Full Judgment Text
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PETITIONER:
J. V. GOKAL & Co. (PRIVATE) LTD.
Vs.
RESPONDENT:
THE ASSISTANT COLLECTOR, OF SALES-TAX(INSPECTION) AND OTHERS
DATE OF JUDGMENT:
25/01/1960
BENCH:
SUBBARAO, K.
BENCH:
SUBBARAO, K.
SINHA, BHUVNESHWAR P.(CJ)
GAJENDRAGADKAR, P.B.
GUPTA, K.C. DAS
SHAH, J.C.
CITATION:
1960 AIR 595 1960 SCR (2) 852
ACT:
Sales Tax-Sale in the course of import-Goods on high seas-
Transfer of shipping documents against Payment - Whether
amounts to delivery of goods-Whether transaction exempt from
tax Constitution of India, Art, 286(1)(b).
HEADNOTE:
The petitioner who entered into contracts with the
Government of India for the supply of certain quantities of
sugar of foreign origin, placed orders with dealers in
foreign countries and made arrangements for transporting the
goods to Bombay by engaging steamers. When the goods were
on the high seas and before the vessels arrived at Bombay
harbour, the petitioner delivered to the Government the
shipping documents- including the bill of lading pertaining
to the goods and received the price. After the goods
reached the port, they were taken delivery of by the
Government of India after paying the requisite customs
duties to the authorities concerned For the assessment year
1954-55, the Assistant Collector of Sales Tax held that
sales tax was payable by the petitioner in respect of the
transaction relating to the sugar sold to the Government.
The petitioner claimed, inter alia, that the sales had taken
place in the course of import and therefore they were not
liable to sales tax under Art. 286(1)(b) of the Constitution
of India. But it was contended for the Sales Tax
Authorities that the sales were not in the course of import
and that, in any case, under the terms of the contracts the
intention of the parties was that notwithstanding the
delivery of the bills of lading against payment the property
in the goods should not pass to the Government till actual
delivery was made.
Held: (1) that under Art. 286(1)(b) of the Constitution
of India the course of the import of the goods starts at a
point when the goods cross the customs barrier of the
foreign country and ends at a point in the importing country
after the goods cross the customs barrier;
(2) that an importer can, if he receives the shipping
documents, transfer the property in the goods when they, are
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on the high seas to a third party by delivering to him
shipping documents against payment and such a sale is one
made in the course of import;
(3) that the delivery of a bill of lading while the goods
are afloat is equivalent to the delivery of the goods
themselves;
Sanders Brothers v. Maclcan & Co., (1883) 11 Q. B. D. 327,
relied on.
(4) that on a true construction of the contracts in
question the property in the goods passed to the Government
of India
853
when the shipping documents were delivered to them against
payment; and
(5) that the sales in question took place in the course of.
import into India and were exempted from sales tax under
Art.286(1)(b) of the constitution.
State of Travancore-Cochi v. The Bombay Co. Ltd., [1952]
S.C. R. 1112, followed.
JUDGMENT:
ORIGINAL JURISDICTION: Petition No. 38 of 1959. Petition
under article 32 of the Constitution ofIndia for enforcement
of Fundamental Rights.
Purshottam Tricumdas, and 1. N. Shroff, for the
Petitioner.A. V. Viswanatha Sastri, R. Ganapathi Iyer and
R. H. Dhebar, for the respondents.
N. A. Palkhivala and I. N. Shroff, for Interveners Nos. 1
to 3 The Bombay Chamber of Commerce & Industry, Bombay and
others).
C. K. Daphtary, Solicitor General of India and T.M. Sen,
for intervener No. 4 Attorney-General for India).
1960. January 25. The Judgment of the Court was delivered
by
SUBBA RAO, T.-This is a petition under Art. 32 of the
Constitution for quashing the order of the first respondent
dated February 9, 1959, setting aside the order of the
second respondent allowing a deduction of an amount of Rs.
1,86,42,730-15-0 from the Petitioners sales tax turnover on
the ground that the said amount was not liable to tax by
virtue of s. 46 of the bombay Sales Tax Act, 1953 (Act III
of 1953), (hereinafter called the Act).
