{"id":175600,"date":"1960-12-14T00:00:00","date_gmt":"1960-12-13T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/bayyana-bhimayya-vs-the-government-of-andhra-pradesh-on-14-december-1960"},"modified":"2016-05-21T19:54:48","modified_gmt":"2016-05-21T14:24:48","slug":"bayyana-bhimayya-vs-the-government-of-andhra-pradesh-on-14-december-1960","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/bayyana-bhimayya-vs-the-government-of-andhra-pradesh-on-14-december-1960","title":{"rendered":"Bayyana Bhimayya vs The Government Of Andhra Pradesh on 14 December, 1960"},"content":{"rendered":"<div class=\"docsource_main\">Supreme Court of India<\/div>\n<div class=\"doc_title\">Bayyana Bhimayya vs The Government Of Andhra Pradesh on 14 December, 1960<\/div>\n<div class=\"doc_citations\">Equivalent citations: 1961 AIR 1065, \t\t  1961 SCR  (3) 267<\/div>\n<div class=\"doc_author\">Author: Hidayatullah<\/div>\n<div class=\"doc_bench\">Bench: Hidayatullah, M.<\/div>\n<pre>           PETITIONER:\nBAYYANA BHIMAYYA\n\n\tVs.\n\nRESPONDENT:\nTHE GOVERNMENT OF ANDHRA PRADESH\n\nDATE OF JUDGMENT:\n14\/12\/1960\n\nBENCH:\nHIDAYATULLAH, M.\nBENCH:\nHIDAYATULLAH, M.\nKAPUR, J.L.\nSHAH, J.C.\n\nCITATION:\n 1961 AIR 1065\t\t  1961 SCR  (3) 267\n CITATOR INFO :\n F\t    1962 SC1585\t (5,7,8,9)\n R\t    1973 SC1061\t (11,12)\n D\t    1975 SC1996\t (2)\n D\t    1978 SC 389\t (22,44)\n\n\nACT:\nSales\t Tax-Delivery\t order-Meaning\t  of-Two    separate\ntransactions-Sales-tax,\t if leviable at both Points-Sale  of\nGoods Act, 1930 (111 of 1930), s. 2(4)-Madras General  Sales\nTax Act, 1939 (Mad.  IX of 1939).\n\n\n\nHEADNOTE:\nThe  respondents dealt in gunnies.  They first entered\tinto\ncontracts  with two Mills agreeing to purchase gunnies at  a\ncertain\t rate  for future delivery, and\t also  entered\tinto\nagreement   with  third\t parties,  by  which  they   charged\nsomething extra from those third parties and handed over the\ndelivery  order known as kutcha delivery order.\t  The  Mills\nhowever\t did  not accept the third  parties  as\t contracting\nparties,  but  only  as the agents  of\tthe  appellants\t and\ndelivered the goods against the kutcha delivery orders,\t and\ncollected  the\tSales Tax from the third parties.   The\t tax\nauthorities treated these transactions between the appellant\nand  the  third parties as fresh sales and  sought  to\tlevy\nsales-tax  again,  which the appellants contended,  was\t not\ndemandable as there were no second sales; the delivery of  a\nkutcha delivery order did not amount to a sale of goods, but\nwas  only  an assignment of a right to\tobtain\tdelivery  of\ngunnies which were not in existence and not appropriated  to\nthe  contract;\tthis  was only an assignment  of  a  forward\ncontract.\nHeld,  that the agreements between the parties\tshowed\tthat\nthird  parties\twere  not  recognised  by  the\tsellers.   A\ndelivery  order\t being\ta document of title  to\t goods,\t the\npossession  of\tsuch a document not only gave the  right  to\nrecover\t the goods but also to transfer them to\t another  by\nendorsement   or   delivery.   There  being   two   separate\ntransactions of sale, one between the Mills and the original\npurchasers and the other between the original purchasers and\nthird parties, tax was payable at both the points.\nThe  Sales Tax officer, <a href=\"\/doc\/127667\/\">Pilibhit v. M\/s.  Budh\tPrakash<\/a>\t jai\nPrakash, [1955] 1 S.C.R. 243, <a href=\"\/doc\/1266379\/\">Poppatlal Shah v. The State of\nMadras,<\/a> [1953] S.C.R. 677, and <a href=\"\/doc\/597594\/\">The State of Andhra v.  Kolla\nSreeramamurthy,<\/a> decided on June 27, 1957, referred to.\n\n\n\nJUDGMENT:\n<\/pre>\n<p>CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 223 and 224<br \/>\nof 1960.\n<\/p>\n<p>Appeals\t from  the  order dated November 23,  1956,  of\t the<br \/>\nAndhra Pradesh High Court, Hyderabad, in Tax Revision  Cases<br \/>\nNos. 17 and 18 of 1956.\n<\/p>\n<p><span class=\"hidden_text\">268<\/span><\/p>\n<p>C.   K.\t Daphtary, Solicitor-General of India and T.  V.  B.<br \/>\nTatachari, for the appellants.\n<\/p>\n<p>K.   N. Rajagopal Sastri and D. Gupta, for the respondent.<br \/>\n1960.  December 14.  The Judgment of the Court was delivered<br \/>\nby<br \/>\nHIDAYATULLAH,  J.-These\t are  two  appeals  on\tcertificates<br \/>\ngranted by the High Court of Andhra Pradesh against a common<br \/>\njudgment in a sales tax revision filed by the appellants  in<br \/>\nthe High Court.