Judgement

SHAH, J. : With certificate of fitness granted by the High Court of Andhra Pradesh this appeal is preferred by Shree Bajrang Jute Mills Ltd.

2. The appellant is engaged in the manufacture of jute goods, and is a registered dealer under the Madras General Sales Tax Act. For the assessment year 1954-55 the appellant submitted its return for sales-tax claiming a deduction of Rs. 21,80,118-1-3 from the turnover in respect of the jute goods supplied by rail to the Associated Cement Ltd. - hereinafter for the sake of brevity called the A. C. C. under dispatch instructions from that Company. The Commercial Tax Officer rejected the claim of the appellant for deduction and that order was confirmed in appeal to the Deputy Commissioner of Commercial Taxes. In appeal to the Sales Tax Appellate Tribunal, the order was reversed, the Tribunal holding that the appellant was entitled to exemption in respect of the turnover for the goods supplied to the A. C. C.. A revision petition presented against the order to the High Court of Andhra Pradesh was heard with a large number of other petitions which raised certain common questions. The High Court reversed the order of the Tribunal and restored the order passed by the Deputy Commissioner of Commercial Taxes.

3. The factory of the appellant is situated at Guntur. The A. C. C. owns cement factories at many places (including one at Tadepalli in the State of Andhra called the Krishna Cement Works) and for the purpose of marketing its products it requires jute packing bags. For securing a regular supply of jute bags, the A. C. C. entered into a contract with the appellant of which the following four conditions are material:

"1. All the goods are sold F. O. R. Guntur unless otherwise expressly stated in this contract.

2. Goods to be packed ....... well pressed and marked in ......... bound bales of ...... per each.

3. Payments to be made in cash, in exchange for Mills Delivery Order on sellers on due date or for Railway receipts or for Dock receipts, or for mate s receipts, (which Dock receipts or Mate s receipts are to be handed by the Dock s or Ship s Officer to the seller s representative).

4. The buyers agree that the property in the goods sold shall not pass from the sellers to the buyer so long as the sellers are in possession of any bills of lading, railway receipts, dock-warrant or Mate s receipts or any other document of title whether such documents are in the names of sellers or buyers, until payment is made in full.

(a) The buyers agree that the risk of loss, deterioration or damage in the goods during transit whether by land or canal or sea or when the goods are in the custody of the seller or any third person in a warehouse, dock or any premises shall be borne by the buyers notwithstanding that the property in the goods does not pass to the buyers during such transit or custody."As and when the gunny bags were needed for packing its products the A. C. C. issued dispatch instructions calling upon the appellant to send jute bags by railway to the cement factories of the A. C. C. outside the State of Andhra. Pursuant to those instructions the appellant loaded the goods in the railway wagons, obtained railway receipts in the name of the A. C. C. as consignee and against payment of the price, delivered the receipts to the Krishna Cement Works, Tadepalli - which, it is common ground, was for the purpose of receiving the railway receipts and making payment, for agent of the A. C. C. It is also common ground that the jute bags were sold to the A. C. C. for the purpose of packing cement by the factories of the A. C. C. to which they were sent and not for any other purpose.

4. The assessing authority and the Deputy Commissioner held that as the railway receipts were delivered to the agent of the buyer within the State of Andhra, and price was also realized from the agent of the buyer within the State, the goods must be deemed to have been delivered to the buyer in the State of Andhra, and the app