COMMISSIONER OF SALES-TAX, EASTERN DIVISION, NAGPUR versus HUSEN ALI ADAMJI AND CO.

Citation: [1959] SUPP. 2 S.C.R. 702 · Decided: 21-04-1959 · Supreme Court of India · Bench: SUDHI RANJAN DAS · Disposal: Dismissed

Judgment (excerpt)

April 2z. 
702 
SUPREME COURT REPORTS [1959] Supp. 
THE COMMISSIONER OF SALES-TAX, 
EASTERN DIVISION, NAGPUR 
v. 
HUSEN ALI ADAMJI AND CO. 
(S. R. DAS, C. J., N. H. BHAGWATI and 
M. liIDAYATULLAH, JJ.) 
Sales Tax-Contract of 
sale-Construction-Unascertained 
goods-Levy of tax on goods sent by rail-Place where property in 
goods passes-Place of appropriation on delivery-Indian Sale of 
Goods Act, I930 (III of I930), ss. 4, I8, 23, 33, 39-Central Pro-
vinces and Berar Sales Tax Act, I947 (C. P. & Bcrar XXI of 
I947), s. 2(g), Explanation II. 
The respondent company was a dealer in matchwood called 
"sawar" and his place of business was situate in Chanda in the 
erst,vhile Central Provinces. Pursuant to an agreement between 
the respondent and a match factory, the former loaded diverse 
quantities of "sawar" logs on railway wagons and despatched 
the same by rail from Chanda and other railway stations in the 
Central Provinces to Ambernath, a town in the erstwhile Pro-
vince of Bombay. Under cl. 4 of the agreement the goods to be 
supplied under the contract shall be despatched by the contractor 
from certain railway stations within the Central Provinces, 
while cl. 2 reserved the right of the consignee to examine the 
goods on arrival at Ambernath and to reject the same if they 
were found, in the opiniqn of the factory manager, not to con-
form with the specifications. Clause 6 provided that the goods 
shall be measured under the supervision of the factory's repre-
sentative, the decision of the factory manager at Ambernath 
being binding on the contractor, and by cl. 7 the prices of the 
goods shall be·" F. 0. R. Ambernath ". The course of dealings 
between the parties was that on arrival of the logs at Ambernath 
the logs were inspected and measured by the factory manager 
and the prices, calculated at the agreed rates, were paid to the 
respondent's agent at Bombay. The question was as to when 
and where the property in the logs passed from the respondent 
to the consignee and whether the respondent was liable to pay 
sales tax under the provisions of the.Central Provinces and Berar 
Sales Tax Act, 1947· At the date when the agreement was 
entered into, the logs were unascertained goods. There was also 
no evidence that at that date the particular logs delivered there-
under were in the Central Provinces in the shape of logs at all. 
The sales tax department levied the tax on the respondent on the 
grounds, inter alia, that (1) the property in the logs passed from 
the respondent to the factory consignee under s. 23 of the Indian 
Sale of Goods Act, 1930, when the logs were loaded in the wagons 
at railway stations within the Centra 1 Provinces and the railway 
(2) S.C.R. SUPREME COURT REPORTS 
703 
receipts taken in the name of the factory were forwarded to the 
x959 
latter, and that (2) in any case, as the logs were in the Central 
Provinces at the date when the contract for sale was made, the Commissioner of 
transfer in them must be deemed to have taken place there 
Sales Tax 
under Explanation II to s. 2(g) of the Central Provinces and 
v. 
Berar Sales Tax Act, 1947· 
Husenali 
Held : (1) that on a proper construction of the contract as a 
Adamji 0- Co. 
whole the intention of the parties was that the respondent 
would send the logs by rail from the different stations in the 
Central Provinces to Ambernath where the factory manager 
would inspect, measure and accept the same if in his opinion 
they were of the description and quality agreed upon. Conse-
quently, as the respondent sent the logs and left it to the 
factory to appropriate to the contract such of them as they 
accepted as of contract quality and description, the property 
in the logs did not pass to the buyer by the mere delivery to the 
railway for carriage but passed only at Ambernath when the 
logs were appropriated by the factory with the assent of the 
seller within the meaning of s. 23 of the Indian Sale of Goods 
Act, 1930. 
(2) that Explanation II to s. 2(g) of the Central Provinces & 
Berar Sales Tax Act, 1947, was not applicable to the case, 
' 
because under the Explanation the goods, in respect of which 
the contract of sale is made, must, at the date of the contract be 
in existence in the Central Provinces, that is to say, that the 
goods must at the date of the contract be there in the form in 
which they are agreed to be sold and there was no evidence, in 
the present case, for this. 
CIVIL APPELLATE JURISDICTION: 
Civil Appeal No

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