Rajagopala Ayyangar, J.
1. These two appeals are against the decrees in two suits on the original side of this Court-C.S. No. 446 of 1947 and C.S. No. 370 of 1950. Louis Dreyfus and Co., Ltd., a dealer on a large scale in groundnuts, is the plaintiff in both these suits which were against the State of Madras, the relief sought being the refund of sales tax stated to have been collected improperly and illegally from them.
2. The earlier suit, C. S. No. 446 of 1947, relates to the assessment year 1944-45 and claims the recovery of a sum of Rs. 26,933-0-5 as the amount illegally exacted from the plaintiffs. This suit has been decreed in plaintiffs' favour and O.S.A. No. 62 of 1951, is the appeal by the State against the decree against them. The, claim in the other suit was for obtaining a refund of Rs. 87,419-14-4, stated to have been unlawfully collected from the plaintiffs as sales tax for the assessment year 1945-46. This suit having been dismissed, the aggrieved plaintiffs have preferred O.S.A. No. 54 of 1953.
3. The nature of the transactions, on the basis of which the liability to tax under the Madras General Sales Tax Act is rested by the State, is the same in regard to the two years which are the subject-matter of these two appeals, but different decisions have been rendered in the two suits, because of factors to which we shall later advert.
4. In Suit No. 446 of 1947 relating to the year 1944-45, from which O.S.A. No. 62 of 1951 has been filed, the Deputy Commercial Tax Officer, Harbour division-the assessing authority-determined the total turnover of Louis Dreyfus and Co., Ltd., whom we shall hereafter call the assessee, at Rs. 2,53,72,488-14-11 by an order dated 27th March, 1946, and levied the tax payable on that figure, which the assessee duly paid and the correctness of this levy is not in dispute. But just about a year afterwards, on 28th March, 1947, the Commercial Tax Officer, North Madras, issued a notice to the assessee to show cause why the above assessment should not be revised under Rule 14(2) of the Madras General Sales Tax Rules, and after considering the objections to his jurisdiction and the merits of the contentions raised, this officer by his proceedings, dated 31st March, 1947, revised the figure of the total turnover by the addition of a further sum of Rs. 30,03,650-12-6 and demanded the extra tax which this revised turnover involved. The assessee paid the sum under protest and filed the suit for the refund of this extra tax. Two points were raised by the plaintiff. The first was that the transaction giving rise to the additional turnover did not attract tax liability under the Madras General Sales Tax Act, 1939; the sales involved were outside the State of Madras and therefore outside the purview of the relevant taxing statute, the contention in this regard being that the essentials of the contract of sale including the passing of the property all happened beyond the limits of the State. The second attack on the legality of the extra levy was based on the circumstance, that the addition was made by the Commercial Tax Officer by revising a final order of assessment passed by the Deputy Commercial Tax Officer. It was contended by the assessee that on a proper construction of the Madras General Sales Tax Act, 1939, Rule 14(2), which enabled a Commercial Tax Officer to revise an order of an assessing officer, was beyond the powers of the rule-making authority. It was also said that, even if the said rule was intra vires, this rule had been misapplied to a case, which, according to the assessee, fell to be dealt with as a case of an escaped assessment under Rule 17. In the written statement that the State filed all these contentions were denied, as also the jurisdiction of the Court to grant relief to the assessee. The trial was before Krishnaswami Nayudu, J. The learned Judge held in favour of the assessee on all the points raised by it, that the tax was not leviable as the sales were outside the State and also that the power of revision was not available to enable the further tax to be levied. It is really unnecessary to set out or canvass the grounds on which the latter point was answered in the assessee's favour for reasons which would be apparent in a minute. He accordingly decreed the suit by the assessee, against which the State filed Original Side Appeal No. 62 of 1951, as we have already mentioned. While this appeal was pending, the question of the validity of Rule 14(2), as well as the circumstances in which it could, if valid, be applied, came up for consideration before Govinda Menon and Krishnaswami Nayudu, JJ., in S. A. No. 612 of 1949, in which judgment was rendered on 28th March, 1952. This judgment which was delivered by Krishnaswami Nayudu, J., for the Bench substantially affirmed what had been laid down in C. S. No. 446 of 1947 as regards these rules. A similar decision had also been reached by a Judge of the City Civil Court from which the State had filed C.C.C.A. No. 137 of 1951. The State, which challenged the correctness of the construction of the rules adopted in these several decisions, requested that the question involved might be heard by a Full Bench, and as the point was of general importance the request was granted. The Full Bench has now answered the reference against the assessee. It is unnecessary to set this out in any detail, as the further hearing of this appeal has proceeded on the basis that as the result of the Full Bench ruling the jurisdiction of the Commercial Tax Officer to revise the assessment in the circumstances of this case stands affirmed leaving the question as to the liability to tax arising out of the sales transactions involved in the suit as the only one left for determination. As the transactions of sale stated to give rise to the tax are of the same type in both the years involved in the two suits, we shall deal with them in common, after setting out the matters connected with O.S.A. No. 54 of 1953.
