ORDER H. S. KAMATH, PRESIDENT - The applicant is a registered dealer having his head office at Jabalpur and branch offices at Damoh and Sagar. His grievance is in respect of the assessment for the first "quarter" (1st June, 1947, to 12th November, 1947,) after the coming into force of the Sales Tax Act. 2. Of the four grounds on which revision has been sought, one has not been pressed. This is in respect of a sum of Rs. 487-2-9, which the dealer recovered from buyers as "sales tax" along with what, for the sake of convenience, may be called the "sale price proper". The inclusion of this amount in the taxable turnover was objected to on the ground that the Act did not provide for the levy of "tax on tax". This point has already been decided by the Board in Ballabhdas v. The State ((1951) N.L.J. 515; 3 S.T.C. 13) where the contention has been held invalid and has, therefore, been rejected. 3. The second ground (the grounds will be considered in an order different from the one found in the application for revision) relates to a sum of Rs. 6,979-0-9 in respect of the Jabalpur shop and Rs. 1,955-6-0 in respect of the Damoh shop. Exclusion from the taxable turnover was claimed on the plea that the amounts represented the value of sales to registered dealers or dealers, who in any case, were likely soon to get themselves registered. The position in this respect during the first quarter was rather unique. The date prescribed by the Provincial Government under the proviso to Section 8(1) was 31st August, 1947. By this date all dealers, who were liable to taxation under the Act, were required to get themselves registered; and the registration so made was to take effect from the commencement of the Act, so far as its penal provisions were concerned. Secondly, sales to such dealers during the period 1st June, 1947, to 31st August, 1947, even though they may not have been registered on the date of sale, were allowed to be regarded as sales to registered dealers, provided that they applied for registration within the date fixed. In the case of the amounts mentioned earlier in this paragraph, the Assessing Officer held that the vendee-dealer was either not registered at all, even on the date of assessment, or he applied for registration after 31st August, 1947. In the case of the amounts mentioned earlier in this paragraph, the Assessing Officer held that the vendee-dealer was either not registered at all, even on the date of assessment, or he applied for registration after 31st August, 1947. Factually this is correct, except for a sum of Rs. 1,435-12-0 relating to the Damoh shop in regard to which the Assessing Officer's note reads as follows :- "Sales of sutli-bardana, etc., to Surajdin Pyarelal before 1st August, 1947, the date of application for registration." This appears to mean that the sales took place before 1st August, 1947, the date on which the vendee applied for registration. If so, the sales for this amount of Rs. 1,435-12-0 were obviously to a registered dealer and the amount should have been excluded from the taxable turnover. In regard to the other items (4 in respect of the Jabalpur shop and 3 in respect of the Damoh shop), the Assessing Officer's view is correct. Of these 7 items, the largest is Rs. 3,788-0-6 representing the price of gunny bags sold to the Deputy Commissioner and the Controller of Food Supplies, Jabalpur. Obviously they are not registered dealers and exclusion should not have been claimed, even under a misunderstanding of the law. Of the remaining 6 items, 2 are in regard to vendees who are not registered at all and 4 in regard to vendees, who applied late for registration. The applicant has clearly no case in regard to the former, and, in regard to the latter four, it has been urged on his behalf that the vendees, who applied late, compounded their offences and secured registration certificates and that such registration should be regarded as though it had been made under Section 8(3) on an application presented in time. It is not possible to accept this contention for which there does not appear to be any support in law. Strictly considered, sales to a dealer, who has not even applied for registration, are sales to an unregistered dealer even during the period 1st June, 1947, to 31st August, 1947, and the vendor is not entitled to claim deduction of the turnover of such sales from his gross turnover. All that Section 8(1) does is to confer some kind of a privilege on the unregistered dealer during this period; it confers no right on the dealer-vendor who is already registered. All that Section 8(1) does is to confer some kind of a privilege on the unregistered dealer during this period; it confers no right on the dealer-vendor who is already registered. If the latter has in practice been allowed to claim deduction in respect of sales made by him to persons who applied for registration by 31st August, 1947, it should be regarded more as a matter of grace than as a right conferred by law. The case for grace ceases when the vendee has defaulted on the date prescribed. 