Manohar Pershad, J.
1. These are four T.R. Petitions Nos. 17, 18, 19 and 20 filed on behalf of the assesses Bayyanna Bhimayya, Sukhadev Rathi, Ramalinga Gada and Potti Venkiah & Sons & Co., for the revision of an order of the Sales Tax Appellate Tribunal, Andhra, at Guntur dated 12th September, 1955. The assessee are carrying on business in Vijayawada as wholesale dealers in gunnies, a product manufactured by Chittivalasa and Nellimarla Jute Mills in Vizagapatnam District which are managed by M/s. Mcleod Ltd., Calcutta. The assessing authority assessed them for 1952-53 and levied a tax on the turnover. The assessees disputed the assessment and challenged the legality on the grounds that the transactions did not amount to sales, that they did not purchase and sell any goods, that the issue of a mill letter was not sale of goods but only authorisation for the purchaser to take delivery of the goods, and that it was only transfer of the rights to get the goods. Aggrieved by the order of the Deputy Commercial Tax Officer rejecting their contentions, the assessees went in appeal to the Deputy Commissioner of Commercial Taxes, Guntur. This appeal was dismissed. They then filed a further appeal before the Andhra Sales Tax Appellate Tribunal, Guntur. This appeal was also dismissed; hence these revisions.
2. Sri Venkatesam and Sri Venkatarama Sastri, the learned counsel for the petitioners, contend that the Appellate Tribunal erred in holding that the transactions between the assessees and the mills on the one hand, and the assessees and the third parties on the other constituted two distinct and separate sales. They contend that it was only one sale and when taxes were already collected from the mills no second tax could be levied and collected from the assessees. It was next contended that the issue of a mill letter or kucha delivery order was only an authorisation for the purchaser to take delivery of the goods and it was only a transfer of a right, i.e., a chose in action and did not constitute a sale. The third argument advanced is that when the goods were not in existence at the time of issue of kucha delivery orders, no property could pass to the third parties and the said transaction could not be said to be a sale within the meaning of the Sale of Goods Act. In other words, it is contended that the issuing of a kucha delivery order was not a document or title and does not by itself transfer possession of, much less title, to the goods and unless the title to the goods is transferred, it does not become a sale. The learned counsel in this connection drew our attention to section 2(4), 6(3), 7 and 11 of the Sales of Goods Act, section 2(b), (c), (h) and (i) of the Sales Tax Act, section 2(c) of the Forward Contracts (Regulation) Act, 1952, and placed reliance on State of Bombay v. United Motors (India) Ltd. (1953 4 S.T.C. 133) and Sales Tax Officer v. Budh Prakash Jai Prakash (1954 5 S.T.C. 193). Lastly it was contended that sales tax could only be levied on a turnover represented by sale of goods and not on the sale of a right to obtain delivery of goods. On behalf of the Department, it is contended that it is not correct to say that there was only one sale, but that there were two different and distinct sales. With regard to the contention that the second transaction between the assessee and the third person was only an assignment of a chose in action, it is urged that having regard to the express conditions in the agreement entered into by the assessees and the third party, it cannot be said that it was merely an assignment. It is next contended that it is not correct to say that the goods were not in existence at the time of the kucha delivery order and that postponement of the delivery of the goods does not amount to their not being in existence. In this connection, the learned Advocate drew our attention to the entries on the left hand side in column 1 of Exhibit A-1. Furthermore, while conceding that till the actual delivery of the goods, the sale does not become complete, he contends on behalf of the Department that as soon as the goods are delivered, the sale becomes complete and the purchaser acquires rights in the said goods.
