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TMI Blog1964 (3) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... of India, New Delhi (hereinafter called the Director) for the supply of timber according to the terms of the contract. For the period from 1st January, 1952, to 31st December, 1952, the petitioner was assessed to sales tax in respect of timber booked by rail from Mandla Fort railway station to places outside the State. Before the Sales Tax Officer, the assessee contended that it was not liable to pay sales tax on the timber supplied by virtue of section 27-A of the Central Provinces and Berar Sales Tax Act, 1947, (hereinafter referred to as the Act), and Article 286 of the Constitution, as it stood prior to the amendment made by the Constitution (Sixth Amendment) Act, 1956. This objection was overruled by the Sales Tax Officer, who held that on a construction of the terms of the contract concluded between the petitioner-firm and the Director, the property in the goods passed to the buyer in this State and that the Explanation to Article 286 had no applicability inasmuch as the delivery of goods at places outside the State was not as a direct result of the sale for the purpose of consumption outside the State. Accordingly, the Sales Tax Officer rejected the petitioner's claim for ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assistant Commissioner and could have also brought the matter to this Court on a reference under section 44 of the Madhya Pradesh General Sales Tax Act, 1958, and that as it did not avail itself of this remedy, it was not entitled to any relief under Articles 226 and 227 of the Constitution. 5.. Two questions arise for determination in this case, namely, first, whether there was a completed sale of timber by the petitioner to the Director in Madhya Pradesh and whether the property in the goods passed in that State; and, secondly, whether, even if the sale was completed in Madhya Pradesh, the goods were delivered for consumption outside the State as a direct result of sale. If the sale was completed in the State of Madhya Pradesh, property in the goods also passed there and the goods were also actually delivered to the buyer in the State of Madhya Pradesh, then the petitioner is undoubtedly liable to pay sales tax in respect of timber sold by it to the Director. If, on the other hand, as a direct result of the sale transactions, the timber was delivered for consumption outside the State of Madhya Pradesh, then notwithstanding the fact that property in the goods passed in the State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on at Mandla Fort and other stations, by A.I.G.S., G.S.I.D., Kanpur, or an officer acting for him. The inspecting authority, after inspecting the timber, issued an inspection certificate and also put a hammer-mark on the timber approved. The approved timber also bore the private mark of the petitioner. The applicant was then required to despatch the timber by "goods train in full wagon load on Military Credit Notes" to the Commandant, C.O.D. Chowki, or the consignee intimated by the C.O.D. Chowki. The place of delivery was F.O.R. Mandla Fort and other stations that were to be intimated. The petitioner had to obtain Military Credit Notes from the inspector and was required to send the railway receipt to the consignee by registered post. As soon as the goods were booked by the railway, the applicant was required to inform, by telegram or express letter, the consignee about the despatch of timber giving the number of wagons and the railway receipt number. The assessee was also required to place in each wagon an invoice or packing note showing the number of planks by sizes and their cubic capacity. When the timber reached the place of destination, the consignee was entitled to re-inspe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctually delivered to the Director at the place of destination, that is, at the place where the goods were sent to the consignee. Again, the term about the assessee being responsible for making suitable arrangement for stocking the timber, in consultation with the inspector, in order to avoid deterioration till they were despatched, and this arrangement being without prejudice to the Director's right under the general conditions of the contract showed that the delivery of timber to the Director was at Mandla Fort where the timber was inspected. If after inspection the assessee remained the owner thereof and had the right of disposal over the timber, there was no necessity to embody this condition in the Acceptance of Tender Form. The cumulative effect of all these terms is that the property in timber passed to the Director at Mandla and the goods were actually delivered to him at that place. The matter of delivery is really clinched by the term in the Acceptance of Tender Form specifying "F.O.R. Mandla Fort" as the place of delivery. 