Chandra Reddy, J.
1. These four are analogous appeals raising a point whether certain sales took place within the State of Madras under Section 2 (h) of the Madras General Sales Tax Act. They are brought by the State against the judgment of the District Judge, Visakhapatnam, allowing the claims of the plaintiffs for refund of the amounts collected by way of sales-tax. The facts of these cases need not be restated elaborately nor is it necessary to recapitulate the details peculiar to individual cases.
It is sufficient to relate the common features of all the cases as the question involved in them is the same. In fact all the suits were tried together, evidence having been adduced in one soft (O. S. 1 of 1051) and disposed of by a common judgment. The suit related to the assessment year 1947-48 and the assessees are residents of Anakapally. They were all merchants dealing in jaggery, The undisputed facts are that the buyers from outside the State would come to Anakapally or sent their agents and select the goods.
After selecting the jaggery, it is weighed in their presence, some advance is paid to the sellers and the goods despatched in their presence. The invoices are prepared showing the price, freight and other incidental charges. In token of the correctness of the entries made therein the signatures of the buyers or their agents are taken. The balance of the sale-price is debited to the account of the buyers.
The railway receipt is taken in the name of the sellers and presented through the bank. The defence to all the suits was that these transactions were assessable to tax in the State of Madras as the sales occurred within that State.
2. The trial court over-ruling these objections decreed the suit being of opinion that the sales were not completed in the State so as to enable the department to levy tax on those transactions. This conclusion of the trial Judge is canvassed before us.
3. The Government Pleader urges in support of these appeals that having regard to the terms of Section 23 of the Sale of Goods Act, the property in the goods passed to the buyers within the State as the goods must be said to have been unconditionally appropriated to the contracts on the facts found viz., that the goods were selected, weighed, put in bags and despatched and the balance of the sale price was debited to the buyers in the account books ol the plaintiffs.
According to him the last circumstance is a clinching one in that it shows that the assessees have treated their buyers as their debtors and that their only remedy is to realise the unpaid purchase money by process of law in the event of a default in that behalf.
4. It is submitted by him that these cases come within the ambit of the judgment in J. S. Basappa v. The Provincial Govt. of Madras, in Appeals Nos. 566 to 568 of 1951 (A), to which one of us was a party and in which it was observed that considerations like, the freight being borne by the buyers, the insertion of a clause in the invoice staring that the sellers were not responsible for any loss or leakage on the way and that the purchaser should bear the losses, and that the creditor was debited with the bill amount on the date of the railway receipt as admitted by the plaintiff are relevant in the determination of the question as to when the title to the goods passed. It was laid down there that those were some of the considerations which were conclusive on the question.
5. Our attention was also drawn to a judgment of a Bench of the Madras High Court in Parthasarathy Gupta v. Calcutta Glass and Silicate Works Ltd., 1948-2 Mad LJ 101 : (AIR 1949 Mad 145) (B). Though in the latter case the controversy centred round the question whether a part of the cause of action had arisen in Madras, the principle underlying that case is sought to be applied to the instant case. We feel that neither of the two rulings is in point here. The first of them deals with a case where the railway receipt was made out to the buyers but was delivered to the seller by way of security for the realisation of the unpaid sale price.
It is in that context that the remarks were made. That apart there is an essential distinction between that batch of appeals and the appeals before us. While in the cases under citation the responsibility of the sellers ceased the moment the goods were put in the waggons the sellers not being liable for any loss or leakage on the way, here the risk did not pass to the buyers till delivery. The testimony of the plaintiff in one of the suits on this went unchallenged.
6. Similarly in Parthasarathy Gupta v. Calcutta Glass and Silicate Works Ltd. (B), the goods were delivered to the agent of the buyers who despatched them to the principals at Madras which implies that the consignment was in the name of the buyer. The learned Chief Justice who delivered the judgment of the Court distinguished Ford Automobiles (India) Ltd. v. Delhi Motor and Engineering Co., AIR 1923 Bom 125 (C), on the ground that in that case the consignment was made at the owner's risk and the railway receipt was made out in the name of plaintiffs as consignees and endorsed by them in blank. Consequently, the decision in Parthasarathy Gupta v. Calcutta Glass and Silicate Works Ltd. (B), does not govern the appeals before us.
