M/S. Ouchterloney Valley Estates Ltd.
Vs. State of Kerala [1964] INSC 232 (23 October 1964)
23/10/1964
ACT:
Sales Tax-Sales by auction at Fort Cochin in
Madras StateDelivery after approval in Travancore-Cochin-Sale whether completed
on fall of hammer at auction in Madras State Taxability of sales under
Travancore-Cochin General Sales Tax Act (Act 11 of 1125).
HEADNOTE:
Teas produced by the appellants were
classified and stocked in lots in, godowns at Willingdon Island which at the
relevant time was in the State of Travancore-Cochin. The sale of the said teas
was however effected by public auction at Fort Cochin in Madras State under the
Rules of the Tea Trade Association of Cochin. Sales-tax was imposed on the
appellants by the State of Kerala under the TravancoreCochin General Sales Tax
Act (Act 11 of 1125) on the authority of the judgment of the Kerala High Court
in Deputy Commissioner of Agricultural Income-tax & Sales Tax v. A. V. Thomas
& Co. Ltd. which was on similar facts. According to the said decision the
sales were completed at the fall of the hammer in Fort Cochin but, nevertheless
by virtue of explanation 2 to s. 2(j) of the Travancore Act they remained
'inside' sales for the purpose of taxation in Kerala State.
Because of this judgment being against them,
the appellants also could not succeed before the Sales Tax Appellate Tribunal
or before the High Court. They were however, granted special leave to appeal by
the Supreme Court.
Before the connected appeals came up for
hearing the Supreme Court had reversed the judgment of the Kerala High Court in
the case of A. V. Thomas & Co. Ltd. on the authority of which the
appellants had been taxed. Counsel for the State of Kerala therefore sought and
was given permission to defend the imposition of tax on alternative reasoning.
Relying upon ss. 17 and 18 of the Sale of Goods Act he contended that the sale
at the auction in Fort Cochin being a sale by sample was not completed at the
fall of the hammer but remained at that stage only a conditional sale.
It became a completed sale when the buyer
after comparing the bulk with the sample accepted the goods in Willing don
Island. 'Me property in the goods thus passed in Kerala State making the sale
liable to tax in that State. Rules of the Tea Trade Association of Cochin were
called for and examined by the Court.
HELD : The title to the goods passed to the
buyer under s. 64(2) of the Sale of Goods Act as soon as the sale was completed
by the auctioner announcing its completion by the fall of the hammer. The
initial auction cannot be treated as an executory contract which had become a
conditional contract on the fall of the hammer. The sale at the auction was in
respect of ascertained goods and it was concluded in every case on the fall of
the hammer. The High Court was therefore in error in upholding the imposition
of sales tax on the appellant by the State of Kerala. [814 E-G]
CIVIL APPELLATE JURISDICTION : Civil Appeals
Nos. 1084-1088 of 1963.
Sup./65-8 804 Appeals by special leave from
the judgment and order dated November 1961, of the Kerala High Court in T.R.C.
Nos. 3942, 31 to 34, 45 and 46, 35 to 38 and 47 respectively.
M. C. Setalvad, Rameshwar Nath, S. N. Andley
and P. L. Vohra, for the appellants (in all the appeals).
P. Govinda Menon and V. A. Seyid Muhammad,
for the respondent (in all the appeals).
The Judgment of the Court was delivered by
Gajendragadkar C.J. This is a group of fifteen appeals by special leave which
raise a common question of law. The appellants in these respective appeals are
Plantation Companies which grow their own tea in Tea Estates and sell their
products. Under the relevant provisions of the Travancore-Cochin General Sales
Tax Act 11 of 1125 (hereinafter called 'the Travancore Act'), Sales-tax
Officers had assessed the appellants to several amounts of tax in respect of
their turn-over for different years. The appellants had urged before the
Sales-tax Officers that the transactions in question were not liable to pay
sales-tax, but their pleas were rejected and sales-tax was ordered to be
imposed in respect of the said transactions. The appellants then challenged the
correctness of these orders by preferring appeals before the Sales-Tax
Appellate Tribunal. The Tribunal concurred with the view taken by the Sales-tax
Officers and confirmed the respective orders of assessment. The appellants then
moved the High Court of Kerala in its revisional jurisdiction under s. 15B of
the Travancore Act. These revision applications also failed-.
and that has brought the appellants to this
Court by special leave.
