LexBENGAL TIMBER TRADING CO. LTD. versus COMMISSIONER OF SALES TAX, MADHYA PRADESH
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BENGAL TIMBER TRADING CO. LTD.
v.
COMMISSIONER OF SALES TAX, MADHYA
PRADESH
February I, 1967
[K. SUBBA RAo, C.J., J. C., SHAH, J. M. SHELAT.,
V. BHARGAVA AND G. K. MITTER, JJ.j
Constitution of India, !950, Ar(. 286(l)(a) Explanation,
prior
to
amendment by the Constitution (Sixth Armndment Act) 1956--Sale of rail-
Wll)I sleepers-"Actually delivered" meaning of-Question to be considered
for decision whether delivery wltliin the State--''F,O.R." used in connec-
tion with price and not place--EfJect of-Liabi1ity to sales-tax under C.P.
and Berar Sales Tax Act (21 of 1947).
The appellant entered into a contract with the President of India for
the supply of railway sleepers. The consignees, to whom the sleepers were
to be despatched according to the instructions given to the appellant under
cl. II (a) of the conditions of contract, were outside the State of Madhya
Pradesh. The sleepers were booked by rail to the consignees from Dham-
tari railway station in Madhya Pradesh. In the third column in the Sche·
dule to the contract, Dhamtari was shown as the place of delivery. On
the question whether the sales came under the Explanation to Art. 286{1)
(u) of the Constitution prior to its amendment by the Constitution (Sixth
Amendment) Act, 1956 and were therefore exe!llpt from sales-tax under
the C.P. and Berar Sales Tax Act, 1947, the High Court held: (I) that
the property in the goods passed to the purchaser at Dhamtari, (2) that
the sleepers were actually delivered to the purchasers at that place, and
(3) that the sales were completed at Dhamtari and were therefore liable
to tax.
Io appeal to this Court,
HELD : The sales were covered by the E•planation and as such were
not ta<able by the State of Madhya Pradesh. [557 A-Bl
(1) The que•tioo is not when and where, under the general law, the
title to the goods passed under the contract; but whether actual delivery
of the 1oods took place, for consumption outside the State of Madhya
Pradesh so as to be within the deeming provision of the
Explanation.
(556 B-C]
(2) In the fifth column in the Schedule to the contract, relating 1o
rate, the expression "F.O.R." was used only in connection with tbe price
of the eoods. Therefore, it only meant that the rate was to be inclusive
of all charges of puttiD& the goods on rail and had nothing to do with
the r,tace of delivery. Further, the expression "actually delivered" in the
Exp anatioo means physical delivery of the goods or such other aetion a.
puts the goods in the po"sscssion of the purchaser but does not include sym-
bolical or notional delivery auch as entrustment to the railway .. a common
carrier (550 C; 553 F-G; 555 D]
SinRareni Collierie" Co. Ltd. v. State of Andhra Prades/1 & Ors. [1966]
2 S.C.R. 190 followed.
L2Sup. CI/67-6
548
SUPREME COURT REPORTS
[1967] 2 s.c.R.
(3) All the claus"' of the contract have to be read a,, a whole to find
out the intention of the partic< as to where the actual delivery wns to tal<o
place. So read, els. 3, 11. 12 and 14 of the contract aro n01 merely con-
ditions •uper-imposed after the actunl delivery of the &ood•. They show
that, while the major pan of the operations of the appellant with regard
to delivery were to be performed at Dhnmtari, he WOJ not relieved of all
liability '" to delivery until the good• were finally accepted at the dcsti-
l>atiooi by the coMignce, and that actual physicnl delivery was not to be
taken as complete before the goods were aeceptcd by the consignee at the
destination.
Clause J(n) links delivery with final acceptance, which,
according to cl. 11 (g), could only be after tbe gooda had reached the
destination and were acknowledged 85 accepted by tho consignee.
Clau.<e
11 (g) also shows that notwithstanding the fact that the goods had been
pUScd by the Sleeper Pas.sing Officer at Dhnmtari, they bad been put on
rail within the period or contract at the said station, the Sleeper Pa5'ing
Olllcer had 11iven the appellnnt a pa.sing certificate in terms of cl. 10
and the Stnlton Moster nt Dhnmtari had is.•ued a tally receipt for the
number of sleepers loaded the consignee stlll had the right to inspect the
flOOW at the destination and reject any which were not in terms of the
contr.Jct; ond such rejected goods were to be treated us non-delivered. The
place of aclllnl delivery, in the light of oil the circumstane<:>. could only
be the destination nnd the goods could only be said to be fuExcerpt shown. Read the full judgment & AI analysis in Lexace.