8.. Shri Dharmadhikari, learned counsel appearing for the assessee, did not dispute that property in the goods passed in the State of Madhya Prades ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s into railway wagons or at the station (depending on the practice of the particular railway) at his own expense. These contracts differ from the ordinary inland contract of sale only in respect of the place at which delivery is to be made, which puts on the seller an item of cost over and above that of the goods themselves, and also prima facie fixes the point at which the property passes and the risk falls upon the buyer and the price becomes payable." The significance of the term in the contract concluded between the parties with regard to the place of delivery as "F.O.R. Mandla Fort" is that the timber was to be actually delivered by the petitioner to the purchaser at the railway station at its own expense. It is important to note that delivery of goods at a particular railway station under the term of "F.O.R. that station" is not any delivery of goods to a carrier for the purpose of transmitting them to the buyer within the meaning of section 39(1) of the Sale of Goods Act. In regard to the place of delivery, the term "F.O.R." can be used in connection with either the place of despatch of the goods or the place of their destination. Where goods are to be delivered "F.O.R. the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to him. There can, therefore, be no question of the operation of section 39(1) in the present case when the assessee contracted to deliver timber to the Director "F.O.R. Mandla Fort". It must be noted that section 39 of the Sale of Goods Act does not impose any legal restriction on the freedom of the buyer and the seller to make their own arrangements as to the terms on which the goods are to be delivered to a carrier for transit. The section applies only when the seller is required to send the goods to the buyer in pursuance of a contract of sale. Where parties to a sale transaction agree between themselves that the seller should deliver goods to the buyer F.O.R. the place of despatch, the effect of the arrangement is to rule out the operation of section 39 of the Sale of Goods Act. 10.. When, therefore, under the term "F.O.R. Mandla Fort" the actual delivery of timber to the purchaser was at that place, the transport and delivery of timber by rail to the consignees at various places outside the State as instructed by the parties cannot be regarded as actual delivery to the purchasers at places outside the State as a direct result of the sale transactions so as to attract Explan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /Bombay. The sales were for specific and ascertained goods in a deliverable state and the goods were despatched by the company to the destinations in Uttar Pradesh as desired by the buyers. The sales were on credit basis, payment being made by the buyers against the sales bills and railway receipts either directly or through bank or by V.P.P. In the case of sales F.O.R. Calcutta/Madras/Bombay, the company debited the buyers with the railway freight and in the case of sales "ex godown", the company debited the buyer with the railway freight and cost of carriage of the goods from the godown to the railway station. It was held by the Allahabad High Court that actual delivery of the goods as a result of the sale took place in Uttar Pradesh within the meaning of Explanation to Article 286(1) of the Constitution and the sales were, therefore, liable to sales tax in Uttar Pradesh. With respects to the learned Judges of the Allahabad High Court, we are unable to agree with the opinion expressed by them that when under the term of delivery of goods "F.O.R. Calcutta/Madras/Bombay" the goods were delivered to the buyer, there was a constructive delivery and not actual delivery. The learned Ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f delivery was not "F.O.R. Mandla Fort" but places outside the State. In regard to this objection, it is sufficient to say that no such plea was ever taken by the petitioner before the Sales Tax Officer or the Appellate Assistant Commissioner or the Conmissioner of Sales Tax. The applicant cannot, therefore, be allowed to urge that contention for the first time in this Court. 14.. The respondents' objection that as the petitioner had the remedy of appealing under section 38 of the M.P. General Sales Tax Act, 1958, against the decision of the Appellate Assistant Commissioner and bringing the matter ultimately on a reference to this Court under section 44 of that Act, and that as it had failed to avail itself of that remedy, it was not entitled to invoke the powers of this Court under Article 226 of the Constitution, does not require consideration when no relief is being granted to the applicant in this petition. But it must be mentioned that a similar objection was raised in Calcutta Co. Ltd. v. Commissioner of Sales Tax M.P. No. 228 of 1963 decided on the 19th December, 1963; since reported at [1964] 15 S.T.C. 554., and was rejected by a Division Bench of this Court by making the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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