3. In order to appreciate the arguments of the learned counsel, a reference to the relevant provisions of the Sale of Goods Act, the Sales Tax Act and Forward Contract (Regulation) Act is necessary; but before dealing with the said provisions, we would like to state certain facts necessary for the correct appreciation of the arguments. The petitioners entered into an agreement with the jute mills for the purchase of gunnies at a specified rate which are to be delivered on a particular date and they paid some amount by way of an advance to the mills. Before the date fixed for the delivery, the petitioners entered into separate contracts with third parties for the sale of the goods contracted to be purchased by the petitioners from the mills. In pursuance of such contracts of sale, the third parties took delivery of the goods direct from the mills, paying the balance of the price to the mills on the strength of mill-letters passed on to them by the petitioners. It is not denied by the petitioners that the third parties took delivery of the goods from the mills after paying the stipulated price. Exhibit A-1 is the first agreement between the mills and the assessees. Exhibits A-2 and 2(a) are the application for delivery facility and the agreement in that connection. Exhibit A-3 is the contract entered into by the assessee and Ramachandra Shivanarayan of Rajahmundry for the purchase of 6000 gunnies. Exhibit A-4 is the kucha delivery order. Exhibit A-5 is the bill of lading for the amounts. Exhibit A-6 is the delivery note in the bills. Exhibit A-7 is the buyer's copy of bill No. 596 issued by Chittivalasa Jute Mills Co., Ltd. The sole question that has to be determined in these revisions is whether the alleged transactions entered into by the assessees and the mills on the one hand and the assessees and the third person on the other, constitute one sale or two different and distinct transactions. We may at this stage refer to the relevant provisions of the sale of Goods Act. Section 2(4) of the Act defines a document of title to goods as follows :
''Document of title to goods' includes a bill of lading, dock-warrant, warehouse-keeper's certificate, wharfinger's certificate, railway receipt, warrant or order for the delivery of goods and any other document used in the ordinary course of business as proof of the possession or control of goods, or authorising or purporting to authorise, either by endorsement or by delivery, the possessor of the document to transfer or receive goods thereby represented.'
4. Section 2(6) defines 'future goods' to mean goods to be manufactured or produced or acquired by the seller after the making of the contract of sale. 'Goods' are defined in section 2(7) to mean every kind of movable property other than actionable claims and money, and includes stocks and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before the sale or under the contract of sale.
5. Section 6(1) which relates to the existence of future goods runs thus :
'The goods which form the subject of a contract of sale may be either existing goods, owned or possessed by the seller, or future goods.'
6. Section 6(3) is as follows :
'Where by a contract of sale the seller purports to effect a present sale of future goods, the contract operates as an agreement to sell the goods.' Section 18 refers to the transfer of property as between the seller and the buyer. It runs : 'Where there is a contract for the sale of unascertained goods, no property in the goods is transferred to the buyer unless and until the goods are ascertained.'
6. What is contended on behalf of the assessees is that inasmuch as the goods were not in existence at the time of the contract it was an agreement of sale of future goods and not a sale.
7. Section 4 of the Indian Sale of Goods Act (Act III of 1930) defines a sale and an agreement to sell as follows :
'(1) A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. There may be a contract of sale between one part-owner and another.
(2) A contract of sale may be absolute or conditional.
(3) Where under a contract of sale the property in the goods is transferred from the seller to the buyer, the contract is called a sale, but where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell.
(4) An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred.'
8. It will be noticed that though the section groups both sales and agreements to sell under the single generic name of 'contracts of sale', following in this respect the scheme of the English Sale of Goods Act, 1893, it treats them as separate categories, the vital point of distinction between them being that whereas in a sale there is a transfer of property in the goods from the seller to the buyer, there is none in an agreement to sell.
9. When the contract is to sell future goods and under section 6(3) of the Sale of Goods Act even if 'the seller purports to effects a present sale of future goods, the contract operates as an agreement to sell the goods'; there can be no transfer of title to the goods until the actually come into existence; and even then the conditions laid down in section 23 of the Act should be satisfied before the property in the goods can pass. That was also the law under the repealed provisions in Chapter VII of the Indian Contract Act, 1872.Section 77 of the Contract Act defined 'sale' as follows :
''Sale' is the exchange of property for a price. It involves the transfer of the ownership of the thing sold from the seller to the buyer.'
10. Section 79 enacted that :
'Where there is a contract for the sale of a thing which has yet to be ascertained, made or finished, the ownership of the thing is not transferred to the buyer until it is ascertained, made or finished.'
11. The distinction between a sale and an agreement to sell under section 1 of the English Act is thus stated by Benjamin on Sale, Eighth Edition, 1950 :
'In order to constitute a 'sale' there must be :
(1) An 'agreement to sell' by which alone the property does not pass; and
(2) an 'actual sale' by which the property passes.'