The material facts are not in dispute and they may be
briefly stated The petitioner is a private company within
the meaning of the Companies Act, 1956 and has its
registered office at Kasturi Buildings, Bombay -1 on
March 24, 1954 and April 15, 1954, into two contracts with
the Government of India for selling to the latter two
consignements of sugar-one of 9500 Long Tons of sugar of
Peruvian orgin and the other of 25000 metrice Tons of sugar
of continental origin. To fulfil the terms of the
contracts, the petitioner placed order with dealers in
foreign countries. The following are the particulars
relating to the first contract dated
854
March 24, 1954, for the supply of 9500 Long Tons of sugar:
(i) 3rd April Letter of Credit opened by the petitioner.
(ii) 3rd May, 1954 S. S. Alba sails from Salaverry (Peru)
carrying 9782.01688 Long Tons of sugar.
(iii) 26th May, 1954
The petitioner delivered to its Bankers, the Central Bank
ofIndia Limited, Bombay, along with the invoice for Rs.
50,35, 405-11-0 the Documents of Title (viz. the Bills of
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Lading duly endorsed in favour of the Government of
India., Ministry of Food & Agriculture (Agriculture) to the
above goods) together with other papers (such as
Certificates) and instructed the said Bankers to
present the same to the Government of India, and to
collect the said amount of Rs. 50,35,405-11-0 from the
Deputy Accountant General (Food & Rehabilitation),New
Delhi.............
(iv) 7th June 1954
Payment made to petitioner’s Bankers by the Government
ofIndia against delivery of Invoice and Bills of Lading.
(v) 26 th June 1954
Date of arrival of S. S. Alba at Bombay harbour.
The corresponding details -pertaining to the second
contract are as follows
Vessel Vessel vassel
S. S. Eleni S. S. S. S. Inger
Stathatos Giovanni Marie
Amendola
I. II. III. IV.
(1) 9910-858 9919-7158 4464-3I5 Total 24292
- 8888 Tons
Tons. Tons. Tons
(ii) 5/6th 5/6th 15/6th Letter of Credit opened
June, 954. June, 1954. June, 1954 by petitioner.
(iii) 10th 31st July, 31st July, Date of
Sailing of vessel
July, 954. 1954. 1954,
855
Vessel Vessel Vessel
S. S. Eleni S. S. S. S. Inger
Stathatos Giovanni Marie
Amendola
(1V) 22nd 12th August,16th August,July, 1954. 1954-
1954.
The petitioner delivered to its Bankers, the Bank of
Baroda Limited, Bombay, along with its invoices for Rs.-
50,43,5o1-8-o, Rs. 22, 69,800-13-0, Rs. 50,38, 997-14-o
respectively the Documents of Title (viz. the Bills of
Lacling) duly endorsed in favour of the Government of India,
Ministry of Food & Agriculture (Agriculture) to the above
goods together with other papers (such as Certificates) and
instructed the said Bankers to present the same to the
Government of India and collect the said amounts of Rs.
50,43, 501-8-0, Rs. 22,69, 800-13-o and Rs. 50,38, 997-14-0,
from the Deputy Accountant General (Food & Rehabilitation)
New Delhi. .................................
(V)26th 18th August, 19th August,
Payment made to the July, 1954. 1954. 1954. petitioner’s
Bankers by .the Government of India against delivery of
Invoices and Bills of Lading.
(V1)12th 3rd Septem- 9th Septem- August 1954.
Date of arrival of Vessel at Bombay Harbour.
The foregoing particulars disclose that some weeks before
the vessel arrived at the Bombay harbour, i.e., when the
vessels were on the high seas, the Government of India
received the documents of title, including bills of lading,
pertaining to the sugar purchased by them and paid the price
to the petitioner. Indeed after the goods reached the port,
they were unloaded, taken delivery of, and cleared by the
Government of
109
856
India after paying the requisite customs duties to the
authorities concerned.
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For the assessment year 1954-55 i.e., April
1, 1954 to March 31, 1955, the petitioner was assessed to
sales tax by the Sales Tax Officer, Licence Circle,
Division 1, Bombay. In calculating the turn-over of the
petitioner, the Sales Tax Officer deducted the price of the
said two sales from the petitioner’s turn-over. On January
31, 1958, the first respondent, the Assistant Collector of
Sales Tax, issued a notice to the petitioner under s. 31 of
the Act proposing to review the said assessment order passed
by the Sales Tax Officer. In due course the petitioner
filed objections and made his representations. The
petitioner contended before the first respondent that the
notice should have been issued, if at all, under s. 15 and
not under s. 31 of the Act inasmuch as the sales had been
disclosed to the Sales Tax Officer and the deduction of the
same had been allowed by him. it was also pleaded that in
any event the sales had taken place in the course of import
and therefore they were not liable to sales tax. The first
respondent rejected both the contentions and held that sales
tax was payable in respect of the said two transactions. He
reassessed the petitioner to a total amount of sales tax and
general tax of Rs.10,22,850-12-0 less Rs. 315-3-0 already
paid by the petitioner, i.e., a sum of Rs. 10,22,535-9-0 and
directed the second respondent, the Sales Tax Officer, to
issue a notice of demand for the said amount. Pursuant to
that order, the second respondent issued a notice dated
February 14, 1959. The petitioner has filed the present
petition for the issue of a writ of certiorari cancelling
the demand notice issued by the second respondent.
