Case: M/S. Carona Sahu Co. Ltd Vs. State Of Maharashtra

2. The appellant is a manufacturer of footwear in Bombay. During the assessment year April 1, 1954 to March 31. 1955, the appellant purchased rubber from certain dealers residing in the State of Cochin. These purchases were assessed to purchase tax by the Sales Tax Officer under S. 10(a) of the Bombay Sales Tax Act (Bombay Act III of 1953-hereinafter referred to as the Act) as they were made "from a person who is not a registered dealer". The Cochin sellers had their agents in Bombay who received orders on behalf of the appellant. The orders of the appellant were accepted by the agents in Bombay and the goods were shipped by the sellers from Cochin to Bombay. After the goods were shipped, the demand drafts were forwarded along with the Bills of Lading by the vendors to their bankers in Bombay. The Bankers endorsed the bill of lading in Bombay and handed it over to purchasers in Bombay in exchange for the price. The price was also paid in Bombay. In the Bills of Lading the sellers in Cochin were described as both consignors and consignees. After the goods were shipped, an invoice was drawn on the appellant in which were printed the followingper S. S. ---------------------from Cochin to Bombay on account and risk of Messrs Carona Sahu Co. Ltd., 15-A Elphinstone Circle, Fort,the period April 1, 1954 to March 31, 1955, the appellant was assessed to purchase tax by the Sales Tax Officer, Licence Circle, Bombay by his assessment order dated March 31, 1956 under Cl. (a) of S. 10 of the Act. The appellant preferred an appeal under S. 30 of the Act to the Assistant Collector of Sales Tax, Appeals II, Bombay Circle, Bombay but it was dismissed. A revision application to the Additional Collector of Sales Tax was dismissed. The appellant thereafter moved the Sales Tax Appellate Tribunal at Bombay for revision of the order passed by the Additional Collector of Sales Tax. By its judgment dated September 4, 1959 the Bombay Sales Tax Tribunal dismissed the revision application and confirmed the order made by the Sales Tax Authorities. At the instance of the appellant, the Sales Tax Tribunal referred the following questions of law for decision of the Bombay High Court under S. 34 (1) of the Act:1. Whether on the facts and circumstances of the case, the property in the rubber consignments passed to the applicant in Cochin i.e. outside the State of Bombay?2. Whether the purchase tax under S. 10(a) is leviable in respect of the purchases in dispute?By its judgment dated April 23, 1962 the Bombay High Court answered both the questions of law in favour of the State and against the appellant.

Court's reasoning:
In our opinion, there is no warrant for this submission and the view taken by the High Court is correct.4. The law is well established that in the case of contract for sale of unascertained goods the property does not pass to the purchaser unless there is unconditional appropriation, of the goods in a deliverable state to the contract. In the case of such a contract, delivery of the goods by the vendor to the common carrier is an appropriation sufficient to pass the property. But there is a difference in the legal effect of delivering goods to a common carrier on the one hand and shipment on board a ship under a bill of lading on the other hand, where goods are delivered on board of a vessel to be carried, and a bill of lading is taken, the delivery by the seller is not delivery to the buyer, but to the captain as bailee for delivery to the person indicated by the bill of lading. The seller may therefore take the bill of lading to his own order. The effect of this transaction is to control the possession of the captain and make the captain accountable to deliver the goods to the seller as the holder of the bill of lading. The bill of lading is the symbol of property, and by so taking the bill of lading the seller keeps to himself the right of dealing with property shipped and also the right of demanding possession from the captain, and this is consistent even with a special term that the goods are shipped on account of and at the risk of thewith the argument that the transfer of risk was an indication of the transfer of property, Lord Cairns held asthe invoice, the goods are described as being shipped on account and at the risk of the plaintiff. But along with the invoice, a bill of lading was taken from the Captain, making the cotton deliverable, not to the plaintiff, but to the shipper on board. It is perfectly well settled that, in that state of things, the entry upon the invoice, stating that the goods are to be shipped on account and at the risk of the consignee, is not conclusive but may be overruled by the circumstance of the jus disponendi being reserved by the shipper through the medium of the bill ofthis principle to the present case, we are of the opinion that the High Court rightly held, upon the facts found, that the property in the rubber consignment passed to the appellant in the State ofare unable to accept the argument put forward by Mr. Donde as correct. We see no reason for placing any limitation or qualification on the term "person" which occurs in S. 10(a).There is nothing in the context or language of the section for importing any qualification on the plain meaning of that expression. That section plainly states that purchases made by a dealer from a person who is not a registered dealer will be subject to purchase tax.The appellant is a dealer and it has made the purchases in question from the sellers who are not registered dealers. The provisions of S. 10(a) of the Act are satisfied in the present case and the purchases in question accordingly are liable todo not think there is any warrant in this argument. Section 10-C reproduces the Explanation to Article 286(1) (a) of the Constitution and it would apply where under general law the sale takes place outside the State but the goods are delivered as a direct result of the sales for consumption within the State of Bombay. The buyer referred to in S. 10-C need not necessarily be a dealer under the Act, because so far as the dealers are concerned they are only liable to three types of taxes, viz., sales tax, general tax and purchase tax, enumerated in S. 6 which is the charging section. On the other hand, S. 10-C applies to a "buyer" who brings into the State of Bombay goods which are notified in the Official Gazette. It should also be noticed that S. 10-C deals only with certain specific goods to be notified by the State Government, whereas S. 10(a) includes all purchases made from persons other than registered dealers. It is manifest that the scope and ambit of these two sections are different. We are of opinion that Mr. Donde is unable to make good his submission on this aspect of the case and the High Court has rightly answered this question of law also in favour of the State and against the assessee.