5. C.S. No. 370 of 1950, from which the appeal just now mentioned arises, was heard and decided by Subba Rao, J., in January, 1953. After the decree in C.S. No. 446 of 1947 in October, 1950, and before C. S. No. 370 of 1950 came on for trial, a Beach of this Court had, in Poppatlal Shah v. State of Madras (1952) 2 M.L.J. 593, to construe the provisions of the taxing enactment in order to consider the circumstances in which the liability to tax would fasten on a transaction of sale. A firm trading under the style of the Indo-Malayan Trading Co., which was the assessee concerned in that case was convicted for failure to pay the sales tax imposed on it. The firm questioned the legality of the tax imposed on the ground, that the sales, which were included in the turnover on which the assessment was levied, did not take place within this State so as to involve any tax liability under the Madras General Sales Tax Act. The firm which had an office in Madras received orders for the supply of groundent oil etc. (in which the tax is collected for the seller) from merchants in Calcutta, and these, when accepted, the relative goods were purchased in the local markets and despatched to Calcutta by rail or steamer, the railway receipts or bills of lading being taken in the name of the sellers. These documents were then forwarded to their bankers in Calcutta, who in their turn, handed them over to the buyers after the bills were retired. The contention of the assessee was that as the property in the goods did not pass to their sellers within the State of Madras but only the delivery of the goods or at least of the documents of title relating to them (sic)-the buyers at Calcutta, they were not sales on which tax was due or exigible under the Madras General Sales Tax Act. That on the arrangement and contract between the assessee and his buyers the property in the goods did not pass to the buyers until the goods were paid for and cleared in Calcutta was not disputed by the State, but it was contended on its behalf that if there was a substantial nexus between this State and any of the components of the contract of sale, it was a sale within this jurisdiction giving rise to a fax liability, and the circumstance that the title to the goods passed to the buyer beyond the limits of this State was not a final or determining factor. This Court accepted this contention of Government and as 'the assessee had an office at Madras, its accounts were maintained here ; the goods which were the subject-matter of sale were in Madras and delivered to common carriers in Madras and the sale price was entered in the accounts of the assessee maintained at Madras' the transaction was held to have a sufficient connection with Madras so as to enable the seller to be taxed.
6. It was by applying the principles of this decision which was binding on (sic) that Subba, Rao, J., held against the plaintiff in C.S. No. 370 of 1950, The learned Judge rested his decision almost wholly on the circumstances that the goods which were the subject-matter of the transact ions in the case before him were within the State at the time of the contract, and that they were despatched from here in implementation of the contract , The place of passing of property as the sole test for determining the locus for fixing liability to sales tax, which is the ratio of the decision of Krishnaswami Nayudu, J., in C.S. No. 446 of 1947, could not obviously Dave been accepted or applied by Subba Rao, J., in view of the decision of thy Bench in Poppatlal Shah's case (1952) 2 M.L.J. 593.
7. The decision in Poppatlal Shah's case (1952) 2 M.L.J. 593 was taken in appeal to the Supreme Court, where is was reversed (Poppatlal Shah v. State of Madras  4 S.T.C. 188), the decision of the Supreme Court being some time after the judgment of Subba, Rao, J. The Supreme Court accepted the contention raised on behalf of the assesses appellant, that the test for determining whether a sale took place in the State or not was whether under the contract between the buyer and seller the property in the goods did or did not pass within the State. If that test were applied there was no dispute there that property in the goods did not pass in Madras.
8. In view of this decision of the Supreme Court as regards the circumstances in which the tax liability accrues, and the decision of the Full Bench regarding the revisional powers of the Commercial Tax Officer under Rule 14(2) of the Madras General Sales Tax Rules, the only point for consideration in both the appeals is the correctness of the conclusion reached by Krishnaswami Nayudu, J., that on the terms of the relevant contract under which the sales were effected the property in the goods did not pass while they were within the limits of the Madras State. We have to add that under thy rules framed under the taxing enactment in regard to groundnut, this tax is levied on the purchaser. The question therefore is whether the title to the goods purchased by the assessees passed to them in this State.