4. The third ground is in respect of a sum of Rs. 80,047-2-3 re-presenting the turnover of sales effected on orders received prior to 1st June, 1947, the date on which the Act came into force. It has been argued that the amount is not liable to assessment, in view of the proviso to Section 4(1) of the Act; and, even if it should be held otherwise, the case for exemption has been urged under Section 4(1) itself. Now, under the proviso, no tax is payable "on sales made in the course of the execution of a contract, which is shown to the satisfaction of the Commissioner to have been entered into before the commencement of this Act." The word "contract" has been defined in a special sense in clause (b) of Section 2, which is reproduced below : "2. (b) 'Contract' means any agreement for carrying out for cash or deferred payment or other valuable consideration - (i) the construction, fitting out, improvement or repair of any building, road, bridge or other immovable property, or (ii) the installation or repair of any machinery affixed to a building or other immovable property, or (iii) the overhaul or repair of any motor vehicle." And the word, according to Section 2 itself, has to be understood throughout the Act in the sense above-mentioned and no other "unless there is anything repugnant in the subject or context." The applicant's learned counsel would have us understand the word "contract" in the proviso to Section 4(1), not in the special sense defined, but in the general sense of an "agreement to sell or to buy". We see nothing repugnant in the context in which the proviso to Section 4(1) has been placed to make us impart to the word "contract" its general meaning and not the special meaning which the Act gives to it. We see nothing repugnant in the context in which the proviso to Section 4(1) has been placed to make us impart to the word "contract" its general meaning and not the special meaning which the Act gives to it. As we see it, the intention of the Legislature in enacting this proviso was not to exempt all agreements to sell and to buy made before the date of the commencement of the Act, but only "contract of work", as we may describe briefly the contracts of the kind defined in Section 2(b). The reason for such an exemption lay in the fact that contractors did not anticipate the payment of this tax when the contracts were made and the tax, if levied, would have fallen entirely on dealers instead of partly at least on consumers. Coming next to the contention that the case is covered by Section 4(1) itself, the point sought to be made is that, though goods were despatched after 1st June, 1947, they were weighed and appropriated towards the contract prior to that date - in fact soon after the orders were received. Relying on Section 23 of the Sale of Goods Act (read with Section 18), the learned counsel for the applicant has argued that once the goods were weighed and appropriated towards the contract, the property in them should be deemed to have passed to the buyers. This appears to be rather an over-simplification of the position indicated in Section 23 because if that section is to apply, the appropriation must be unconditional and there should, in this case, be the assent of the buyer, express or implied. The facts as stated by the applicant's agent before the Assessing Officer do not seem to establish a case such as would bring it within the scope of Section 23. He states as follows :- "Our firm received some orders for supply of sarso or mustard seeds at certain agreed selling rates. We weighed the goods according to description and applied for indent of wagons. The purchasers were informed that on receipt of wagons the goods will be loaded and R.R. sent through Bank or direct. The following goods were despatched after 1st June, 1947, in execution of old orders. (Here follow certain details regarding the total amount involved, i.e., Rs. 80,047-2-3). We weighed the goods according to description and applied for indent of wagons. The purchasers were informed that on receipt of wagons the goods will be loaded and R.R. sent through Bank or direct. The following goods were despatched after 1st June, 1947, in execution of old orders. (Here follow certain details regarding the total amount involved, i.e., Rs. 80,047-2-3). As soon as the goods were despatched, bills were drawn against the purchasers; goods accounts were then credited and the purchasers accounts debited. If the goods are damaged before loading the wagons the responsibility rested with us. The property in these goods was transferred to the purchasers as soon as the goods were despatched according to bilti cut souda system." There is nothing to show in the statement of facts above, that the goods were appropriated towards the contract unconditionally after they were weighed. On the contrary, the admission that the applicant was to bear the risk of damage, if any, to the goods any time before they were railed and despatched should make it clear that there was no appropriation towards the contract and no transfer of property. On the facts stated by the applicant's own authorised agent, it is clear that the sales were effected after the commencement of the Act and have, therefore, rightly been taxed. 5. The fourth and last ground relates to the following amounts received by each of the three shops of the applicant from the Ganesh Export and Import Co. of Calcutta during this period :- (i) Jabalpur shop Rs. 84,852-11-9 (ii) Damoh " " 58,684- 7-0 (iii) Sagar " " 43,645- 8-9 ------------------- Total " 1,87,182-11-6 ------------------- The total amount of Rs. 1,87,182-11-6 was included in the gross turnover by the applicant who claimed deduction of the whole of it under sub-clause (iv) of clause (a) of Section 2(j) which refers to "such other sales as may be prescribed". 