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TMI Blog1959 (4) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... estern India Match Co., Ltd., which is popularly known and will hereinafter be referred to as "WIMCO" for the supply of a minimum quantity of 2,500 tons of sawar logs during the season 1947-48. This agreement is evidenced by WIMCO's letter dated January 7, 1948, accepting and confirming it. Unfortunately that letter, although a part of the record, has not been printed in the Paper Book. It is common ground, however, that the agreement of sale was subject to the conditions appearing in a formal contract in writing dated March 2, 1945, which is said to have been renewed from year to year. It appears that prior to the execution of the last-mentioned contract there was another contract between the respondent and WIMCO which was dated October 18, 1940. Evidently that contract was superseded by the later one of March 2, 1945, the terms and conditions whereof were renewed year after year. It is, therefore, not easily intelligible why both the contracts were filed before the Sales Tax Authorities and actually mentioned in the first question that was referred to the High Court. Both the contracts have been printed in the Paper Book and reference has been made to some of the terms of both of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the contract as "F.O.R. Ambernath". We now pass on to the later contract of March 2, 1945. Clause I sets out the specifications of the logs to be supplied under the contract in exactly the same language as in clause 1 of the earlier contract. The other material clauses, again omitting the unnecessary portions, are as follows: "2. The contractor agrees that any logs supplied by him which, on arrival at Ambernath, are found in the opinion of the company's factory manager not to conform with the specifications herein shall not be accepted or paid for by the company, notwithstanding the fact that such logs may have been accepted by the company's representatives before being railed to Ambernath." It may be mentioned here that Ambernath is a place situate in the erstwhile Province of Bombay and outside the Central Provinces. "4. The goods to be supplied under this contract shall be despatched by the contractor from railway stations on the B.N. Railway, N. S. Railway and G.I.P. Railway sections between the following stations. " It is unnecessary to set out the names of the stations which, it may, however, be stated, are all in the erstwhile Central Provinces. Clause 6 provides: "6. Mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e "on all sales effected after the commencement of the Act." "Sale" is defined by section 2(g) of the Act. At the relevant period, that section, omitting Explanation I, which is not material for our purpose, ran as follows: " 'Sale' with all its grammatical variations and cognate expressions means any transfer of property in goods for cash or deferred payment or other valuable consideration, including a transfer of property in goods made in course of the execution of a contract, but does not include a mortgage, hypothecation, charge or pledge. Explanation II: Notwithstanding anything to the contrary in the Indian Sale of Goods Act, 1930, the sale of any goods which are actually in the Central Provinces and Berar at the time when the contract of sale as defined in that Act in respect thereof is made, shall, wherever the said contract of sale is made, be deemed for the purpose of this Act to have taken place in the Central Provinces and Berar." The Act being a piece of legislation enacted by the Legislature of the erstwhile Province of Central Provinces and Berar, its operation is limited to the territories of that Province. Therefore, the question arises: Does the sum of Rs. 30,067 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22 which [except as to sub-section (3) of section 19] apparently apply to contracts for the sale of specific or ascertained goods, we come to section 23 which provides: "23. Sale of unascertained goods and appropriation.-(1) Where there is a contract for the sale of unascertained or future goods by description and goods of that description and in a deliverable state are unconditionally appropriated to the contract, either by the seller with the assent of the buyer or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer. Such assent may be expressed or implied, and may be given either before or after the appropriation is made. (2) Delivery to carrier.-Where, in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier or other bailee (whether named by the buyer or not) for the purpose of transmission to the buyer, and does not reserve the right of disposal, he is deemed to have unconditionally appropriated the goods to the contract." Reference may next be made to section 33 and section 39 (1). Section 33 says: "33. Delivery.