9. The assessees are a limited liability company incorporated in England and carry on business inter alia in groundnuts at, among other places, Madras, and with their head office in Bombay. During the war, the assessees contracted to supply groundnut to the British Ministry of Food, the export from India being from the port of Marmagoa. To implement this contract, the assessees entered into various types of arrangements to procure the goods, and among them only two are of relevance for the decision of these appeals, the Bombay and the Artbia sales.
10. The first one has been compendiously termed the 'Bombay sales'. Under this the assessees' head office at Bombay entered into contracts of purchase with merchants in Bombay through the brokers of that city. The contracts were in the form set out in Ex. P. 1 in C. S. No. 370 of 1950, which in identical with Ex. P. 19 in C. S. No. 446 of 1947, these being the counternarts signed by the seller. This document which was signed by the seller and addressed to the assessee, the buyer, after renting the sale of the quantity specified and the price stipulated for the latter 'being free railway station Bombay or to be delivered at buyer's godown' which is also at Bombay. The payment was to be according to the rules of the general terms and conditions, that 90% of the invoice price was to be paid against railway receipts and the balance after the acceptance of the goods and after a final weighment at Marmagoa (Marraagoa was expressly named as the place where the goods were to be delivered). The buyer had an option of rejecting the goods after their delivery at Marmagoa, if it should turn out that they were not equal to the quality stipulated. It was a further term of this contract that the sellers should intimate the buyer the name of their constituents, the quantities of goods which they were in a position to consign as well as the stations at which the goods would be loaded. Those were the terms of the contract in writing. The practice in regard to the carrying out. of this contract was spoken to by the manager of the assessee at Bombay. He said that altar these contracts were signed by the buyer and a seller at Bombay through the medium of the brokers, the sellers would intimate to the buyer the name of their constituent, the quantity available and the stations where the goods could be put on rail. This information the buyers passed on to the office of the British Ministry of Food at Bombay, and they in their turn advised the railways concerned for arranging the requisite waggons. Thereupon 'the constituents' loaded the goods on the waggons, got the railway receipt in the name of Louis Dreyfus Company Ltd., as consignor and consignee and despatched the railway receipts to the Bombay sellers. These latter then tendered the railway receipts to the assessee at Bombay against payment of 90% of the purchase price. The assessees would then clear the goods at Maimagoa and have the goods weighed and surveyed for quality and it was alter their final weighment and acceptance of the goods after survey that the balance of the price, etc., would he paid...also in Bombay, Such of the goods as did not conform to the quality stipulated under the contract, would be rejected by the buyers, the intimation in this regard being at Bombay.
11. It will be seen from the above that the offer and acceptance which results in the contract of sale and the final acceptance of the goods in performance thereof as well as the payment of the price all took place outside this State. The only matters which occurred in this jurisdiction were (1) the presence of the goods at the time of the formation of the contract and their despatch from here to implement it; (2) the consignment of the goods by rail by 'railway receipts in which the buyer is shown as both consignor or consignee. If. was the first factor and that alone that was held to impose tax liability on the assessee by Subba Rao, J., based on the decision of this Court in Poppatlal Shah's case (1952) 2 M.L.J. 593. But in view of the reversal of this view by the Supreme Court, the presence of the goods here at the time of the sale should be held to be irrelevant; and this was conceded.
12. The learned Advocate-General who argued these appeals on behalf of the State relied on the second of the above matters to support the levy of the tax, The contract here was one for the sale of unascertained goods, and hence there could be no passing of property until the goods were ascertained. The argument advanced war. that the goods became ascertained when the dealers or 'constituents' who had sold the goods to the sellers from whom the assessee purchased, lost control over the goods by loading them in waggons, taking the railway receipts in the name of the seller's nominees, viz., the assessees as the consignors. It was urged that if the property in the goods passed from these 'constituents' by their delivery to a carrier, the person to whom the property would pass would be their Bombay buyers, but as these buyers had in their turn sold the goods to the assessee and had nominated the latter to accept the delivery by taking the receipt in their name as consignor, the title to the goods would pass by the very act of delivery to the carrier to the assessee itself. It will be seen that this contention rests primarily on the circumstance of the assessees figuring as consignor and consignee in the railway receipts obtained by 'the constituents.' Delivery to a carrier would no doubt be an appropriation in. cases where the buyer authorises the despatch of goods through that agency, but the appropriation involved in such act need not necessarily be unconditional, which it has to be for the passing of property, where delivery to the carrier is the only fact relied on for constituting the appropriation and so the transfer of property.
