra vires or ultra vires. I have no doubt in my mind that rule 14(2) is intra vires of the rule-making powers of the State under section 19 of the Act. Section 19(1) enables the Pro- vincial Government to make rules to carry out the purpose of the Act and "in particular and without prejudice to the generality of the foregoing power, such rules may provide for any other matter for which there is no provision or no sufficient provision in this Act and for which provision is in the opinion of the Provincial Government, necessary for giving effect to the purposes of this Act." The enactment giving power to make rules and other powers are subject to two limitations. First of all, authority so given cannot be delegated with which we are not con- cerned here. Secondly, the rules made in pursuance of a delegated authority to that effect must be consistent with the statute under which they came to be made. The authority is given to the end that the provisions of the statute may be better carried out into effect and not with a view to neutralising or contradicting those provisions. This is especially so in the case of the Madra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision in the Act for giving effect to the purpose of this Act, it cannot be said that this is not intra vires of the rule-making powers conferred by section 19 of the Act. 19.. But for reasons already stated I have to hold that in regard to the assessment of 1945-46 by reason of the one year period pres- cribed under rule 17(1) of the unamended Act the Commercial Tax Officer was not justified in invoking his revisional powers and reopening the assessment, albeit for a legitimate reason, viz., that a portion of the turnover had been wrongly exempted from assessment. 20.. The learned Government Pleader wants to get over this impediment by confining the phrase "turnover of business of a dealer has escaped assessment" to mistakes of omission only. But "escaped assessment" cannot be confined to mistakes of omission only. It is instructive to study the expositions of this phrase as arising under section 34 of the Indian Income-tax Act in the standard treatises: Sri V.S. Sundaram, Law of Income-tax in India, 7th Edn. 1954, page 959: "The words in the second alternative 'assessed at too low a rate' in section 34 (2) of the Income-tax Act, (Indian) show that the escape need not necessa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shore v. Commissioner of Income-tax, Punjab(7); Province of Bihar v. Khetra Mohan Kumar(8), contra Maharaja Bikram Kishore v. Province of Assam(9). Sri A.C. Sampath Aiyangar's Indian Income-tax Act, 4th Edn., pages 918 to 920: Escaped assessment: This may happen in one of several ways. One very common way is where the Income-tax Officer being unaware of the existence of the assessee completely misses him and takes no steps at all to assess.....A second case is where the Income-tax Officer being aware of the existence of the assessee and in proceeding to assess, fails to take the requisite preliminary steps and hence the assessment is annulled.....A third case would be where the (1) [1933] 1 I.T.R. 143. (6) [1934] 2 T.T.R. 71. (2) [1935] 3 I.T.R. 171. (7) [1936] 4 I.T.R. 287. (3) [1940] 8 I.T.R. 222. (8) [1949] 17 I.T.R. 286. (4) [1952] 21 I.T.R. 382. (9) [1949] 17 I.T.R. 220. (5) [1935] 3 I.T.R. 438. particular Income-tax Officer who has made the assessment is found to have no Jurisdiction over the assessee in question and therefore a court of law annuls the assessment.....In all the above cases, there is a total escape of the assessee from assessment. There is another sense also i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und: If the Inspector "discovers" that in (1) [1939] 7 I.T.R. 362. (3) [1937] 5 I.T.R. 416. (2) [1937] 5 I.T.R. 90. (4) [1949] 17 I.T.R. 220. the assessments made any properties or profits chargeable to tax have been omitted, that any person has not been assessed, or has been under- charged, or has obtained any unauthorised allowance, deduction or relief, or that any person has not made a return, or has not made a full return, an "additional first assessment" is to be made.....The word "discover" simply means "find out", and the power to make an addi- tional assessment is applicable even though there has been a complete disclosure of all relevant facts upon which a correct assessment might have been based in the first instance, and whether it is an error of fact or error of law that has been discovered: Inland Revenue Commissioners v. Mackinlay's Trustees(1), Commercial Structures Ltd. v. Briggs(2). See also Vestey(3). The mere discovery of his own oversight enables the Inspector to make an additional assessment: Steel Barrel Co., Ltd. v. Osborne(4). The fact that there has been an appeal against the original assessment does not prevent an additional assessment: Anderton and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he factory. The fact that the various purchasers of this groundnut oil purchased them for delivery outside the Province and then actually so delivered them is neither here nor there. It is not those purchasers who are claiming the rebate but the plaintiffs who sold the articles inside Madras State and delivered them inside Madras State and thereby completed their transactions and became only the bailees and sellers with a lien for unpaid purchase price in regard to all that transpired thereafter. 25.. In the result I find in C.S. No. 111 of 1951 under issue I that the Commercial Tax Officer is entitled to reopen and revise the assess- ment of the sales tax on the turnover of Rs. 14,10,234-1-0 for the year 1946-47; under issue 2 that the plaintiff is entitled to deduction but not rebate; under issue 3 that the sale of groundnut oil was not outside the Province as alleged by the plaintiff; under issue 4 that the Com- mercial Tax Officer had jurisdiction to exercise the powers under section 12 of the Act and rule 14 of the General Sales Tax Rules and he has conformed to rule 17(1) in treating the assessment as escaped assessment; and under issue 5 that the relief to which the plaint ..... X X X X Extracts X X X X X X X X Extracts X X X X
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