84,852-11-9 (ii) Damoh " " 58,684- 7-0 (iii) Sagar " " 43,645- 8-9 ------------------- Total " 1,87,182-11-6 ------------------- The total amount of Rs. 1,87,182-11-6 was included in the gross turnover by the applicant who claimed deduction of the whole of it under sub-clause (iv) of clause (a) of Section 2(j) which refers to "such other sales as may be prescribed". A note was appended to the effect 'gharu mal C.P. Ke bahar bheja" (domestic goods or the firm's own goods sent outside C.P.) The nature of the transactions with the Ganesh Co., (as the Calcutta firm mentioned above may be briefly called) has been described by the applicant's agent before the Assessing Officer as below :- "From the Damoh branch, the firm has sent the following goods for sale in the adat or commission of the dealers after 1st June, 1947, to 12th November, 1947. Dealer to Sale proceeds Date Name of articles whom sent received during the period. From Mustard & Ganesh Export Rs. 58,684-7-0 Sale proceeds 1-6-47 to Linseed & Import Co., received of 1201 12-11-47 2722 bags. Cal. bags of both. The balance of 1521 bags remained with the Agent, Ganesh Export Co. in Calcutta on 12-11-1947." The dealers mentioned above do not send any order to us for supply of goods. They only intimate the latest market rates prevailing at their places. If the rates are suitable our firm sends the goods to the agents on the firm's account (Gharu mal). The goods are consigned "to self" with endorsement for delivery in favour of the agent concerned. The consignment is sent "freight to pay" and the agent pays the freight and debits to this firm's account. The R.R. is sent by registered post to the agent's address and no advance is taken from the agent. The goods are sent on the firm's risk and the firm remains responsible for loss or damage. We direct the agent to sell the goods at profit and at times we direct that the goods may not be sold below certain rates. If the rates show a marked downward trend then he asks our instructions by telegram; otherwise for slight variations in rates like one or two annas the agent sells it without reference to us. We direct the agent to sell the goods at profit and at times we direct that the goods may not be sold below certain rates. If the rates show a marked downward trend then he asks our instructions by telegram; otherwise for slight variations in rates like one or two annas the agent sells it without reference to us. He charges adhat, Dharmada, cartage, railway freight, godown rent, insurance charges etc., from us and deducts them from the sale proceeds and the balance is remitted to us. The agent sells the goods, on our account to the customers and shows them accordingly in the accounts." 6. The accounts given above is of the dealings of the Damoh shop, but it applies also to the dealings of the shops at Jabalpur and Sagar. The veracity of this account does not appear to have been challenged or even suspected either by the Assessing Officer or by the Sales Tax Commissioner. On the facts stated, they held that the despatch of goods to the Calcutta firm involved a transfer of property in them for deferred payment. The relevant parts of their orders should be reproduced for a proper adjudication of what is really the most important ground urged in revision. Here is what the Sales Tax Officer says :- "The dealer contends that the Calcutta company did not sent any supply order but after selling the goods in Calcutta market remitted the balance of sale proceeds. 'Sale' as defined in the C.P. and Berar Sales Tax Act means 'any transfer of property in goods for cash or deferred payment'. The Calcutta company as commission agent used their discretion in deciding the best profitable rates available over and above the minimum intimated by the dealer. The company selects the ultimate customers and in case of their failing to pay the agreed price the company would sue them in Courts at the company's expense. After sale the company in their khata bahis credited the account of Hirji Govindji and debited to the account of those customers. This dealer (the applicant) in his khata bahis credited the Calcutta consignment account with sale price received and debited the account of the company. After sale the company in their khata bahis credited the account of Hirji Govindji and debited to the account of those customers. This dealer (the applicant) in his khata bahis credited the Calcutta consignment account with sale price received and debited the account of the company. Actually it is a transfer of property in Sarso seeds to the company in Calcutta for deferred payment and is liable to tax as sale." The Sales Tax Commissioner observed as follows :- "The appellant's agent.....has stated that no specific orders are placed with them by any Calcutta firm for supply of goods, but that the latest prevailing rates at Calcutta are obtained, and if they are suitable, the goods are despatched to Calcutta and the Ganesh Export and Import Company sells them and remits the sale-proceeds. The ownership in goods was actually transferred to the agent at Calcutta, viz. Ganesh Export and Import Company, when the consignments were despatched from here and it was this company who had the sole right to settle the rates and choose the buyers and