13. In the present case there are several circumstances which militate against the delivery to the carrier and the goods being consigned in the name of the assessees being treated as sufficient to pass properly. The first is that this was done because of the requirements of the war-time regulations under which railway priority could be obtained only if the goods were consigned in the name of a party who had contracted to supply goods to Government. Further the Assistant Manager of Louis Dreyfus who was examined as P.W. 1 in C.S. No. 446 of 1947 deposed thus :-
Q.-Why are the goods consigned in Louis Dreyfus's name ?
A.-- To meet the requirements of Government:. They have imposed a ban.
14. The ban referred to was a ban on exports from this State, which was relaxed in the case of those who had to fulfil contracts for supply to the British Government. The position which was not disputed by the Government at the stage of the trial was accepted by the learned Judges in both the judgments under appeal, and indeed is not contested by the learned Advocate-General before us. But his argument was that this circumstance did not establish that nothing except the requirements of Government led to the goods being consigned in the name of the assessees. We are however unable to agree with the implication of this suggestion, that the procedure might have been thought of as a means of effecting a complete delivery to the buyer even at that stage. Such an idea is inconsistent with the form of the transaction under which any portion of the purchase price became payable only on tender of the railway receipt in Bombay.
15. If then this circumstance were eliminated, we have the fact that 90% of the invoice price was paid only on lender of the documents at Bombay. The delivery to the carrier could not therefore be deemed to be an unconditional appropriation but governed by Section 25 of the Sale of Goods Act. Besides, there are the further facts, that the goods were checked by weight, and analysed for quality at Marmagoa, and that the final payment was made after adjusting the freight to the account of the sellers which is indication that the intention of the parties in having the goods consigned in the name of the buyer as consignor and consignee was merely to enable the export of the goods to be effected so as to comply with the restrictions, in that regard and not to pass title in the goods to the buyer.
16. We have had occasion to deal with a similar question in Gandhi and Sons v. State of Madras (1955) 2 M.L.J. 545, and, therefore, we do not find it necessary to embark again on any detailed discussion of the legal principles involved. Following the reasoning of that decision we hold that the learned Judges were right in their view, that the property in the goods in what are termed the 'Bombay sales' did not pass to the buyer within this State.
17. The result is that on the ruling of Poppatlal Shah's case (1953) 1 M.L.J. 739, the assesses are not liable to sales tax in respect of these purchases.
18. We shall next consider the purchases through the arthias which are referred to as the port-pass contracts in C.S. No. 446 of 1947, The etymological meaning of the expression arthia appears to be a commission agent. There were two such arthias employed by the assessees for procuring their requirement of groundnuts, but, the nature of the transaction and the terms of the contract were the same. Exhibit P. 14(a) in C.S. No. 446-of 1947 which is the contract entered into with one Gulfazor represents our such. The terms of the commission were determined by this arrangement, and the goods obtained under it were consigned to the buyers under what are termed 'port-pass terms', and these terms are to be found in the type exemplified by Exhibit P. 14(c). The conditions of the port-pass are substantially identical with those to be found in the Bombay sales-Marrmgoa named as the place of delivery where the final weighment and analysis of the goods would take place, with a right in the buyer to reject in the event of the goods not conforming to the contract specifications : 90% of the price being paid at Bombay on delivery of the railway receipts by the arthias, the receipts themselves being taken in the name of the buyer as consignor and consignee, and the balance of the price being paid after the report regarding weighment and analysis were received. It will thus be seen that the only point of difference between the Bombay sales and the arthia sales is in the existence of the arthia commission agency terms embodied in the type represented by Exhibit P. 14(a) and the sole question for our consideration is whether Exhibit P. 14(a) taken in conjunction with Exhibit P. 14(c) is really different from the Bombay sale.