The learned Solicitor-General intervened on behalf of the
Union Government and Mr. Palkbivala intervened for
interveners 1 to 3, and both of them supported the
petitioner.
Mr. Purshottam Tricumdas, appearing for the petitioner,
raised before us the following contentions: (1) Under Art.
286(1)(b) of the Constitution, as it stood before the
Constitution (Sixth Amendment) Act, 1956, the sales in
question were not liable to sales tax inasmuch as they took
place in the course of import of the
857
goods into the territory of India; (2) the said sales were
exempted from sales tax by the Bombay State under the
explanation to Art. 286(1) of the Constitution, as the goods
were delivered for the purpose of consumption in States
other than Bombay; (3) the sales were effected outside the
State of Bombay i.e., New Delhi, and therefore they were
also exempted under Art. 286(1)(a) of the Constitution; and
(4) the first respondent could have only interfered with the
earlier order of assessment under s. 15 of the Act within
three years from the end of the assessment year 1954- 55,
i.e., March 31, 1955, and that the said period having
elapsed, he had no power to interfere in revision under s.
31 of the Act.
The first point is the most substantial one in the case and
if the petitioner succeeds on that point, no other question
would arise for consideration.
The first question turns upon the interpretation of Art.
286(1)(b) of the Constitution before it was amended by the
Constitution (Sixth Amendment) Act, 1956. The said Article
read;
" (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-
(b) in the course of the import of goods into, or export of
the goods out of, the territory of India. " Under this
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Article, if the sales by the petitioner to the Government of
India took place in the course of the import. of the goods
into the territory of India, the Bombay State would have no
power to impose sales tax on the said sales.
What does the phrase "in the course of the import of the
goods into the territory of India " convey ? The crucial
words of the phrase are " import " and " in the course of’.
The term "import" signifies etymologically " to bring in ".
To import goods into the territory of India therefore means
to bring into the territory of India goods from abroad. The
words " course " means it progress from point to point ".
The course of import, therefore, starts from one point and
ends at another. It starts when the goods cross the customs
barrier in foreign country and ends when they cross the
customs
858
barrier in the importing country. These words were
subject of judicial scrutiny by this Court in State of
Travancore- Cochin v. Shunmugha Vilas Cashew Nut Factory(1).
Construing these words, Patanjali Sastri C.J., observed at
p. 62:
The word " course " etymologically denotes movement
from one point to another, and the expression " in the
course of " not only implies a period of time during which
the movement is in progress but postulates also a connected
relation.
" As regards the limits of the course, the learned Chief
Justice observed at p. 68:
" It would seem, therefore, logical to hold that the course
or the export out of, or of the import into the territory of
India does not commence or terminate until the goods cross
the customs barrier. "
Das, J., as he then was, in his dissenting judgment
practically agreed with Patanjali Sastri, C. J., on the
interpretation of the said words. The learned Judge
expressed his view at p. 92 thus:
"The word " course " conveys to my mind the idea of a
gradual and continuous flow, an advance, a journey, a
passage or progress from one place to another.
Etymologically it means and implies motion, a forward
movement. The phrase " in the course of " clearly has
reference to a period of time during which the movement is
in progress. Therefore, the words "in the course of the
import of the goods into and the export of the goods out of
the territory of India " obviously cover the period of time
during which the goods are on their import or export journey
".
We respectfully agree with the aforesaid observations of the
learned Judges. The course of the import of the goods may
be said to begin when the goods- enter their import journey,
i.e., when they cross the customs barrier of the foreign
country and end when they cross the customs barrier of the
importing country.