Though the periods and the amounts of
turn-over for which sales-tax has been levied against the different appellants
are not the same, the principal point which these appeals raise for our
decision rests on facts which are common to all the cases, and so, it would be
enough if we refer to the facts in respect of one of these appeals. We will
accordingly mention the relevant facts in regard to appeals Nos. 1084-1088/1963
in which the appellant is M/s Ouchterloney Valley Estates Ltd. We may add that
the three other appellants in the present group are : The Kil Kotagiri Tea
& Coffee Estate Co. Ltd., M/s. Peria Karamali Tea & Produce Co. Ltd.;
and M/s. Chembra Peak Estates Ltd. The appellant M/s Ouchterloney Valley
Estates Ltd. produces tea in its own Tea Estates and sells its products. It
does not itself carry on the business of buying and selling its products. The
Managing Agents of the appellant are M/s. Peirce Leslie & Co. Ltd..
805 Coimbatore. The quantities of tea
produced by the appellant were sold by public auction at Fort Cochin; the
purchasers paid the consideration at Fort Cochin and obtained from the
auctioneers delivery notes requesting the godown keepers at Wellingdon Island
to deliver the goods. After the goods are produced, they are sent to the
godowns at Wellingdon Island and the sale by public auction is held at Fort
Cochin. Fort Cochin was in the. State of Madras, whereas Wellingdon Island was
in the State of Travancore at the relevant time.
The periods for which assessment has been
levied against the appellant are 1952-53, 1953-54, 1954-55, 1955-56 and 195657.
The procedure followed for the public
auctions in question must now be indicated. This is how the procedure has been
summarised in the present proceedings:"Teas produced in the concerned
Estates are graded, weighed and packed in chests in the estates and are
subsequently forwarded with garden invoices to the godowns of their Clearing
and Forwarding Agents, Messrs.
Peirce Leslie & Co. Ltd., Cochin, at Wellingdon
Island to be stored there awaiting further instructions. Thereafter, the
brokers in Fort Cochin check the weight of the chests, draw samples of their
contents and group the chests in lots. They then publish printed catalogs
giving the names of the Estate and the godowns, the numbers of the lots, the
serial numbers and total number of chests in each lot, the weight of each chest
and the total weight of each lot and advertise the sale of such chests with
export rights, by public auction. at Fort Cochin on particular date and hour.
The sale is conducted, by samples, at Fort Cochin, at the proclaimed date and
hour and is confirmed in the name of the highest bidder. The bid may be for an
entire lot or for a portion thereof, technically known as 'brake'. The buyer
shall be entitled to open the chests bid by him and examine the contents
thereof to ascertain the actual state and condition of the tea. Difference or
inferiority in quality, description, deterioration, damage and defect in
packing will entitle the buyer to submit claims or rejection, or allowance or
damage. Such claims must be submitted, after inspection, no doubt, not later
than 5 P.m. on the 3rd day before the prompt day (ninth day after date of sale)
or in the case of removal before the prompt day, at least 24 hours before 806
such removal. Payment shall be made in Cochin on or before prompt day, in cash
or by cheque or draft on a Cochin Bank. If the' buyer shall fail to pay for the
tea or any part thereof on the due date for payment, the goods may be resold.
Any loss arising on such resale shall be borne by the buyer. Delivery shall be
taken before 5 P.m. on the 5th day after prompt day. The goods will be at
sellers risk to the extent of the sale price only, until 5 P.m. on the 5th day
after prompt day or until removal by the buyer, if removed earlier." When
the assessment proceedings in question were pending before the Sales-tax
Officer, it was urged by the appellant that the impugned transactions which
were included in the turnover of the appellant were not liable to tax on
several grounds. The substantial contention against the appellant was that the
transfers of tea which were sought to be assessed could be assessed by the
respondent State of Kerala because of a previous decision of the Kerala High
Court in Deputy Commissioner of Agricultural Income-tax and Sales-tax v. A. V.
Thomas & Co, Ltd.(") In that case, the Kerala High Court had proceeded
to deal with the matter on the basis that the property in the goods sold passed
at Fort Cochin on the fall of the hammer at the auction and that they could not
be said to be "outside" sale within the meaning of Art.
