Satyanarayana Rao, J.-

The assessee, Messrs. Louis Dreyfus & Company Ltd., was assessed to sales-tax for the assessment year, 1948-49, including in its turnover a sum of Rs.5,53,746-5-6 which represents the value of Niger seeds shipped by the assessee to places outside the territory of Indian Union in pursuance of contracts entered into by their London office.

The assessment was based upon Explanation 2 to section 2(h) of the Sales Tax Act, which was added by the Madras General Sales Tax (Amending) Act, 1947 (Act XXV of 1947). The basis on which the tax was levied under this Explanation was that the goods were actually in this State at the time of the contracts of sale. If the assessment has to be made after the Constitution came into force, probably the assessee would have been exempt from the payment of the tax under Article 286, of the Constitution. But, as the assessment year was before that date, the Department and the Tribunal upheld the assessment under the new Explanation, Explanation 2 to section 2(h), which was added by the Amending Act of 1947.

Before the Amendment, tax could not have been imposed unless the sale was completed within the State of Madras, that is unless the ownership in the goods had passed to the buyer within the State as is now finally decided by the Supreme Court in Poppatlal Shah v. State of Madras1.

The argument now before us was twofold. In the first place, it was contended that this provision is repugnant to the provisions of the Sale of Goods Act, and therefore, should not prevail, as the previous sanction of the Governor-General was not obtained for enacting the Amendment, that was introduced in 1947. The second argument, which is also another aspect of the first point, was that the impugned provision is repugnant to the Sale of Goods Act, and under section 107(2) of the Government of India Act, the Sale of Goods Act should prevail over the Provincial Law, in the absence of the assent of the Governor-General.

The legislative power of the State Legislature to enact the law was derived from item 48 of the Provincial List, List No. II of the VII Schedule to the Government of India Act of 1935, read with section 100 of the Government of India Act. Under this Entry, the Provincial Legislature is empowered to make laws, in respcet of “taxes on the sale of goods and on advertisements”. The expression “sale of goods” is a composite expression consisting of several important elements in the transaction of sale. The bargain or the agreement of sale, the delivery of goods, the passing of the property, etc. form its essential elements. The Sales Tax Act, which was enacted for the purpose of a levy of a general tax on the sale of goods in the State of Madras, could take any of the elements, which go to constitute the same, as establishing sufficient nexus with the territory to justify the imposition of the tax. Before the Amendment in the absence of any separate provision establishing the nexus, it was assumed that the place where the property in the goods passes was the place at which the tax could be levied. If this was outside the State the tax could not be levied. In order to get over this situation, the State Legislature in 1947 introuduced the Explanation 2 to section 2(h) of the Sales Tax Act, whereunder it is open to the State to justify the imposition of the levy of the sales-tax if the goods were actually in the State at the time of the contract of sale. That is the situation of the goods at the time of the contract of sale was taken as establishing sufficient nexus to justify the imposition of the tax.

Does this provision in any way affect, alter or modify any of the provisions of the Sale of Goods Act is the question to be considered. Under the Sale of Goods Act, it must be remembered that there is no provision fixing the situs of sale. The provisions of the Sale of Goods Act only related to the time when the property in the goods passes form the seller to the buyer. The sections beginning with sec

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