VENKATARAMA AYYAR, J.

The appellant is a partner of a firm of merchants called Indo-Malayan Trading Company and has been convicted in proceedings taken under Section 15 of the Madras General Sales Tax Act for failure to pay the tax which had been imposed on the said firm. The Indo-Malayan Trading Company carries on the business of purchasing and selling groundnut oil, sago and kirana articles and has its head office in the City of Madras. The usual course of business is that the firm receives orders from merchants in Calcutta for the supply of these articles; the orders are accepted in Madras; the articles are purchased in the local markets and despatched to Calcutta by rail or steamer. The relative railway receipts or bills of lading are taken in the name of the sellers and so are the insurance policies. They are then forwarded to their bankers in Calcutta who deliver the same to the consignees on payment of the price and other charges. During the period from 1st April, 1947, to 31st December, 1947, which is the period of assessment concerned in these proceedings the turnover of such transactions amounted to Rs. 37, 75, 357. The point for decision is whether sales tax is leviable on this amount.

The contention of the assessee is that the title to the goods sold passed only in Calcutta because the documents of title were taken in the name of the sellers and delivered to the purchaser on payment of the price at Calcutta and that consequently there was no sale within the Province of Madras and, therefore, no liability to pay the tax arises under the Act. The Deputy Commercial Tax Officer passed an order on 12th February, 1949, rejecting this contention and assessing the firm to sales tax on these transactions and this decision was affirmed on appeal by the Commercial Tax Officer by his order dated 29th May, 194

9. On 2nd June, 1949, notice of the final assessment and demand for payment of the amount of tax was issued to the firm. The assessees preferred a revision to the Board and that was dismissed on 23rd May, 1950. On 14th August, 1950, the assessed filed a suit O.S. No. 903 of 1950 on the file of the City Civil Court, Madras, for a declaration that the imposition of the tax was not justified by the Act and was in consequences illegal. That suit was dismissed on 31st July, 1951, and an appeal against that judgment is pending in this Court, C.C.C.A. No. 131 of 1951. Meanwhile, the Government instituted the prosecution under Section 15, C.T. No. 1358 of 1950, out of which the present appeal has arisen. The accused pleaded in before that the firm was not liable to be taxed under the provision of the Act and that the assessment was illegal. That plea was overruled and the appellant was ordered to pay a fine of Rs. 1, 000 in addition to the tax. Against the said order the accused has preferred this appeal.The substantial question that arises for determination in this appeal is whether the sales in question took place within the Province of Madras. Mr. V. T. Rangaswami Iyengar, the learned Advocate for the appellant, argues that on the facts already stated - and there is no dispute above them - the sellers continued to be the owners of the goods until they were paid for and cleared in Calcutta and under the provisions of the Sale of Goods Act, the property in the goods passed to the purchasers only in Calcutta and that, therefore, the sale took place only there. The contention of the learned Advocate-General, on the other hand, is that for purposes of the General Sales Tax Act the question whether there was a sale within the Province of Madras would have to be determined on a factual basis as to where the transaction took place and not on a consideration of questions as to where property passed in the goods. It is conceded on behalf of the Government that if the correct principle to apply is to determine where property in goods passed, the sales in question could not be held to have taken place within the Province of Madras. On the other hand, it is equally indisputable that if the true test is to determine where the transactions took place, the finding that the sales in question took place within the Province of Madras is unassailable, because the firm had its head office at Madras; its accounts were maintained at Madras; 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 Madras accounts. The question is which of these two stand-points is the correct one to adopt under the Act.