\n<\/p>\n<p>The facts are as follows: In the year 1952-53, for which the<br \/>\nassessment  of\tsales tax was in  question,  the  appellants<br \/>\ndealt  in  gunnies,  and purchased them from  two  Mills  in<br \/>\nVishakapatnam  District and in respect of which they  issued<br \/>\ndelivery orders to third parties, with whom they had entered<br \/>\ninto  separate transactions.  The procedure followed by\t the<br \/>\nappellants was this: They first entered into contracts\twith<br \/>\nthe Mills agreeing to purchase gunnies at a certain rate for<br \/>\nfuture\tdelivery.   Exhibit  A-1  is  a\t specimen  of\tsuch<br \/>\ncontracts.  The appellants also entered into agreements with<br \/>\nthe Mills, by which the Mills agreed to deliver the goods to<br \/>\nthird  parties if requested by the appellants.\t The  Mills,<br \/>\nhowever,  did  not accept the third parties  as\t contracting<br \/>\nparties but only as agents of the appellants.  Exhibits\t A-2<br \/>\nand A-2(a) are specimen agreements of this kind.  Before the<br \/>\ndate  of  delivery, the appellants entered  into  agreements<br \/>\nwith  third parties, by which they charged  something  extra<br \/>\nfrom the third parties and handed over to them the  delivery<br \/>\norders,\t  which\t were  known  as  kutcha  delivery   orders.<br \/>\nExhibits A-3 and A-4 are specimens of the agreement and\t the<br \/>\ndelivery orders respectively.  The Mills used to deliver the<br \/>\ngoods  against\tthe  kutcha delivery orders  along  with  an<br \/>\ninvoice and a bill, of which Exs.  A-6 and A-7 are specimens<br \/>\nrespectively,  and  collected the sales tax from  the  third<br \/>\nparties.    The\t tax  authorities,  however,   treated\t the<br \/>\ntransaction  between the appellants and third parties  as  a<br \/>\nfresh sale, and sought to levy sales tax on it<br \/>\n<span class=\"hidden_text\">269<\/span><br \/>\nagain, which, the appellants, contended, was not demandable,<br \/>\nas there was no second sale.\n<\/p>\n<p>The appellants failed in their contentions before the Deputy<br \/>\nCommercial  Tax\t Officer, Guntur, and their appeals  to\t the<br \/>\nDeputy\tCommissioner  of Commercial Taxes,  Guntur  and\t the<br \/>\nAndhra\t Sales\t Tax  Appellate\t  Tribunal,   Guntur,\twere<br \/>\nunsuccessful.\tThe appellants then went up in\trevision  to<br \/>\nthe High Court under the Madras General Sales Tax Act,\t1939<br \/>\n(as  amended  by Madras Act No. 6 of 1951), but\t were  again<br \/>\nunsuccessful.\t  The\tHigh   Court,\t however,    granted<br \/>\ncertificates, on which these appeals have been filed.<br \/>\nThe contentions of the appellants are that the agreement and<br \/>\nthe delivery of the kutcha delivery order did not amount  to<br \/>\na  sale of goods, but was only an assignment of a  right  to<br \/>\nobtain delivery of the gunnies, which were not in  existence<br \/>\nat the time of the transaction with third parties, and\twere<br \/>\nnot  appropriated to the contract, or, in  the\talternative,<br \/>\nthat  this  was only an assignment of  a  forward  contract.<br \/>\nThey  seem to have relied in the High Court upon  the  deci-<br \/>\nsions  of  this\t Court reported in <a href=\"\/doc\/127667\/\">The\tSales  Tax  Officer,<br \/>\nPilibhit  v.  Messrs.\tBudh  Prakash  Jai  Prakash<\/a>(1)\t and<br \/>\n<a href=\"\/doc\/1266379\/\">Poppatlal Shah v. The State of Madras<\/a> (2) to show that these<br \/>\ntransactions  were not sales.  These cases were\t not  relied<br \/>\nupon  by  the appellants before us, presumably\tbecause\t the<br \/>\nHigh Court has adequately shown their inapplicability to the<br \/>\nfacts here.\n<\/p>\n<p>The  learned Solicitor-General appearing for the  appellants<br \/>\nrested his case entirely upon the first contention,  namely,<br \/>\nthat  there  was  only an assignment of a  right  to  obtain<br \/>\ndelivery  of the gunnies and not a sale.  He contended\tthat<br \/>\nthere was only one transaction of sale between the Mills and<br \/>\nthe third parties, who, on the strength of the assignment of<br \/>\nthe right to take delivery, had received the goods from\t the<br \/>\nMills.\tin  our opinion, this does not\trepresent  the\ttrue<br \/>\nnature of the transactions, either in fact, or in law.