A. V. THOMAS & CO. LTD. versus DEPUTY COMMISSIONER OF AGRICULTURAL INCOME TAX

Citation: [1963] SUPP. 2 S.C.R. 608 · Decided: 30-11-1962 · Supreme Court of India · Bench: S.K. DAS · Disposal: Appeal(s) allowed

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Judgment (excerpt)

1962 
608 SUPREME COURT REPORTS [1963]SUPP. 
A. V. THOMAS & CO. LTD. 
v. 
DEPUTY COMMISSIONER OF 
AGRICULTURAL INCOME TAX 
(S. K. DAB, J. L. KAPUR, A. K. SARKAR, 
M. HIDAYATULLAH AND RAGHUBAR DAYAL, JJ.) 
Sales Te1x-GoodB stored in Travanwre-Sale by auction 
ill Madras by aamples-Delirery in Trai·ancore-Oonsumption 
neitl1er in Madras nor in Travancore-IVkether sales taxable i11 
J.'ravancore-Oonstitution of India, Art. 286 (1). 
The sales of teas were by auction which was conducted 
in Fort Cochin in Madras State. The price was paid in Fort 
Cr,chin and delivery orders were also given there for goods 
which were at Willingdon Island in Travancore Cochin State. 
From Willingdon Islands the goods were acnt for consumption 
to other States and to foreign countries. The State of Travan-
core Cochin sought to tax theac transactions for sales tax. 
Held, that the property in the goods passed when the 
contract was accepted on the fall of the hammer in Fort Cochin. 
Under Art. 286(1) it was the "passing of the property within 
the State" that was intended to be fastened on for the purpose 
of determining whether the 
~ale was "inside'' or "outside" the 
State. Subject to the operation of the "explanation" that State 
in which property passed would be the only State which 
would have the power levy the tax on the sale. But the explana-
tion did not apply in the present caac as there was no delivery 
as a direct result of the sale for consumption in any particular 
State. 
Indian Oopptr Corporation Ltd. v: State of Bihar, [1961] 
2 S.C.R. 276, followed. 
CrvIL APPNLLA'I'E JumsvICTION : Civil Appeal 
No. IJ28 of 1061. 
Appeal from the judgment and order dated 
February 24, 1960, of the Kerala High Court in Tax 
Revision Case No. 22of1957. 
G. B. Pai, J. B. Dadachanji, 0. O. Mathur and 
Ravinder Narain, for the appellant. 
2 S.C.R. SUPREME COURT REPORTS 
609 
V. P. Gopalan Nambiar, Advocnte General, 
State of Kerala and Sardar Bahad,ur, for the respon· 
dent. 
A. V. Viswa1iatl1a 
Sastri, S. N. 
Andley, 
Rumeshwar Nat/1 and 1'. L. Vuhra, for the Inter· 
veners. 
l !.162. 
November 30. The .J udgemcnt of the 
Court was delivered by 
KAPUR, J.-This appeal by certificate of the 
High Court of Kerala raises the question of the 
taxability of sales of tea under the Travancore-
Cochin General Sales Tax Act, hereinafter termed 
the Act, and the Rules made thereunder. 
The 
assessment period is 1952-53 and the turnover was of 
a sum 
of Rs.3, 77,644/-
on which 
a tax 
of 
Rs. 5900/ ll/- was levied. The appellant before us 
is the asses~ee company and the respondent is the 
Deputy Commissioner of Agricultural Income-tax 
and Sales tax. 
Mr. A. V. Viswanatha Sastri 011 
behalf of 
Outcherloney Valley Estates (1938) Ltd. has applied 
for intervention on the ground that in case of that 
company also the State of Kerala has, ·on similar 
facts, levied sales tax on certain transaction, that the 
High Court or Kcrala ha5 upheld the taxability of 
the transactions relying on the judgment which is 
under appeal in the present case, and that the 
intervener has obtained Special leave to appeal 
against that judgment and the records are under 
print. In view of these circumstances we have 
allowed that company to intervene in the present 
appeal. 
The assessment was made on March 30, 1955, 
under r. 33(i) of the Act on the ground that the sales 
of tea had escaped assessment. The appeal against 
1962 
A.V. Thoma:• 0: Cu. 
Ltd. 
v. 
Deputy Commissio11tr 
of Agricult11ral 
lnwme Tax 
1962 
A.V. Thomas & Co. 
Ltd. 
v. 
Deputy Commissioner 
of '4.gricultural 
Income Ta."C 
JCapur, J. 
610 SUPREME COURT REPORTS [1963] SUPP. 
that order was unsuccessful and thereafter a further 
appeal was taken to the Sales tax Appellate Tribunal 
which by its order dated August I 2, 1957, held that 
the ban under ·Art. 286(l)(a) of the Constitution on 
sales which are outside the State applied in regard 
to the salrs of' full lots' and therefore remanded the 
case to the Sales tax Officer. 
Against that order a 
revision wa~ taken to the High Court which held 
that the decision of the Appellate Tribunal in regard 
to the applicability of Art. 286(1 )(a) was erroneous 
and therefore the sales were subject to sales tax 
under the Act. It is against that judgment and order 
that the assessee company has come to this court 
on a certificate of the High Court. 
Put shortly, the nature and procedure of sales 
of teas was this; that the teas were stored in the go. 
downs at

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