The word "sale" has both a legal and a popular sense. In the legal sense it imports passing of property in the goods. In its popular sense it signifies the transaction which results in the passing of property. To a lawyer the legal sense would appear to be the correct one to be given to the word in the Sales Tax Act. That is the conception which is familiarised in the provisions of the Sale of Goods Act. If one leaves out of account sales tax legislation which is of comparatively recent origin, questions relating to sale of goods usually come up before Courts only in connection with disputes between the sellers and purchasers. If the goods perish, on whom is the loss to fall If the purchaser becomes insolvent before payment of price can the goods be claimed by the trustee in bankruptcy For deciding these and similar questions it is necessary to determine at what point of time the property in goods passed to the purchaser. Sometimes when the point for determination is as to jurisdiction of Court to entertain suits based on contract, it may be material to consider where property in the goods passed, that being part of cause of action. These being the questions which are accustomed to be debated in connection with sale of goods, it is natural that a lawyer should, as a matter of first impression, approach the question of sale under the Sales Tax Act with the same concept of a sale. But if the matter is further considered it will be seen that considerations which arise under the Sales Tax Act are altogether different from those which arise under the Sale of Goods Act. The object of the Sales Tax Act is to impose a tax on all sales and it is a tax imposed on the occasion of sale : Vide The Province of Madras v. Boddu Paidanna and Sons Vakkan v. Province of Madras and Syed Mohamed & Co., and Another v. The State of Madras and Another. So far as the Government is concerned, it would be immaterial at what point of time property in the goods actually passed from the seller to the buyer. Of course, there must be a completed sale before tax can be levied and there would be a completed sale only when property passes. That is the scope of the definition of "sale" in Section 2(h). But when once there is a completed sale, the question when property passed in the goods would be a matter of no concern or consequence for purposes of the Sales Tax Act. The Government is interest only in collecting tax due in respect of the sale and the only fact about which it has to satisfy itself is whether the sale took place within the Province of Madras. In this context the popular meaning of the word is the more natural one and there is good reason for adopting it. The Officers who have got to assess the tax under the Act need not necessarily be lawyers and it is difficult to believe that the Legislature would have entrusted to their decision abstruse question as to passing of property which have taxed the legal acumen of learned Judges and lawyers. It is far more probable that they were expected to base their decision on facts and circumstances showing where the transaction took place. They would, in this view, have to enquire where the office of the dealer is located, where the accounts are maintained, where the bargains are made, where the goods were actually lying at the time of the bargain, where they were consigned in pursuance of the contract, and where sale proceeds were dealt with. These and similar matters are questions of fact which could properly be left to the determination of administrative tribunals.In Norfolk and W.R. Co. v. Sims 191 US 441; 48 L.Ed. 254 at 256) the facts were that Messrs. Sears Roebuck and Company who were manufactures of sewing machines in Chicago in the State of Illinois sold a machine to Mrs. Satterfield of Roxboro in the State of North Carolina and consigned the same through a common carrier. The sellers took out a bill of lading and sent the same to an agent at Roxboro who delivered the same to Mrs. Satterfield on receipt of the price. Before Mrs. Satterfield could take delivery of the machine, the local authorities seized it for payment of a tax alleged to be due from the sellers by virtue of a statute of North Carolina which imposed a licence tax on all persons "engaged in the business of selling" within the State. The question was whether on the facts found, the sellers could be held to have carried on business of selling in Roxboro. The contention of the local authority was that the property in the machine passed only at Roxboro where the bill of lading was delivered on payment of price and therefore there was "business of selling" within the State. In negativing this contention the Court observed :-

"While it may be entirely true that the property on the thing sold does not pass under a C.O.D. consignment (collection on delivery) until delivery of the goods and payment to the carrier and hence it may be said that the sale is not completed until then, yet, as a matter of fact, the bargain is made, and the contract of sale completed as such, when the order is received in Chicago, and the machine shipped in pursuance thereof. A sale really consists of two separate and distinct elements : first, a contract of sale, which is completed when the offer is made and accepted; and second, a delivery of the property which may precede, be accompanied by, or follow the payment of the price, as may have been agreed upon between the parties. The substance of the sale is the agreement to sell, and its acceptance. That possession shall be retained until payment of the price may or may not have been a part of the original bargain, but in substance it is a mere method of collection, and we have never understood that a licence could be imposed upon this transaction except in connection with the prior agreement to sell, although in certain cases arising under the police power it has been held that the sale is not completed until delivery and sometimes not until payment. Were it not for the opinion of the Supreme Court of North Carolina, we should have said that the words engaged in the business of selling the same within the State had reference to the word selling in its popular and ordinary sense of selling from a stock on hand or upon a special order to a manufacture and not to a mere method of collecting the money."