-Delivery of goods sold may be made by doing anything which the parties a-reed shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he logs. The respondent preferred what in form appeared to be a second appeal to the Board of Revenue. As, however, there could be no second appeal under section 22(4) of the Act, the Board treated the memorandum of appeal as an application for revision under sub-section (5) of section 22 of the Act read with rule 57. Both the members of the Board of Revenue came to the same conclusion, namely, that the sales were liable to assessment under the Act, but the reasonings adopted by them were somewhat different. Shri Shrivastava, a member of the Board of Revenue, took the view that as soon as logs answering the description agreed upon were brought to the railhead at Chanda and sorted out and loaded in the wagons in the presence of WIMCO'S representatives, there was an implied contract of sale of specific and ascertained goods, as evidenced by the conduct of parties and the property in each consignment passed immediately from the respondent to WIMCO at the railway station in the Central Provinces where such implied contracts were made. The Chairman of the Board of Revenue, however, took the view that the contract of sale was made outside the Central Provinces, namely, in Bombay and tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iage. It passed at Ambernath where the goods were appropriated by the buyer to the contract with the assent of the seller. (4) The word 'goods' in the definition of 'sale' in the Sales Tax Act must be interpreted according to its definition in section 2(d) of the Act and not according to the definition in section 2(7) of the Sale of Goods Act. The standing sawar trees are not goods within the meaning of the former Act." The effect of the answers being to nullify the assessment order, the Commissioner of Sales Tax has come up on appeal before us after obtaining special leave of this Court. The answers to the first two questions have not been questioned before us. The main arguments have centered round the answers to questions (3) and (4). The answer to question (3) turned on the construction placed by the High Court on section 23 of the Sale of Goods Act. After quotating section 23, the High Court observed as follows: "After sorting the logs with the assent of the buyer's representative, the applicant appropriated the logs to the contract by railing them to the buyer's destination at Ambernath. The statement of the case is silent on the point whether the railway receipts were made o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty in them passed under section 23 from the respondent to WIMCO at the railway stations within the Central Provinces as soon as the sawar logs were loaded on the wagons and the railway receipts were taken out in the name of WIMCO. It is said that so far as the respondent is concerned it unconditionally appropriated the logs to the contract. Seeing that they were actually accepted by WIMCO on their arrival at Ambernath it is quite clear that the logs were of the contract quality and description. The only question, according to learned counsel for the department, therefore, is whether there was assent of WIMCO to such appropriation. It has been found as a fact that WIMCO'S representative was not present on all occasions when sawar logs used to be loaded on the railway wagons. There is no evidence that he was actually present when these particular sawar logs, with the sale proceeds of which we are concerned, were put into the wagons. Nor is there an iota of evidence that the representative of WIMCO had any authority to bind WIMCO by any assent. In view of these difficulties, learned counsel for the department did not press the case of express assent of the representative of WIMCO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the goods should be delivered at Ambernath. There are, nevertheless, several other provisions in the later contract indicating that property in the logs loaded in the wagons will not pass to WIMCO until after the goods arrive at Ambernath and are inspected, measured and accepted by WIMCO'S factory manager. Clause 2 of the later contract quite clearly reserves the right of WIMCO to examine the goods on arrival and to reject the same if they are found, in the opinion of its factory manager, not to conform with the specifications. This reservation, which is made notwithstanding the fact that the logs may have been accepted by its representative before they were railed to Ambernath, clearly indicates that the so-called acceptance by the representative was not final but was entirely tentative and subject to approval of the logs by WIMCO'S factory manager at Ambernath after their arrival. This circumstance certainly militates against the property in them having already passed to WIMCO at the railway stations in the Central Provinces. The provisions of clause 6 that the goods shall be measured under the supervision of WIMCO'S representative, the decision of its factory manager at Amber ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f sale is entered into are, at the date of such contract, actually in the Central Provinces. Learned counsel for the department urges that the logs delivered must have been in existence in the Central Provinces either in the shape of logs or in the shape of standing timber. There is no evidence that at the date when the agreement for sale was made, the particular logs delivered thereunder were in the Central Provinces in the shape of logs at all. Learned counsel says that, at any rate, they must have been in existence there in the shape of standing timber. Apart from anything else, the agreement here was not "in respect of " any standing timber and there was no provision in the agreement as between the, respondent and WIMCO for severance of the standing timber before sale under that agreement. In order to attract Explanation II the goods, in respect of which the contract of sale is made, must, at the date of the contract be in existence in the Central Provinces, that is to say, that the goods must at the date of the contract be there in the form in which they are agreed to be sold. There is not an iota of evidence on that point. In our judgment, there is no force in this alternativ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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