realise the sale price and remit the same to the appellant. Mere description to say that it was 'Gharumal' does not change the real nature of the transaction. In my opinion, these transactions are clear sales within the meaning of the C.P. and Berar Sales Tax Act and, therefore, are liable to sales tax." 7. The nature of the transactions not being in dispute, the main point for determination is whether the circumstances in which the applicant despatched goods to the Ganesh Co., at Calcutta, involved the transfer to that company of the property in those goods, within the meaning of sub-section (g) of Section 2 of the Act, read, if necessary, with Explanation (II) to that sub-section. To decide this question, we must consider two subsidiary questions :- (a) at what point of time exactly has the contract of sale been made in this case ? and (b) where exactly were the goods situated, when that contract was made ? 8. The applicant's learned counsel has based his whole case on the contention that the Ganesh Co., in all these transactions, was a pakka adatia of the applicant. and (b) where exactly were the goods situated, when that contract was made ? 8. The applicant's learned counsel has based his whole case on the contention that the Ganesh Co., in all these transactions, was a pakka adatia of the applicant. The terms of the agreement between the parties do not appear to have been reduced to writing, but the position has not been seriously challenged by the learned counsel for the State, who also also agrees that in a case of pakka adat, the transactions are between principal and principal. He points out that the applicant has been sending goods regularly to the Ganesh Co., at Calcutta and suggests that the presumption underlying such regular despatch is that there is an implied contract between the parties, if not an express one, prior to the despatch. The contract of sale having thus taken place, while the goods were still in the Province, the sale should be deemed to have taken place in the Province, even though the actual physical transfer of the goods might take place outside. On behalf of the applicant, it has been urged that these are not the implications of the pakki adat system. For deciding this case, it does not appear necessary to go into the intricacies of that system in any great detail. But the following from the standard work on the subject of R. R. Mody, based on certain judgments of the Bombay High Court is worth reproducing :- "The pakka adatia has been defined by Macleod, J., as 'a person who enters into a contract of employment with his constituent for reward. He obtains instructions from his client what contracts to enter into but generally speaking the constituent is not concerned with the method in which his instructions are carried out'. Beaman, J., in the same case defines the pakka adatia in the following terms : 'A pakka adatia.... is a commission agent and something more. He receives orders from his constituents and places them in the open market. His obligations are briefly to find money for goods or goods for money or settle differences on due dates. Beaman, J., in the same case defines the pakka adatia in the following terms : 'A pakka adatia.... is a commission agent and something more. He receives orders from his constituents and places them in the open market. His obligations are briefly to find money for goods or goods for money or settle differences on due dates. His peculiar feature and one which is, as far as I know, not shared by any other agent known to the law is that he can allocate his principal's contracts to himself when it suits him to do so." The learned Judge also said ..... "that neglecting this one distinguishing characteristic he is very like an ordinary del credere agent. But he is that and more." (Chap. I, page 2 of the 2nd edition.) 9. In the light of the above and in view of the admitted facts of the case, such contract as may be presumed to exist between the parties prior to the despatch of the goods from this Province is not a contract of sale, as defined in Section 4 of the Sale of Goods Act, but a contract whereby the Calcutta firm agrees to find money for the goods placed at its disposal by the applicant. Admittedly, no orders are placed with or received by the applicant. There are communications between the parties regarding ruling market rates at Calcutta and their adequacy or inadequacy. Goods are despatched - the Calcutta firm undertaking to find buyers for the goods, at prices approved by the applicant, (subject to narrow marginal fluctuations) and guaranteeing payment of the price received, after it has reimbursed itself its expenses and appropriated to itself its commission or reward for the services rendered. In this process, we consider that the contract of sale takes place between the Calcutta firm and the person who buys of that firm after the goods have reached Calcutta. There has been no sale in this Province and the amounts involved are exempt from assessment under our Act. 10. In the result, we direct that the amount of Rs. 1,435-12-0 mentioned in paragraph 3 of this order and the amount of Rs. 1,87,182-11-6 mentioned at the beginning of paragraph 5 should be excluded from the taxable turnover, as determined by the Assessing Officer. To this extent the application is allowed, and in other respects it is rejected. Application partly allowed.