286(1) (a) of the Constitution. The High
Court was inclined to take the view that the said constitutional provision had
no reference exclusively to the transfer of the property in the goods according
to the provisions of the Indian Sale of Goods Act, 1930 (No. 3 of 1930)
(hereinafter called "the Act"); and so, explanation 2 to s. 2(j) of
the Travancore Act was not violative of Art. 286(1) (a), and that if at the
moment when the property passed, it being not relevant where the property
passed, the goods were in the State of Travancore-Cochin, then it was not an
"outside" sale quoad Travancore-Cochin and could be subjected to
sales tax by that State. Since this judgment of the Kerala High Court was
binding on the sales-tax authorities at the time when they considered the
dispute between the appellants and the respondent State of Kerala in the
present proceedings, they have held that the transactions with which the
appellant was concerned could be validly assessed by the respondent State.
The same view, in substance, has been
accepted by the High Court when it rejected the revision application filed by
the appellant before it.
(1) I.L.R. [1960] Kerala 1395.
807 Meanwhile, the decision of the Kerala
High Court in the case of A. V. Thomas & Co.(1) was reversed by this Court
when the matter came before it in appeal in A. V. Thomas & Co. Ltd. v.
Deputy Commissioner of Agricultural Income Tax and Sales Tax, Trivendrum. (2)
In that case, this Court has held that the explanation to Art. 286(1) creates a
fiction as between two States, one where the goods are delivered for
consumption in that State, and the other where the title in the goods passed
and the former is treated as the situs of the taxable event to the exclusion of
the latter. In regard to sales of teas in lots by public auction, this Court
held that the property in teas passed to the buyer under S. 54 of the Act as
soon as the offer was accepted on fall of the hammer at Fort Cochin in the
State of Madras and, therefore, the only State which could have power to levy a
tax on such sale would be the State of Madras and so far as the
Travancore-Cochin was concerned, the sale would be an outside sale. The same
view has been expressed by this Court in a subsequent decision coming from
Kerala in Malayalam Plantations Ltd., Quilon v. The Deputy Commissioner of
Agricultural Income-tax and Sales-tax, South Zone, Quilon.(3) The result is
that the decision of the Kerala High Court in the case of A. V. Thomas &
Co.(4) on which the sales-tax authorities and the High Court of Kerala have
decided the dispute between the appellants and the respondent State in the
present proceedings is no longer good law, and that would inevitably mean that
the appellants must succeed on the ground that the sales of tea having taken place
in the same manner as the sales of tea which had come before this Court in the
two decisions to which we have just referred, they are "outside
sales" so far as the respondent State is concerned and cannot be
legitimately assessed to tax under the relevant provisions of the Sales Tax
Act.
Mr. Menon for the respondent State has,
however, strenuously contended that the question as to whether the present
sales are outside sales so far as the respondent is concerned, has never been
properly tried, and he urges that if the essential incidents in regard to the
present sales are taken into account, it would be found that the said sales are
'inside' sales so far as the respondent State is concerned. It is common ground
that if the sales are. held to be inside sales so far as the respondent State
is concerned, the view taken by the High Court would have to be confirmed and
the appellants would have to pay the sales-tax as ordered by the (1) I.L.R.
11960] Kerala. 1395.
(2) [1963] Supp. 2 S.C.R. 608.
(3) A.I.R. 1965. S.C. 161.
808 sales-tax authorities. On the other hand,
if the sales in question are not inside sales as urged by Mr. Setalvad for the
appellants, the view taken by the High Court must be reversed and the appeals
allowed.
It appears that in the two decisions of this
Court to which we have just referred, this point has not been considered. In
fact in the case of A. V. Thomas & Co. (1) the conclusion of the Sales-tax
Appellate Tribunal that the property in the goods sold passed at Fort Cochin in
full lots with the fall of the hammer was not disputed, and that raised the
question about the construction of Art. 286. In the latter case of Malayalam
Plantations Ltd.(1) this question was attempted to be raised before this Court,
but this Court did not allow the appellant to argue that point, because the
finding of the sales-tax authorities that the title in the goods had passed at
Fort Cochin on the fall of the hammer at the auction had not been disputed
before the High Court. Mr. Menon contends that in the present proceedings, the
respondent State has been urging at all material stages that the sales in
question are inside sales, and so, he should be permitted to argue that point.
We have accordingly heard Mr. Menon on this point and we propose to decide it on
the merits.