<br \/>\nTo begin with, the Mills had made clear in their  agreements<br \/>\nthat  they  were  not  recognising  the\t third\tparties\t  as<br \/>\ncontracting parties having privity with<br \/>\n(1) [1955] 1 S.C.R. 243.\n<\/p>\n<p>(2) [1953] S.C.R. 677.\n<\/p>\n<p><span class=\"hidden_text\">270<\/span><\/p>\n<p>them,  and that delivery would be given against\t the  kutcha<br \/>\ndelivery  orders  to  the third parties\t as  agents  of\t the<br \/>\nappellants.   The  Mills,  therefore,  recognised  only\t the<br \/>\nappellants as contracting parties, and there was thus a sale<br \/>\nto  the appellants from the Mills, on which ,;sales tax\t was<br \/>\ncorrectly  demanded  and was paid.  In so far as  the  third<br \/>\nparties\t were  concerned, they had purchased  the  goods  by<br \/>\npayment of an extra price, and the transaction must, in\t law<br \/>\nand  in\t fact,\tbe considered a fresh  transaction  of\tsale<br \/>\nbetween\t the appellants and the third parties.\t A  delivery<br \/>\norder  is a document of title to goods (vide s. 2(4) of\t the<br \/>\nSale of Goods Act), and the possessor of such a document has<br \/>\nthe right not only to receive the goods but also to transfer<br \/>\nit to another by endorsement or delivery.  At the moment  of<br \/>\ndelivery  by the Mills to the third parties, there were,  in<br \/>\neffect, two deliveries, one by the Mills to the\t Appellants,<br \/>\nrepresented,  in so far as the Mills were concerned, by\t the<br \/>\nappellants&#8217; agents, the third parties, and the other, by the<br \/>\nappellants   to\t the  third  parties  as  buyers  from\t the<br \/>\nappellants.  These two deliveries might synchronise in point<br \/>\nof time, but were separate, in point of fact and in the\t eye<br \/>\nof law.\t If a dispute arose as to the goods delivered  under<br \/>\nthe  kutcha delivery order to the third parties against\t the<br \/>\nMills,\taction could lie at the instance of the\t appellants.<br \/>\nThe  third parties could proceed on breach of contract\tonly<br \/>\nagainst\t the appellants and not against the Mills.   In\t our<br \/>\nopinion, there being two separate transactions of sale,\t tax<br \/>\nwas  payable  at  both the points,  as\thas  been  correctly<br \/>\npointed out by the tax authorities and the High Court.<br \/>\nThe appellants relied upon a decision of the Andhra  Pradesh<br \/>\nHigh  Court  in <a href=\"\/doc\/597594\/\">The State of Andhra v.\tKolla  Sreeramamurty<\/a><br \/>\n(3),  but there, the facts were different, and the  Division<br \/>\nBench  itself  in dealing with the case,  distinguished\t the<br \/>\njudgment under appeal, observing that there was no scope for<br \/>\nthe application of the principles laid down in the  judgment<br \/>\nunder  appeal, because in the cited case, &#8220;the\tproperty  in<br \/>\nthe goods did not pass from the mills to the assessee and<br \/>\n(3)  Second  Appeals Nos. 194 &amp; 195 of 1954 decided on\tJune<br \/>\n27, 1957.\n<\/p>\n<p><span class=\"hidden_text\">271<\/span><\/p>\n<p>there  was no agreement of sale of goods to be\tobtained  in<br \/>\nfuture between the assessee and the third party&#8221;.<br \/>\nIn  the\t result, the appeals tail, and\tare  dismissed\twith<br \/>\ncosts.\tOne hearing fee.\n<\/p>\n<p>\t\t\t\t\t  Appeals dismissed.\n<\/p>\n<p>\t\t       _________________<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court of India Bayyana Bhimayya vs The Government Of Andhra Pradesh on 14 December, 1960 Equivalent citations: 1961 AIR 1065, 1961 SCR (3) 267 Author: Hidayatullah Bench: Hidayatullah, M. PETITIONER: BAYYANA BHIMAYYA Vs. RESPONDENT: THE GOVERNMENT OF ANDHRA PRADESH DATE OF JUDGMENT: 14\/12\/1960 BENCH: HIDAYATULLAH, M. BENCH: HIDAYATULLAH, M. KAPUR, J.L. SHAH, J.C. CITATION: [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-175600","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Bayyana Bhimayya vs The Government Of Andhra Pradesh on 14 December, 1960 - Free Judgements of Supreme Court &amp; High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/bayyana-bhimayya-vs-the-government-of-andhra-pradesh-on-14-december-1960\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Bayyana Bhimayya vs The Government Of Andhra Pradesh on 14 December, 1960 - Free Judgements of Supreme Court &amp; 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