LexMALAYALAM PLANTATIONS LTD. versus THE DEPUTY COMMISSIONER OF AGRICULTURAL INCOME-TAX AND SALES TAX
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7 S.C.R. SUPREME COURT REPORTS 391 MALAYALAM PLANTATIONS LTD. v. THE DEPUTY COMMISSIONER OF AGRICULTURAL INCOME-TAX AND SALES TAX [P. B. GAJENDRAGADKAR, C.J .. K. N. WANCHOO, J. c. SHAH, N. RAJAGOPALA AYYANGAR AND S.M. SiKRI, JJ.] Sales Tax-Tea sold bu auction at Fort Cochin which was outside State of Travancore-Cochin-Whether to he included in turn-over for purposes of Sales-tax-"Outside Sale"-Meanina of-Doctrine of territorial nexus in Sales Ta.r legis!ation- Point not urged in High Court or taken up in Statement of case-It can be taken up in Supreme Court-Constitution of India, Art. 286(i)(a} before and after the Constitution (Sixth Amendment) Act, 1956-Travancore-Cochin General Sales Tax Act. 1950, s. (J). The appellant company owns several estates wherein tea is grown and it was assessed to sales-tax by the Sales Tax Officer in respect of the tea sold by 1t during the years 1954-55 and 1955-56. An appeal filed by the appellant was rejected bv the Appellate Assistant Commissioner on the ground that the tea when sold was admittedly in godowns in the State of Travan- core-Cochin and that consequently the sales must be deemed tc have taken place within tl:e State of Travancore-Cochin and hence liable to be included in the taxable turn-over. When a further appeal was taken to the Sales Tax Appellate Tribunal. it was held that the property in the goods sold passed at Fort Cochin in Madras State on the fall of the hammer at the auction and hence the same was not taxable. The State filed a revision petition to the High Court. While the High Court accepted the finding of the Tribunal that the property in the goods sold pas- sed at Fort. Cochin on the fall of the hammer at the auction. it differed from the Tribunal as regards the effect of the circm!'- stance that the tea sold was. at the point of sale, physically in godowns situated in the State of Travancore-Cochin · and held the sales to be taxable. The appellant cam<> to this Court after obtaining a certificate of fitness from the High Court. The onlv question argued before this court was whetter a sale of tea effected by the appellant by auction at Fort Cochin in Madras State wa• a sale outside the State of Travancore- Cochin or inside it and whether the same was taxable or not. • Accepting the appeal. HELD: No sales tax was to be levied in this case as the sales took place outside the State of Travancore-Cochin. The test for determining whP.ther a sale is inside or outside a State is \\·here the property in the goods passed and in the present case the property in the goods passed in Fort Cochin in Madras State on the fall of the hammer at the auction. The point about the property not having passed in the Madras State was not argued before the High Court and was also not urged in the statement of case filed by respondent and hence the same was not allowed to be argued in the Supreme Court. Per Shah. J. The property in the goods passed at Fort Cochin in Madras State and as the goods were delivered not for the purpose of consumption in any particular State, the sales were not inside Travancore-Cochin but were outside the 1964 March 20 I 1964 Malayalam Planfa. tions Ltd. v. TheDepuly Commisaioner of Agricultural Incomt·tax and Salea Taz 392 SUPREME COURT REPORTS [1964] State and were as held by this Court in A. V. Thomas & Co. v. Deputy Commissioner of Agricultural Income-tax and Sales Tax Trivandrum, 14 S.T.C. 363, not liable to be taxed under the Travancore-Cochin General Sales Tax Act, 1950. The doctrine of territorial nexus had full play in sales tax legislation under the Government of India, Act, 1935 and was not abrogated by the enactment of Art, 286 of the Constitution. It continued to be in operation in the interregnum between the promulgation of the Constitution and the amendment of Art. 286 by the Constitution (Sixth Amendment) Act. 1956. It also applies now subject to certain modifications. Par Jiament has been given the power to formulate principles for determining when a sale or purcl:ase of goods takes place outside the State or in the course of the import of the goods into or export of the goods out of the territory of India. Exercising the power und.er cl. (2) Parliament has enacted the Central Sales Tax Act, 1956 and by s. 4(2) the doctrine of territorial nexus has been given legislative recognition th<mgh in somewhat limited form. Deputy Commissioner of Agricultur
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