In American Express Co. v. State of Iowa 108 US 133; 49 L.Ed. 417 at 422), the question again arose with reference to goods shipped from one State to another under a C.O.D. contract. After observing that opinion was divided as to when under such a contract property passed the Court proceeded on to state :-

"But we need not consider this subject. Beyond possible question the contract to sell and ship was completed in Illinois. The right of the parties to make a contract in Illinois for the sale and purchase of merchandise, and in doing so, to fix by agreement the time when and condition on which the completed title should pass, is beyond question."

The precise question which came up for decision in the above cases was with reference to the commerce clause. But the principles laid down therein as to what constitutes sales would equally be applicable on a question as to where the sale actually takes place in a transaction of an inter-State character.

The following observations of Black, J., in Richfield Oil Corporation v. State Board of Equalization 329 US 69; 91 L.Ed. 80 at p. 95) may be appositely quoted :-

"This purely intra-State sale transaction cannot properly be held to have lost its intra-State per-exportation status by reason of the fact that the parties did not intend title to pass until the oil was delivered at the purchasers ship. For formal passage of title is not an adequate criterion for measuring a states constitutional power to tax sales made within the state. Private parties are free to decide, so far as their own interests are concerned, when legal title shall be considered to pass. But a state surely is not required by the Constitution to forbear from taxing that part of a sale transaction which precedes the particular moment the parties have arbitrarily selected for a conceptual transfer of title. Nor need a state withhold the exercise of its power to tax sales until an article is delivered or paid for. That delivery, perhaps the last step in executing this agreement to sell, happened to border on the imaginary line where the actual exporter took possession does not justify us in concluding that therefore this whole sale transaction occurred after exportation. Constitutional interpretations which make serious inroads into the power of both the States and the Federal Government to tax sales made by local businesses should not turn on fine legal concept of when title passes or delivery occurred in relation to the beginning of exportation."

The point for decision in this case also was whether the transaction in question was repugnant to Article 1, Section 10(2), of the American Constitution. But the observations quoted above enunciate a general principle which is capable of application to determination of the power of a State to impose tax on sales.

In Vakkan v. Province of Madras a subject of the State of Cochin entered into contracts of sale in Fort Cochin in British India and the goods were also delivered in Fort cochin. On these facts it was held that the sale must be deemed to have place in the State of Madras and that taxes were rightly imposed in respect of such sales under the madras General Sales Tax Act.

Our attention was invited to the decision of Krishnaswami Nayudu, J., in Louis Dreyfus and Company Limited v. The Province of Madras on the Original Side of this Court. One of the points that arose for determination there was whether the imposition of sales tax was illegal on the ground that the sales did not take place within the Province. The question was argued on the basis that sale takes place where property in the goods passes and on that basis it was held by the learned Judge that the property in the goods passed at Marmagoa and not in Madras and that, therefore, the imposition was illegal. But the contention now raised by the Advocate-General was not put forward in that case and the decision is accordingly of no assistance in the determination of the question now under consideration.

for the appellant sought to build an argument on the basis of the Madras Act XXV of 1947 which introduced Explanation (2) to the definition of sale of goods under the Act. It runs as follows :-

"Explanation (2). - Notwithstanding anything to the contrary in the Indian Sale of Goods Act, 1930, the sale or purchase of any goods shall be deemed, for the purposes of this Act, to have taken place in this Province, wherever the contract of sale or purchase might have been made :-(a) if the goods were actually in this Province at the time when the contract of sale or purchase in respect thereof was made, or

(b) in case the contract was for the sale or purchase of future goods by description, then, if the goods are actually produced in this Province at any time after the contract of sale or purchase in respect thereof was made."

