LexBAYYANA BHIMAYYA versus THE GOVERNMENT OF ANDHRA PRADESH
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3 S.C.R. SUPREME COURT REPORTS 267 BAYYANA BHIMAYYA v. THE GOVERNMENT OF ANDHRA PRADESH (J. L. KAPUR, M. HIDAYATULLAH and J. c. SHAH, JJ.) Sales Tax-Delivery order-Mealfing of-Two separate tran- sactions-Sales-tax, if leviable at both points-Sale of Goods Act, r930 (Ill of r930), s. 2(4)-Madras General Sales Tax Act, I939 (Mad. IX of r939). The respondents dealt in gun!lies. They first entered into contracts with two Mills agreeing to purchase gunnies at a cer- tain rate for future .delivery, and also entered into agreement with third parties, by which they charged something extra from those third parties and handed over the delivery order known as kutcha delivery order. The Mills h~wever did not accept the third parties as contracting parties, but only as the agents of the appellants and delivered the goods against the kutcha delivery orders, and collected the Sales Tax from the third parties. The tax authorities treated these transactions between the appellant and the third parties as fresh sales and sought to levy sales-tax again, which the appellants contended, was not demandable as there were no second sales; the delivery of a kutcha delivery order did not amount to a sale of goods, but was only an assign- ment of a right to obtain delivery of gunnies which were not in existence and not appropriated to the contract; this was only an assignment of a forward contract. Held, that the agreements between the parties showed that third parties were not recognised by the sellers. A delivery order being a document of title to goods, the possession of such a document not only gave the right to recover the goods but also to transfer them to another by endorsement or delivery. There being two separate transactions of sale, one between the Mills and the original purchasers and the other between the original purchasers and third parties, tax was payable at both the points. The Sales Tax Officer, Pilibhit v. M/s. Budh Prakash Jai Prakash, [1955] I S.C.R. 243, Poppatlal Shah v. The State of Madras, [1953] S.C.R. 677, and The State of Andhra v. Ko/la Sree- ramamurthy, decided on June 27, 1957, referred to. CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 223 and 224 of 1960. Appeals from the order dated November 23, 1956, of the Andhra Pradesh High Court, Hyderabad, in Tax Revision Cases Nos. 17 and 18 of 1956. December x4. 268 SUPREME COURT REPORTS [1961) '96° C. ](. Daphtary, Solicitor-General of India and T. V. Bayyana R. Tatachari, for the appellants. Bhimay_va K. N. Rajagopal Sastr-i and D. Gupta, for the res- Tht Go~,'ernment pondent. of Andhra Pradesh 1960. December 14. The Judgment of the Court llidayatullah J. was delivered by • HrnAYATULLAH, J.-These are two appeals on certificates granted by the High Court of Andhra Pra- desh against a common judgment in a sales tax revi- sion filed by the appellants in the High Court. The facts are as follows: In tlie year 1952-53, for which the assessment of sales tax was in question, the appellants dealt in gunnies, and purchased them from two Mills in Vishakapatnam District and in res- pect of which they issued delivery orders to third parties, with whom they had entered into separate transactions. The procedure followed 'by the appel- lants was this: They first entered into contracts with the Mills agreeing to purchase gunnies at a certain rate for future delivery. Exhibit A-1 is a specimen of such contracts. The appellants also entered into agreements with the Mills, by which the Mills agreed to deliver the goods to third parties if requested by the appellants. The Mills, however, did not accept the third parties as contracting parties but only as agents of the appellants. Exhibits A-2 and A-2(a) are specimen agreements of this kind. Before the date of delivery, the appellants entered into agree- ments with third parties, by which they charged something extra from the third parties and handed over to them the delivery orders, which were known as kutcha delivery orders. Exhibits A-3 and A-4 are specimens of the agreement and the delivery orders respectively. The Mills used to deliver the goods against the kutcha delivery orders along with an invoice and a bill, of which Exs. A-6 and A-7 are specimens respectively, and collected the sales tax from the third parties. The tax authorities, however, treated the transaction between the appellants and third parties ::.s a fresh sale, and sought to levy
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