When those appeals were heard by us first on
the 10th September, 1964, the procedure followed in conducting the sales in
question was placed before us in the form of a summary which we have quoted at
the beginning of this judgment. We, however, thought that since we were
deciding the question as to where the title in the goods passed, it would be
more satisfactory to have before us all the Rules of the Tea Trade Association
of Cochin which prescribed the procedure for these sales. Accordingly, the
matter was adjourned to enable the parties to produce the said Rules.
The said Rules have since then been produced
before us and we have heard both Mr. Setalvad and Mr. Menon fully on the points
raised by Mr. Menon that the sales in question are inside sales so far as the
respondent State is concerned.
Mr. Menon contends that in deciding this
question we ought to bear in mind the fact that the sales are sales by sample
to which s. 17 of the Act applies. In the case of a contract of sale by sample,
s. 17(2) provides three implied conditions; they are : (a) that the bulk shall
correspond with the sample in quality;
(1) [1963] Supp. 2 S.C.R. 608.
(2) A.I.R. 1965 S.C. 161.
809 (b) that the buyer shall have a
reasonable opportunity of comparing the bulk with the sample; and (c) that the
goods shall be free from any defect, rendering them unmerchantable, which would
not be apparent on reasonable examination of the sample. The argument is that a
sale by sample is, in substance, a sale of unascertained goods, with the result
that no property in the goods is transferred to the buyer unless and until the
goods are ascertained. That is the effect of s. 18 of the Act. Sale by sample,
according to Mr. Menon, is a conditional sale and can be described even as an
executory contract. It becomes a concluded contract as a result of which title
in the goods would pass to the buyer only when the goods have been inspected by
the buyer and accepted by him. Section 64(2) of the Act provides that in the
case of a sale by auction, the sale is complete when the auctioneer announces
its completion by the fall of the hammer or in other customary manner; and it
adds that until such announcement is made, any bidder may retract his bid. Mr.
Menon accepts this principle, but contends that what is completed under s.
64(2) is conditional sale, and that does not
make the contract a concluded contract. The executory contract under s. 17
becomes a completed conditional contract under s.
64(2). but title under such a contract would
pass only after the condition of inspection and approval has been satisfied.
Thus presented, the argument is no doubt
attractive. The sale by public auction took place at Fort Cochin which was in
the State of Madras at the relevant time, but the goods had been stored in the
godowns at the Wellingdon Island within the territorial limits of Travancore,
and the inspection of the goods took place at these, godowns. It is after the
goods are inspected by the buyer and accepted by him that the contract is
completed and title passes from the seller to the buyer. This event takes place
in the Wellingdon Island, and so, the transaction of sale is an inside sale for
the purpose of sales-tax levied by the respondent State.
In support of this argument, Mr. Menon has
referred us to the statement of Benjamin that "where the subject-matter of
the sale is not in existence, or not ascertained at the time of the contract,
an engagement that it shall, when existing or ascertained, possess certain
qualities, is not a mere warranty, but a condition, the performance of which is
precedent to any obligation upon the vendee under the contract, because the
existence of those qualities, being part of the description of the thing sold,
becomes essential to its identity; and the vendee cannot be obliged to receive
and pay for a thing different from that for which he con810 tracted". (1)
Another passage from the same book on which Mr. Menon relies speaks of
acceptance as a taking of the goods by the buyer with the intention of becoming
owner (p.
750). The argument is that the goods are
required to be inspected in the case of a sale by sample and it is only when
inspection discloses no material defects in the goods that acceptance follows,
and that makes the contract a concluded contract by which title passes to the
buyer.
Similarly, Mr. Menon relies on one more
statement of Benjamin which says, "The specific goods may, for instance,
be sold by description. If the specific existing chattel is sold by
description, and does not correspond with that description, the seller fails to
comply, not with a warranty or collateral agreement, but with the contract
itself by breach of a condition precedent" (p. 304).
In support of his case, Mr. Menon has also
relied on a decision of the King's Bench Division in McManus v.