12. It would be observed that the definition of a 'contract of sale' above cited includes both a mere agreement to sell and an actual sale. This distinction between sales and agreements to sell based upon the passing of the property in the goods is relevant in determining the rights of parties under a contract. The position is thus stated in Halsbury's Laws of England, Vol. 29, page 15, para 13 :
'An agreement to sell, or, as it is often called an executory contract of sale, is a contract pure and simple, whereas a sale, or, as it is called for distinction, an executed contract of sale, is a contract plus a conveyance. Thus, by an agreement to sell a mere jus in personam is created, by a sale a jus in rem is transferred. Where goods have been sold, and the buyer makes default in payment, the seller may sue for the contract price, but where an agreement to buy is broken, usually the seller's only remedy is an action for unliquidated damages. Similarly, if an agreement to sell be broken by the seller, the buyer has only a personal remedy against the seller. The goods are the property of the seller and he can dispose of them. They may be taken in execution for his debts, and if he becomes bankrupt they pass to his trustee in bankruptcy. But if there has been a sale, and the seller breaks his engagement to deliver the goods, the buyer has not only a personal remedy against the seller, but also the usual proprietary remedies in respect of the goods themselves, such as the actions for conversion and detinue. Again, if there be an agreement for sale and the goods perish, the loss as a rule falls on the seller, while if there has been a sale the loss as a rule falls upon the buyer.' Now 'turnover' has been defined in the Sales Tax Act to mean aggregate amount for which goods are either brought by or sold by a dealer whether for cash or for deferred payment or other valuable consideration provided that the proceeds of the sale by a person of agricultural or horticultural produce grown by himself or grown on any land in which he has an interest whether as owner, usufructuary mortgagee, tenant or otherwise, shall be excluded from his turnover.
'Forward contract' has been defined in the Forward Contracts (Regulation) Act, LXXIV of 1952, to mean a contract for the delivery of goods at a future date and which is not a ready delivery contract.
In the light of these provisions if we read the documents pertaining to the transactions we find that the parties are not only shown as buyer and seller, but the documents contain all the ingredients constituting a sale, i.e., existence of goods, payment or promise to pay the price, passing of title in the goods and so on. Sri Venkatesam, the learned counsel for the assessees relies on the following observation of the Appellate Tribunal at page 22 of the typed copy of the judgment : 'We do not know whether the goods have been appropriated specifically towards the first contract. In any case the appellant has not got the goods with him or obtained title to any goods.'
13. He therefore contends that when the goods were not in existence at the time of the alleged contract, title in the goods did not pass to the buyer resulting in the absence of two of the ingredients necessary to constitute a sale. We are very reluctant to accept this contention of the learned counsel. The Tribunal has nowhere held that the goods were not in existence. The observation relied upon by the learned counsel does not lead to that conclusion. On the other hand, from the following observations, the contention of the learned counsel is negatived. At page 23 of the typed copy of the judgment they observe :
'An apparent complexity in the circumstances that the appellant did not himself take delivery from the mill and then pass on delivery to the third party, really makes no difference at all with regard to the finalisation of the two agreements of sale if we keep in mind certain well-known maxims relating to after acquisition of a wanting title and of constructive delivery.'
14. On the same page, they observe further :
'The consequence of delivery to the third party and payment of the price by him to the mill on the second contract need a somewhat detailed consideration. In the first place it has the effect of conveying the property of the mill to the appellant. This result cannot be doubted in view of the express arrangement that delivery by the mill is given to the third party only as an agent of the appellant...........'
15. At page 24 they observe :
'Therefore the appellant has obtained full property in the goods.'
16. At page 25 :
'Thus there is a symbolical transfer of both the property and possession from the appellant to the third party as a result of express agreement between the parties.'
17. In view of the above observations of the Tribunal, it is very difficult to hold as has been contended by the learned counsel for the assessees that the main ingredients, i.e., the existence of goods and the passing of title, are absent in the transaction. The fact that the goods were in existence is quite clear from Exhibit A-1. Only the delivery of the goods is postponed. The learned counsel for the assessee relying on the entry relating to the option in the right hand side column of the agreement tried to persuade us that the goods could not be regarded as being in existence. We are not prepared to accept this argument either. In the left hand side of the same column the size, quality, quantity and the weight of the goods have been mentioned. It follows therefore that if the buyer did not exercise the option given to him under the agreement, the size, the weight and the quality mentioned in the left hand column would stand. It cannot be said from this that the goods were not in existence at the time of the contract. It is also clear from the said agreement that the goods were ascertained and the delivery of the goods was postponed to a subsequent date. Even assuming for the sake of argument that the goods were not in existence at the time of the contract, it does not help the case of the assessees, for it is admitted by them that at a later date the goods were delivered to the third person. It this was so, then that person would acquire a right from the date of the delivery of the goods and the original contract would become complete. The learned counsel conceding this point contended that if there were subsequent transfers all those transfers would become valid by retrospective operation. In our opinion, there