The next question is, when can it be said that a sale takes
place in the course of import journey ? This Court in State
of Travancore-Cochin v. The Bombay Co. Ltd. (2) held that a
sale which occasioned
(1) [1954] S.C.R. 53
(2) [1952] S.C.R. 1112
859
the export was a sale that took place in the course of
export of the goods. If A, a merchant in India, sells his
goods to a merchant in London and puts through the
transaction by transporting the goods by a ship to London,
the said sale which occasioned the export is exempted under
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Art. 286(1)(b) of the Constitution from the levy of sales
tax. The same principle applies to a converse case of goods
which occasioned the import of the goods into India. This
Court again in State of Travancore-Cochin v. Shanmugha Vilas
Cashew Nut Factory (1) extended the doctrine to a case of
sale, or a purchase of goods effected within the State by
transfer of shipping documents while the goods were in the
course of transit. The decision dealt with three types of
purchases, viz., (i) purchases made in the local market;
(ii) purchases made in the. neighbouring districts of an
adjacent State; and (iii) imports from Africa. The imports
from Africa consisted of two groups-one group consisted of
goods that were purchased when they were on the high seas
and shipped from the African ports to Cochin or Quilon : we
are not concerned with the other group. In the said case
some commission agents at Bombay arranged for the purchase
on behalf of the assessee, got delivery of the shipping
documents at Bombay through a bank which advanced money
against the shipping documents and collected the same from
the assessees at destination. This Court, by a majority,
held that, in respect of the purchases falling under the
first group of imports, the commission agents acted merely
as agents of the respondents therein and that the said
purchases occasioned the import and therefore came within
the exemption. That was not a case where the goods were
sold by an importer in India to a third party when the goods
were on the high seas. It was a case where a party in
Cochin purchased goods which were on the high seas through
his agent at Bombay and the agent paid the price through a
bank against the shipping documents. But the learned Judge,
Patanjali Sastri, C. J., expressing the majority view,
considered the scope of the exemption in all its aspects
and, summarized the conclusions thus at p. 69:
(1) [1954] S.C. R. 53.
860
" Our conclusions may be summed up as follows:-
(1) Sales by export and purchases by import
fall within the exemption under article 286(1)(b) (2)
Purchases in the State by the exporter for the purpose of
export as well as sales in the State by the importer after
the goods have crossed the customs barrier are not within
the exemption. (3) Sales in the State by the exporter or
importer by transfer of shipping documents while the goods
are beyond the customs barrier are within the exemption,
assuming that the State power of taxation extends to such
transactions. "
Das, J., as he then was, in his dissenting judgment, agreed
with Patanjali Sastri, C. J., on the third conclusion with
which we are now concerned.’ The learned Judge put forward
his view at p. 94 thus:
" Such sales or purchases, by delivery of shipping documents
while the goods are on the high seas on their import journey
were and. are well recognized species of transactions done
every day on a large scale in big commercial towns like
Bombay and Calcutta and are indeed the necessary and
concomitant incidents of foreign trade. To hold that these
sales or purchases do not take place " in the course of "
import or export but are to be regarded as purely ordinary
local or home transactions distinct from foreign trade, is
to ignore the realities of the situation. Such a
construction will permit the imposition of tax by a State
over and above the customs duty or export duty levied by
Parliament. Such double taxation on the same lot of goods
will increase the price of the goods and, in the case of
export, may prevent the exporters from competing in the
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world market and, in the case of import, will put a greater
burden on the consumers. This will eventually hamper and
prejudically affect our foreign trade and will bring about
precisely that calamity which it is the intention and
purpose of our Constitution to prevent. "
The learned Judge also in his judgment elaborately
considered the great hardship that would be caused to an
Indian importer if he was not permitted to sell the goods
which were on the high sear, by delivery of
861
shipping documents against payment. Though that case dealt
with a different situation, we agree with the learned
Judge’s observations that an importer can, if he receives
the shipping documents, transfer the property in the goods
when they are on the high seas to a third party by
delivering to him shipping documents against payment and
such a sale is one made in the course of import.
The legal position vis-a-vis the import. sale can be
summarized thus; (1) The course of import of goods starts at
a point when the goods cross the customs barrier of the
foreign country and ends at a point in the importing country
after the goods cross the customs barrier; (2) the sale
which occasions the import is a sale in the course of
import; (3) a purchase by an importer of goods when they are
on the high seas by payment against shipping documents is
also a purchase in the course of import and (4) a sale by an
importer of goods, after the property in the goods passed to
him either after the receipt of the documents of title
against payment or otherwise, to a third party by a similar
process is also a sale in the course of import.
The next question is whether the sales by the petitioner to
the Government of India are sales in the course of import.