Fortescue & Anr. (2) In that case, the
Court of Appeal has held that at a sale by auction subject to a reserve price
on the article sold, where the fact that there is a reserve is known, the offer
of the auctioneer to sell, the bidding, and the knocking down of the article to
the highest bidder are all subject to the condition that the reserve price
should be reached, and the fact that the auctioneer knocks down the article to
a bidder who has bid a less price than the reserve gives the latter no right of
action against the auctioneer, either for breach of duty in refusing to sign a
memorandum of or otherwise complete the contract, or for breach of warranty of
authority to accept the bid. In dealing with the point raised before the Court,
-Collins, M. R. observed that no authority had been cited to show that the fall
of the hammer could do away with a condition expressly stipulated for by the
conditions of sale. The same view has been expressed by Fletcher Moulton L.J.
by observing that the limitation of an auctioneer's authority, by his principal
fixing a reserve price, is a perfectly valid and effectual limitation. That is
why the fall of the hammer would not affect the binding character of the
condition as to reserve price subject to which alone the contract of sale could
be concluded. It would be noticed that the whole of the argument thus presented
by Mr. Menon proceeds on the assumption that the contract of sale by sample in
the present proceedings was a contract of goods which were in a sense
unascertained and it would be concluded only when the buyer, inspected the
goods and accepted them.
(1) Judah Philip Benjamin's "A Treatise
on the Law of Sale of Personal Property 8th Edn. by Finnomore and James, p.
907.
(2) [1907] 2 K.B. 1.
811 The position in regard to the relevant
provisions of the Act bearing on the question as to when title in the goods
sold passes, is not in doubt. If the contract of sale is for ascertained goods
which are actually described in the list prepared before the sales are held and
it appears that all material particulars about the goods are shown in the list,
then the question as to when title passes would depend essentially upon the
intention of the parties expressed in the terms of the contract. Section 19 (1)
of the Act provides that 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. Section 19(2)
adds that 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 of the case. Under s. 19(3) it is provided that unless a
different intention appears, the rules contained in sections 20 to 24 would be
relevant to decide this question. One thing is clear in the present case viz.,
that the goods in question were not unascertained goods, nor were they not in
existence; goods were clearly in existence, they had been graded, weighed and
packed in numbered chests and a list was prepared in respect of the contents of
these chests separately. It is true that what the buyers are shown at the time
of sale by public auction are samples and the rules authorise the buyers to
inspect the goods; but that is not to say that the sale is a sale of
unascertained or nonexisting goods.
Let us, therefore, consider the relevant and
material terms and conditions of the rules under which the sales take place,
for it is these terms which will decide as to when title passes to the buyer.
Condition No. 7 of the Rules provides that subject to the reserved or upset
price, the highest bidder shall be the buyer, and it lays, down that until the
fall of the hammer or until the registration of the sale as provided in clause
5, any bidder may retract his bid. Under condition No. 8, the auctioneer has to
declare the name of the highest bidder before the lot is knocked down. Under
condition 11, the buyer is entitled to open the chests purchased by him and examine
the contents thereof to ascertain the actual state and condition of the tea.
Such examination has to take place before the expiration of the time allowed
for submission of claims as provided in condition 12 or in the event of earlier
removal of the tea, before the date of actual removal. This condition refers to
the chests purchased by the buyer and contemplates that as a result of the
examination of the goods, the buyer can make claims 812 within the time
specified by condition 12. Condition 12 is material. and so, it is necessary to
read it. It reads thus:"All claims on the ground of difference or
inferiority in quality, description, deterioration, damage, defect in packing
or any other ground whatsoever must be submitted to the selling broker in writing
not later than 5 p.m. on the third day before Prompt Day. Prompt Day shall be
the tenth day after date of sale. In the case of teas removed before Prompt
Day, such claims must be submitted at least 24 hours before removal of tea.
In the absence of any claim submitted in
strict accordance with this condition, the tea shall be deemed to have complied
with the contract in all respects and to have been accepted by the buyer, who
shall not be entitled to reject the tea or to claim any allowance or damages in
respect thereof".
Mr. Menon has placed considerable emphasis on
the fact that this condition provides that the goods shall be deemed to have
been accepted by the buyer when he failed to make inspection within the time
allowed. In other words, his argument is that this condition shows that
acceptance can be deemed to have taken place only after the procedure
prescribed by condition 12 has not been followed and therefore, it envisages
acceptance only after inspection in all cases. We do not think that much
importance can be attached to the expression "to have been accepted by the
buyer" on which Mr. Menon rests his argument. We have already seen that
condition has referred to the chests as having been purchased by the buyer; and
that would be clearly against Mr. Menon's case. So, it would be reasonable not
to base our decision principally on the words used by the conditions, such
'purchased' or ' accepted', but to take into account the substance of these
conditions.