7. We are also unable to agree with the contention of the Government Pleader that these cases fall within the purview of Section 23 of the Sale of Goods Act which reads :
'(1) Where there is a contract for the sale of unascertained or future goods by description and goods of that description and in a deliverable state are unconditionally appropriated to the contract, either by the seller with the assent of the buyer or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer. Such assent may be express or implied, and may be given either before or after the appropriation is made.
(2) Where, in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier or other bailee (whether named by the buyer or not) for the purpose of transmission to the buyer, and does not reserve the right of diposal, he is deemed to have unconditionally appropriated the goods to the contract'
Section 23 will be attracted only if it is established that there was an unconditional appropriation of the goods to the contract. The fact that the goods had undergone the selective process, weighed and were delivered to the common carrier for transport does not show that there was an unconditional appropriation. In our opinion, these factors by themselves are not decisive. Whether the appropriation is unconditional turns upon the construction of Section 25 of the Sale of Goods Act, i.e., whether the seller reserved the Jus Disponendi. Section 19 of the said Act reads :--
'(1) Where there is a contract for the sale of specific or ascertained goods the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred.
(2) For the purpose of ascertaining the intention of the parties regard shall be had to the terms of the contract, the conduct of the parties and the circumstances in the case.
(3) Unless a different intention appears, the rules contained in Sections 20 - 24 are rules for ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the buyer.'
So in gathering the intention of the parties, the rules stated in Sections 20 - 25 afford guidance. It could be seen from Section 25 that even the delivery of goods to the buyer or to a carrier for transmitting them to the buyer does not determine the question of the passing of the ownership of the goods if the seller retained the power of disposal over the goods until certain conditions are fulfilled. Hence the determining factor is the reservation of just Disponendi.
In our opinion, the seller in the case before us did not intend to part with the property in the goods till he was fully paid by the buyers for the following reasons. When the railway receipt which is a document of title is taken out in the name of the seller, he manifests his intention to remain the owner and to retain control over the goods till the buyer makes the payment through the bank. The buyer cannot obtain delivery of the goods so long as he does not obtain the railway receipt from the bank by honouring tha hundies drawn on him.
The situation will be different if the railway receipt is taken in the name of the buyer because the title to the goods vests by that in the buyer himself. The fact that the Railway receipt is again handed over to the seller to ensure repayment of the money before the goods are delivered to the buyer would not constitute the seller the owner of the goods, the only right of the seller in such a case being to enforce equitable lien on the articles.
If on the other hand the seller books the goods to self the appropriation can be said to have been effected only when full payment is made to the seller. So long as this condition is unfulfilled the unconditional appropriation contemplated by Section 23 is not effected. There is also the uncontradicted evidence of the plaintiff that if the buyer did not honour the hundi he himself would sell the goods to others.
It could be deduced from the above circumstances that the term of the contract between the parties is that the buyer would obtain title to the properties only when the full sale-price is paid by him to the seller. By this method the operation of Rule 23 (1) is excluded.
8. Mr. Venkatesam for the respondent relied upon a judgment of the Supreme Court in Commr. of Income Tax, Madras v. Mysore Chromite Ltd. : 27ITR128(SC) (D) which decided inter alia that the earliest point of time when the goods passed to the buyers was when the bill of lading was handed over to the buyers against the acceptance of the relative bill of exchange in London, to which place the goods were shipped. The learned Government Pleader distinguished this authority on the ground that it related to a bill of hiding which stands on a different footing.
This distinction is maintained under Section 25 of the Sale of Goods Act which has made the bill of lading Prima Facie evidence of the reservation of the right of disposal over the goods by the seller, submitted the Government Pleader. It is true the pronouncement bears on the bills of lading. But that contains the proposition that there could be no unconditional appropriation so long as the conditions imposed by the seller were unfulfilled. That condition in the present case is payment of the price to the seller.
As already stated by us unless the contrary intention could be inferred from other circumstances or the conduct of the parries, the consignment of the goods to the seller is a pointer to the conclusion that he intended to remain the owner thereof till he realised the balance of the purchase-money. We are also disposed to think that the tact that the seller debited the buyer with the balance or that the goods were taken out of the stock register does not establish the contrary intention. We feel that it does not in any way alter the position.
These debits seem to have been made in accordance with trade usage. It follows that the sales were completed only outside the State where the buyers obtained delivery of the goods by paying the balance of the sale-price to the agents of the assessees and consequently, the taxing authority in the Madras State had no power to subject these transactions to sales-tax and these suits were rightly decreed by the Trial Judge.
9 In the result the appeals are dismissed with costs.