19. The document Exhibit P. 14(a) is most clumsily worded each clause appearing to contradict the legal relationship indicated by the previous one. The first, clause: 'That, the said 'arthias' shall serve the said 'traders' in the Raichur/Gulberga, Wadi/Warrangal and Hyderabad/Kurnool lines for the purchase of groundnuts and other commodities for their houses at Bombay and Madras,
by its use of the expression 'serve...for the purchase of groundnuts for their (traders) house' seems to say that the arthias are agents for effecting purchases. The succeeding clause which runs 'That the traders shall not be bound to buy exclusively from these arthias but shall be at liberty to buy from any other party in the jurisdiction hereinabove mentioned' speaking of 'buying from the arthias' and of 'buying from any other party' by implication appears to suggest that the relationship between the arthia and trader is that of seller and buyer.
20. Clause 3 reverts to the idea expressed in clause 1 and provides:-
That the said arthias shall on receipt of orders from the said traders make purchases for the traders' houses concerned of such goods within such quantities and within such limits of prices as the arthias may from time to time be advised and on such terms as the usual port-pass contract of the said traders for the various articles they deal in may contain from time to time.
21. The practice appears to have been for the assessee to indicate quantities required, as well as the prices it was willing to pay, and on receipt of this advice the arthias would, either from goods already contracted for by them or from those which they were able to secure subsequently implement; their contract with the traders. The assessees called in this contract 'traders' had no concern with the prices at which the arthias were able to effect their purchases, and clause 13 expressly forbade the arthias to pledge the credit of the traders. Clause 13 runs :
That the arthias shall not pledge the credit of the traders in connection with any purchases advised by the arthias who alone will be responsible to the third parties on account of such transactions. The traders will recognise the arthias only for such transactions and will in no case be responsible or answerable to third parties in respect of purchases made or advised by the arthias.
22. The corollary to this is clause 12 which runs :-
That the said arthias shall be wholly and solely responsible for the due fulfilment of all contracts of purchases advised by them.
23. The 'purchases made by the arthias' were to be advised to the 'traders' and this was under clause 4 'to be understood to be on port-pass terms' an aspect emphasised and underlined by clauses 6 and 7, so that the conditions of the other port-pass contract were integrated with and made part of the arthia agreement. We shall be referring to the 'port-pass terms' after setting out the other terms of Exhibit P. 14(a). These include provision for the payment of 90% against clean and unqualified railway receipts and 10% after final check and analysis ; a commission of 3/4 % on the net amount paid against contracts of purchase ; and for arbitration in the event of disputes.
24. The port-pass contract which is referred to in the arthia agreement starts by designating the arthias as the seller and the trader as the buyer, and after specifying the quantity sold and describing the quality and price of the goods sold provides the buyer with an option to reject the goods in the event of non-conformity to the contract quality. Marroagoa harbour is named as the place of delivery and the terms of payment are identical with those in the Bombay sales. The procedure followed in the case of the arthia sales was identical with that in the other sale, viz., an intimation to the buyer of the names of the constituent, the railway station where the goods would be loaded into waggons, the quantity, etc. Of course, here also the 'constituents' after loading the goods obtained the railway receipts in the name of the assessee as consignor or consignee; but for reasons already mentioned, we do not consider this as very material for determining the point when property in the goods passed to the buyer.
25. The argument by the learned Advocate-General was that the arthias were commission agents, and when they entered into a contract for purchase from the growers or dealers, it was as if the assessees had themselves entered into these contracts, with the result that when these constituents delivered these goods at the railway stations for being loaded in waggons they parted with their title which thereafter vested in the assessees. But this would be the case only if the arthias were strictly intermediaries who brought about the relationship of seller and buyer between the constituent and the assessees. The terms of Exhibit P. 14(a), however, do not. enable this to be established. The arrangements riddled as it is with ambiguity as regards the legal relationship brought about between arthias and traders had to be read along with the port-pass terms which it incorporates. There is no ambiguity or doubt as regards the latter, and Exhibit P. 14(c) clearly envisages the arthia. as a seller in relation to the trader. Further, having regard to clauses 12 and 13 of Exhibit, P. 14(a), there could be no contractual relationship between 'constituent' and the assessee. In the face of these, we are clearly of the opinion that for the present purposes there is no essential difference between the direct purchases from the Bombay merchants and these purchases through the arthias, and that in the latter case also the property in the goods did not pass to the assessees in the State of Madras.
26. The assessees are, therefore, entitled to succeed in both the suits, with the result that O.S.A. No. 62 of 1951 fails and has to be dismissed, while O.S.A. No, 54 of 1953 succeeds and has to be allowed. The assessees are entitled to their costs in both the appeals, as well as before the trial Judge.
27. O.S.A. No. 62 of 1951 dismissed and O.S.A No. 54 of 1953 allowed.