It may be stated at this stage that after the
public auction takes place, claims have to be made by the buyer not later than
the third day before the Prompt Day, or 24 hours before removal of goods,
whichever event happens earlier. The Prompt Day is the 10th day on or before
which payment has to be made by the buyer, and possession has to be taken by
him before 5 P.m. on the fifth day after the Prompt Day (condition No. 22). The
goods continue to be at the sellers' risk to the extent of the sale price only
until 5 P.M. on the fifth day after the Prompt Day or until removal by the
buyer if removed earlier (condition No. 23).
813 Condition 12 clearly shows that the buyer
has a right to make claims either on the ground of difference or inferiority in
quality disclosed on inspection, or as a result of a defect in packing or any
other ground whatsoever. After the time specified by this condition has
expired, the buyer cannot male a claim to reject the goods, nor can he ask for
any allowance or damages in respect thereof.
Condition 13 is also important. It reads thus
"Each chest comprised in a lot shall be treated as the subject of a
separate contract of sale; but this condition shall not entitle the buyer to
require the seller to give part delivery of less than the full number of chests
sold; and in the event of the buyer claiming to reject the lot purchased by
him, the Arbitrators or Umpire, if satisfied that the lot was not a good
tender, shall be entitled to award rejection of the entire lot, and not only
the particular chests found on examination to be defective".
It would be noticed that the first part of
condition 13 corresponds to s. 64(1) of the Act. It, however, adds that though
each chest shall be treated as the subject-matter of a separate contract of
sale, the buyer cannot claim delivery of less than the full number of chests
sold. If the buyer makes a claim for rejecting the contract, the Arbitrators or
Umpire may, if satisfied that the lot was not a good.
tender, hold that the buyer is entitled to
reject either the entire lot or in a proper case even particular specified
chests constituting the lot. Like the word "accepted" in condition
12, the word "tender" in condition 13 cannot, however, materially
affect the nature of the transaction.
Condition 13 makes it clear that in case the
buyer finds a substantial defect in the quality of the goods -sold to him, he
cannot reject the contract of his own; all he can do is to make a claim in that
behalf before the Arbitrator; and this condition is consistent only with the
view that the goods have already been purchased by the buyer and the claim
which he is allowed to make is as a result of the breach of the contract of
sale.
Mr. Menon attempted to argue that condition
13 merely enable the buyer to move the Arbitrator. According to him, the buyer
can reject the contract of his own, or file a claim for damages in a civil
court without having recourse to arbitration. In our opinion, condition 13 is
not merely an enabling condition; it is an obligatory condition and it gives
the buyer only one remedy, and that is to move the arbitrator for appropriate
relief.
814 Condition 15 is also relevant. It reads
thus:"If the Buyer shall fail to pay for the tea or any part thereof on
the due date for payment, the goods may be resold. either by auction or private
sale, at the option of the seller.
Any loss arising on such resale, together
with interest at 6 per cent per annum from the due date and all charges
incurred, shall be paid by the buyer to the seller, and the buyer shall not be
entitled to any profit, which may accrue from such -resale".
This condition is consistent with the
provisions of s. 64(2) of the Act, and it cannot be said to support Mr. Menon's
contention that the title in the goods does not pass to the buyer until he has
inspected them and indicated his acceptance.
Condition 16 is a general condition as to
arbitration and it provides that any disputes or differences which may arise
between the parties shall be referred to arbitration as therein indicated.
Reading conditions 13 and 16 together, there can be no doubt that all claims
which the buyer is entitled to make must be made to the arbitrators and it is
the decision of the arbitrators that will determine the dispute between the
buyer and the seller.
We have carefully considered all the rules
under which sales in question have been held by public auction, and we are
satisfied that title to the goods passed to the buyer under s. 64(2) of the Act
as soon as the sale was completed by the auctioneer announcing its completion
by the fall of the hammer. The initial auction cannot. in our opinion, be
treated as an executory contract which became a conditional contract on the
fall of the hammer. The auction was an auction sale in respect of ascertained
goods and it was concluded in every case on the fall of the hammer. On that
view of the matter, we must hold that the High Court was in error in coming to
the conclusion that the Sales-tax authorities were justified in imposing
sales-tax against the appellants in regard to the transactions which have given
rise to the present appeals.
The result is, the appeals are allowed, the
orders passed by the High Court in revision are set aside, and the levy of
sales-tax imposed by the Sale,,-tax authorities against the appellants is held
to be invalid. There would be no order as to Costs.
Appeals allowed.
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