From the facts narrated supra, it is seen that the
petitioner, pursuant to the earlier contracts entered into
with the Government of India, delivered the shipping
documents, including the bill of lading to the Government
against payment when the goods were on the high seas. In
view of the foregoing discussion, it should be held that the
sales fall under the fourth principle and therefore they
were sales that took place in the course of import of the
goods into India. A bill of lading is " a writing, signed
on behalf of the owner of the ship in which goods are
embarked, acknowledging the receipt of the goods, and
undertaking to deliver them at the end of the voyage subject
to such conditions as may be mentioned in the bill of
lading’. It is well settled in commercial world that a bill
of lading represents the goods and the transfer of it
operates as a transfer of the goods. The legal effect of
the transfer of a bill of
862
lading has been enunciated by Bowen, L.J., in Sanders
Brothers v. Madan & Co. (1) thus at p. 341
"The law as to the indorsement of bills of
lading is as clear as in my opinion the practice of all
European merchants is thoroughly understood. A cargo at
sea while in the hands of the carrier is necessarily
incapable of physical delivery. During this period of
transit and voyage, the bill of lading by the law merchant
is universally recognised as its symbol, and the indorsement
and delivery of the bill of lading operates as a symbolical
delivery of cargo. Property in the goods passes by such
indorsement and delivery of the bill of lading, whenever it
is the intention of the parties that the property should
pass just as under similar circumstances the property would
pass by an actual delivery of the goods. And for the
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purpose of passing such property in the goods and completing
the title of the indorsee to full possession thereof, the
bill of lading, until complete delivery of the cargo has,
been made on shore to some one rightfully claiming under it,
remains in force as a symbol, and carries with it not only
the full ownership of the goods, but also all rights created
by the contract of carriage between the shipper and the
shipowner. It is a key which in the hands of a rightfull
owner is intended to unlock the door of the warehouse,
floating or fixed, in which the goods may chance to be. "
We have quoted the passage in extenso as it clearly and
fully states the law on the subject. It is not disputed
that the law in India is also similar to that in England.
The delivery of the bill of lading while the goods are
afloat is equivalent to the delivery of the goods
themselves. The learned counsel concedes that ordinarily
that will be so, but contends that in the present case, the
contract clearly indicates that the intention of the parties
was that till actual delivery was made the property in the
goods would not pass to the buyer. Both the contracts are
similar in terms and they follow the standard terms pres-
cribed by the Government. The main terms of the contracts
may be summarized thus:
(1) (1883) 11 Q.B.D. 327.
863
The first clause defines the term "sellers" to mean the
party selling the sugar and the term "the Government" to
mean the President of India. Clause 2 prescribes that
suitable gunny bags approved by the Government should be
used for importing sugar. Clause 3 provides for inspection
of quality, weight and packing of sugar by the Government at
the time of shipment. Clause 4 says that sugar shall be
shipped to particular ports. Clause 5 compels the sellers
to engage steamers on charter terms, empowers the Government
to take delivery of the goods at the port of discharge from
the ship’s rail and imposes the burden on the sellers to
meet the expenses of stevedoring, lighterage where
necessary, hiring of cranes, dock dues and pilotage. Clause
6 deals with the mode of payment for supplies made; under
that clause the sellers are to submit a bill for full
payment of cost and freight value to the Government in the
Ministry of Food and Agriculture, New Delhi, duly supported
by a complete set of clean on board bills of lading
consisting of three negotiable and three non-negotiable
copies, a certificate of origin of sugar, a certificate of
quality, weight and packing, a certificate from the ship-
owners that the freight has been paid in full and that the
ship owners retain no lien whatsoever on the cargo on that
account. Under clause 6 (c) letter of credit shall be
opened by the sellers at their cost, and the Government of
India agree to arrange for the foreign exchange as necessary
to the extent of the cost-and-freight-value of the quantity
of sugar purchased on the production of an import licence
which will be issued on application to the proper authority
on their prescribed form. Clause 8 confers on the
Government a right, in the event of the sellers’ failure to
supply the sugar in accordance with the terms of the
contract, to recover any sum as liquidated damages, and/or
by way of penalty upto a prescribed amount. Clause 9
authorizes the Government, in the event of the sellers
failing to observe or perform any provisions of the
contract, to terminate the contract forthwith. Clause II
under the heading "Force Majeure" confers on the Government,
in case delivery in whole or in part is prevented or delayed
directly
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110
864
or indirectly by any cause of Force Majeure, war, strikes,
rebellion, insurrection, political disturbances, civil
commotion, fire or flood, on account of plague or other
epidemics, the right to cancel the contract for the
quantities so prevented or delayed. After the sellers
entered into the contracts, they obtained the requisite
licences from the Government, opened letters of credit,
placed orders with foreign companies, engaged a steamer on
charter terms, took delivery of the goods from the foreign
firms and, when the goods were on the high seas, delivered
the documents of title to the Central Government against
payment and the said Government, taking the licence from the
sellers, cleared the goods at the Bombay harbour.
