TMI Blog1975 (2) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... despatch to the District Controller of Stores (CAN), Western Rly., Ajmer." The officer designated as Inspecting Officer was the Works Manager (Carriage), Workshop, Lower Parel, Bombay. The relevant conditions contained under the heading "special instructions" are to the effect that 100 per cent of the payment would be made on receipt of goods by the consignee in good condition. It was further provided that the contractors (respondents) were to be entirely responsible for the execution of the contract in all respects in accordance with the terms and conditions and any approval which the Inspector might have given in respect of the stores, materials or other particulars and the work or the workmanship involved in the contract (whether with or without test carried out by the contractors or the Inspector) would not bind the purchaser and notwithstanding any approval or acceptance given by the Inspector, it would be lawful for the consignee of the stores on behalf of the purchaser to reject the stores on arrival at destination if it was found that the stores supplied by the contractor were not in conformity with the terms and conditions of the contract in all respects. It was further p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified in law in holding that the sales amounting to Rs. 64,849-7-0 had taken place outside the State of Bombay? (2) Whether there was any evidence before the majority of the Tribunal to come to the conclusion that the goods held by the respondent moved from the State of Bombay to Ajmer under the contract of sale?" For consideration of the points raised in this reference, it is necessary to set out certain provisions of article 286 of the Constitution of India prior to its amendment in 1956. The relevant portion of that article read as follows: "286. (1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place- (a) outside the State; or (b) in the course of the import of the goods into, or export of the goods out of, the territory of India. Explanation.-For the purposes of sub-clause (a), a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consumption in that State, notwithstanding the fact that under the general law relating to sale of goods the property in the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at their destination at Ajmer if it was found that the goods supplied by the respondents were not in conformity with the terms and conditions of the contract in all respects. This makes it quite clear that the inspection by the Inspection Officer at Bombay was merely in the nature of a preliminary inspection so that the goods, which were not according to the specifications should not be sent at all to Ajmer and the final inspecting authority was the consignee at Ajmer. It is also significant that the respondents were made entirely responsible for the execution of the contract in all respects and it was provided that any deterioration of the goods even after inspection and acceptance by the Inspector at Bombay but before the receipt by the consignee at Ajmer would be to the account of the respondents. It was further provided that the provision and arrangement of transport and wagons would not be the responsibility of the purchaser but of the respondents, which would clearly suggest that the liability in respect of the goods until they reach the consignee remained entirely with the respondents. In this connection, we may usefully refer to the decision of the Supreme Court in Bengal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e actually delivered to the purchaser at that place, and hence the sale of such sleepers was not exempt from the imposition of sales tax by the State of Madhya Pradesh. On appeal to the Supreme Court it was observed by the Supreme Court that the whole of the contract had to be taken into account and then the intention of the parties as to where actual delivery was to take place thereunder had to be found out. Their Lordships of the Supreme Court have pointed out that in order to find out whether the explanation to article 286(1)(a) was applicable, it was not necessary for the court to consider where the property in the goods had passed nor was it to guide itself by section 39(1) of the Sale of Goods Act, which only raised a prima facie inference as to delivery. It was held by the Supreme Court that there could be no doubt that while the major part of the operations of the contractor (appellant) with regard to delivery were to be performed at Dhamtari, he was not relieved of all liability as to delivery until the goods were finally accepted at the destination by the consignee. Having regard to the provisions of the contract, which we have already referred to earlier, it was held tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mer mark on the timber approved. The timber was then despatched by goods train in full wagon loads on military credit notes to the specified consignees. The appellant sent the railway receipts to the consignee by registered post. The consignee was entitled at the destination to reinspect the goods, check the shortage, if any, and reject the timber not conforming to specifications. The appellant was paid 90 per cent of the price of each consignment on proof of despatch and the balance was to be paid on receipt of the consignment in good condition. The sales tax authorities of the State of Madhya Pradesh assessed the appellant to tax on those sales. The appellant applied to the High Court under article 226 of the Constitution of India for a writ to quash the assessments. The High Court held that the cumulative effect of all the terms of the contract was that the goods were actually delivered at Mandla Fort and dismissed the petition. The Supreme Court rejected the appeal of the appellant against the decision of the High Court. It was submitted by Mr. Shah that on the ratio of this decision it should be held that in the case before us the goods were actually delivered for actual consu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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