is no question of any retrospective operation in this case. It is true that the question of levying a tax would only arise after the sale is complete, but in view of the clear terms of the agreement, we do not agree with the contention of the learned counsel for the assessee that the transaction which is sought to be assessed is merely an authorisation to receive the goods, and not a completed sale. It is not an authorisation letter to take delivery of the goods that is sought to be assessed. It is the transaction of sale between the assessee and the third party that has in fact been assessed. In that contract, the assessee is described as the seller and the third party as the buyer, and all the ingredients of sale are present. It is not a case of an assignment of contract as has been argued by the learned counsel but a regular transfer of the right in the goods for a higher consideration. We are, therefore, definite that the transaction between the assessees and the third party is one of sale of goods. It is a misnomer to call the transaction a kucha delivery order or delivery of a mill-letter. The document No. 5 which is called kucha delivery order is no more than an instruction or request to the mills to deliver gunnies for which there is a contract in document No. 1. The argument that it is a assignment and not a sale also is unacceptable. Sri Venkatesam, the learned counsel for the petitioners, argued that if the third party failed to take delivery from the mills, the assessees could only claim damages, but not the price from the third party and he further urged that if the contract between the assessees (sic) was one of sale and not an assignment the question arose whether the assignee could sue the mills for the breach of contract. He contends that he could not do so. We cannot accept this argument, either. It is true that on the basis of Exhibit A-3, the third party could not sue the mills, for there is no privity of contract between him and the mills, but on this account it cannot be said that the alleged agreement is an assignment and not a sale. From the above discussion, it would appear that there are two independent contracts of sale. The theory of a single sale cannot be reconciled with the existence of two distinct contracts in which the assessee played two different roles, in one capacity as a buyer and in the other as a seller. Sales Tax Officer, Pilbihit v. Budh Prakash Jai Prakash (1954 5 S.T.C. 193) was an appeal under the certificate of the High Court under Article 133(1) of the Constitution arising out of a writ petition under Article 226 of the Constitution. In this case, the legality of the proceedings of the assessment of tax and the assessment orders were challenged on the ground that the U.P. Sales Tax Act, XV of 1948, in so far as it imposed a tax on forward contracts was ultra vires the powers of the Provincial Legislature. This contention was accepted by the High Court and a writ of certiorari was issued. In the appeal before the Supreme Court, the question arose whether the transaction amounted to a sale or a contract of sale. Their Lordships of the Supreme Court held :
'The power conferred under Entry 48 to impose a tax on the sale of goods can therefore be exercised only when there is a sale under which there is a transfer of property in the goods, and not when there is a mere agreement to sell. The State Legislature cannot, by enlarging the definition of 'sale' as including forward contracts, arrogate to itself a power which is not conferred upon it by the Constitution Act, and the definition of 'sale' in section 2(h) of Act XV of 1948 must, to that extent, be declared ultra vires.'
18. This ruling does not help the contention of the petitioners. Poppatlal Shah v. State of Madras : 1953CriLJ1105 was also a case of appeal on a certificate granted by the Madras High Court under Article 131(c) and 132 of the Constitution. The sole point in that appeal was whether the sale transactions were liable to be taxed under the General Sales Tax Act of Madras. It appears that before the High Court both parties accepted the position that if on the facts stated, which were not disputed by either side, the sale could be held to have taken place within the Province of Madras, the tax could legitimately be levied on them, but not otherwise. The parties differed, however, as regards the test to be applied in determining whether the sales did take place within the Province of Madras or not. The contention of the appellant was that the place of sale was Calcutta as the property in the goods sold admittedly passed to the purchasers in that city, whereas the respondent-State contended, on the other hand, that the true test for determining the locality of the sale was not where the property in the goods sold passed, but where the actual transaction was put through. The High Court accepted the contention of the respondent-State. Their Lordships of the Supreme Court observed :'The mere fact that the contract for sale was entered into within the Province of Madras does not make the transaction, which was completed admittedly within another Province, where the property in the goods passed, a sale within the Province of Madras according to the provisions of the Madras Sales Tax Act (as it stood before its amendment in 1947) and no tax could be levied upon such a transaction under the (then) provisions of the Act. A contract of sale becomes a sale under the Sale of Goods Act only when the property in the goods is transferred to the buyer under the terms of the contract itself.'
19. The learned counsel for the assessees places reliance on this authority to show that their Lordships have observed that the sale is not complete unless all the ingredients, i.e., bargain or contract of sale, the payment or promise of payment of price, the delivery of goods and the actual passing of the title, are present in the transaction. We agree with this contention, but as we have already held that in the contract of the assessees all these elements are present, we need not pursue the point any further. In the case of State of Bombay v. United Motors Ltd. : 4SCR1069 , cited to us, the validity of the right to tax sales or purchases outside the State was questioned and their Lordships of the Supreme Court have laid down the same principle so that this ruling also does not help the petitioners as stated earlier.
20. In the result, we do not find any substance in these revisions. They are therefore dismissed with costs.