Let us now scrutinize the terms of the contract to ascertain
whether they disclose any intention of the parties that
notwithstanding the delivery of the bill of lading against
payment the property in the goods should not pass to the
Government. The circumstances under which the contracts
were entered into between the parties indicate that both the
parties were interested to see that property in the goods
passed in the ordinary way when the shipping documents were
handed over to the Government against payment. The sellers
had to meet their liability to the foreign companies with
whom they opened letters of credit and the Government must
have been anxious to get the title to the goods so that the
sellers might not divert the goods towards their other
commitments or to other buyers for more tempting prices.
Under the contract every safeguard for securing the goods of
agreed specifications was provided for in the earlier
clauses and therefore there was no reason for postponing the
passing of the property in the goods to the buyer till the
goods were actually delivered in the port. The sellers on
their side would have been anxious that the property should
pass when the goods were on the high seas, for otherwise
they would be compelled to pay sales tax. Nor are the
clauses of the contracts relied upon by the respondents
inconsistent with the property in the goods passing in
accordance with the mercantile usage. The liability
undertaken by the sellers to meet the expenses relating
865
to stevedorage, lighterage where necessary, hiring of
cranes, dock dues and pilotage, at the time of delivery of
the goods on which reliance is placed to indicate a contrary
intention, in our view, has nothing to do with the question
raised, for that liability can rest with the sellers even
after the property in the goods has passed to the buyers;
nor clauses 9 to 11 on which strong reliance is placed by
the learned counsel are inconsistent with the property in
the goods passing to the buyer; they could legitimately be
made applicable to a point of time when the property in the
goods has not passed to the buyer. If the sellers fail to
observe the performance of any provisions of the contracts
before the property in the goods passed to the buyer, under
clause 9 of the contracts the buyer can cancel the contract.
So too, under cl. II, if any contemplated mishap takes
place on the high seas by force majeure, the seller shall
send a cablegram to that effect and the buyer is empowered
to cancel the whole of the contract or a part of it. This
also applies to a point of time before the property in the
goods has passed to the buyer. If, on the other hand, the
seller delivers the shipping documents against payment and
thereafter if he does not deliver the goods at the port, the
buyer may have other remedies for the recovery of damages
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etc. But that right is not covered by either cl. (9) or el.
(II) of the contract. A scrutiny of all the terms of the
contract does not indicate the intention that the property
in the goods shall not pass to the buyer notwithstanding
delivery of shipping documents against payment.
Apart from the terms of the contract, reliance is also
placed by the learned counsel for the respondents on the
following circumstances: (i) the seller himself chartered
the ship; and (ii) the licence issued by the Government was
made non-transferable. We do not see how these two facts
indicate the contrary intention. If the seller himself
chartered a steamer. when the goods he purchased were loaded
in the ship, the property in the goods passed to him and
therefore he was in a position to sell the same to the
Government. The fact that the licence was non-transferable
has no relation to the property in the goods passing
866
to the Government. The licence issued by the Govern-
ment is an exercise of the statutory power under the
relevant Act. Whether the petitioner sold the goods to the
Government or to a third party, he had to obtain a
licence. Indeed in the present case, the licence was given
to the seller with the express object of fulfilling the
contracts with the Government and was issued several days
after the contracts were executed, and indeed the Government
took the licence from the seller and cleared the goods
through their officer.
For all the foregoing reasons we hold that the property in
the goods passed to the Government of India when the
shipping documents were delivered to them against payment.
It follows that the sale of the goods by the petitioner to
the Government of India took place when the goods were on
the high seas.
That being so, the sales in question must be held to have
taken place in the course of the import into India and
therefore they would be exempted from sales tax under Art.
286(1)(b) of the Constitution.
In this view, no other question would arise for
consideration. ln the result the order of the Assistant
Collector of Sales Tax is set aside and that of the Sales
Tax Officer is restored. The respondents will pay the costs
of the petitioner.
Petition allowed.