It was argued that this Explanation recognizes that under the Act as it stood prior to the amendment, the question as to where the sale took place should be determined in accordance with the principles laid down in the Sale of Goods Act and as the Explanation came into force only on 1st January, 1948, it has to be ignored for the purpose of the present proceedings which relate to the assessment for the period from 1st April, 1947, to 31st December, 1947. This argument proceeds on the assumption that the object of the amendment was to effect a change in the law. That, however, is not necessarily the case. Explanations are inserted for removing doubts and declaring the law. Explanation (2) no doubt states that "notwithstanding anything to the contrary in the Indian Sale of Goods Act, 1930" the sale should be deemed to have taken place in this Province, wherever the contract of sale or purchase might have been made. But the Sale of Goods Act contains no provision that a sale takes place where a contract of sale or purchase takes place. There is not even a provision in the Act as to where a sale takes place, even thought there are provisions as to when property passes in the goods. Under the circumstances it is more natural to construe the Explanation as enacted for removing doubts and not to effect a change in the law. Our conclusion accordingly is that the word "sale" in the Madras General Sales Tax Act must be understood in a popular sense and sales tax can be levied under the Act if the transaction substantially takes place within this Province, notwithstanding that the property in the goods does not pass within the State.A contention was raised that on this construction the Madras General Sales Tax Act would have extra-territorial operation affecting transactions concluded in other States and that it would, therefore, be ultra vires. The answer to this contention is furnished by the decision of the Privy Council in Wallace Brother & Co. v. Commissioner of Income-tax, Bombay (1948 F.L.J. 32 at p. 36). There, a company incorporated in England having its registered office there was carrying on business in India. The Income-tax authorities in India acting under the provisions of the Indian Income-tax Act imposed a tax on the company not company not merely in respect of the income received in Indian but also of the income received in England. On the question whether the Indian Legislature was competent to tax the income received from England, the Privy Council observed :-

"The resulting general conception as to the scope of income-tax is that, given a sufficient territorial connection between the person sought to be charged and the country seeking to tax him, income-tax may properly extend to that person in respect of his foreign income."

In Wadia v. Commissioner of Income-tax, Bombay (1949 F.L.J. 18), the Gwalior Durbar was advancing large sums on mortgage of debentures over property in British Indian. The question was whether interest received by the Durbar at Gwalior was assessable to income-tax. The assessee contended that Section 42(1) of the Income-tax Act under which the assessment was sought to be made was extra-territorial in its operation and, therefore, ultra vires of the Indian Legislature. It was held by the majority that on the facts there was sufficient connection to clothe the Indian Legislature with competence to impose the tax and that, therefore, the assessment was not illegal. In Commissioners of Taxation v. Kirk 1900 AC 588), the question arose with reference to ores extracted in New South Wales and sold as finished products outside the State. The sale proceeds were realised outside the State. The State of New South Wales sought to levy income-tax on the profits made on such sales. The Privy Council held that it was within the competence of the Legislature of New South Wales to impose tax even though the profits were received outside the State, as part of the process was within the State. In International Harvester Company of Canada Ltd. v. Provincial Tax Commission 1949 AC 36; the Privy Council after quoting with approval the above decision observed that "regarding profit as arising solely at the place of sale" is fallacious. Vide also the decision of this Court in Vakkan v. Province of Madras (1952 65 L.W. 793; On these authorities, the attack on the Madras General Sales Tax Act on the ground that it is extra-territorial in its operation must fail.In the result, this appeal fails and is dismissed.

RAJAMANNAR, C.J. - I agree.

Appeal dismissed.