LANDMARK JUDGEMENT ON THE SALE OF GOODS ACT

THE SALE OF GOODS ACT

CASE NAME

HELD

1.       M/s. K.P. Mozika v Oil and Natural Gas Corporation Ltd. & Ors. (2024)

The Supreme Court ruled that hiring motor vehicles/cranes where the contractor retains significant control is a service, not a sale, and therefore not subject to Sales Tax or VAT. The Court clarified that a "transfer of the right to use goods" requires the user to gain exclusive possession and substantial control over the goods; if the contractor maintains control, maintenance, and liability, it is a service contract.

2.       State of M.P. v. Orient Paper Mills Ltd., (1977) 2 SCC 77

The Supreme Court of India clarified that standing timber is considered movable property under the Sale of Goods Act if the contract specifies it will be severed (cut) from the land. This ruling confirmed that the key factor is the intention for severance to occur under the contract itself, not the timber's rooted state when the contract was made.

3.       CIT v. Hind Construction Ltd., (1972) 4 SCC 460

The Supreme Court of India established that a transaction must involve a transfer of goods between two distinct legal persons to be considered a "sale" for income tax purposes. A business cannot sell goods to itself, and therefore, an internal accounting adjustment like revaluing assets does not constitute a sale and is not taxable as business profit.

4.       H. Anraj v. Govt, of Tamil Nadu, (1986) 1 SCC 414

The Supreme Court determined that lottery tickets are considered "goods" under the law.

5.       Sunrise Associates v. Government of NCT of Delhi (2006)

A Constitution Bench of the Supreme Court of India held that lottery tickets are "actionable claims" and not "goods." As such, their sale cannot be subject to sales tax under state sales tax laws. This landmark decision overruled the earlier judgment in H. Anraj v. Government of Tamil Nadu (1986), which had held the opposite.

6.       M.S. Madhusoodhanan v. Kerala Kaumudi (P) Ltd. (2004) 9 SCC 204

The Supreme Court of India held that a contract for the transfer of goods where the price is to be determined later is valid and not invalid under Section 29 of the Indian Contract Act, 1872; essentially meaning that goods can be transferred immediately even if the final price is agreed upon at a later date.

7.       Grant v. Australian Knitting Mills, AIR 1936 PC 34

The Privy Council established that a buyer's reliance on a seller's skill and judgment is a key factor in establishing an implied warranty of fitness for purpose. The buyer does not need to explicitly state their reliance; it can be inferred from the circumstances of the sale, particularly when a consumer purchases goods from a retailer.

8.       Agricultural Market Committee v. Shalimar Chemical Works Ltd., (1997) 5 SCC 516

The Supreme Court ruled that the passing of title (property) in goods depends on Section 20 of the Sale of Goods Act (which deals with the transfer of specific, deliverable goods) and is not determined by the time of payment or delivery.

9.       Morgan Stanley Mutual Fund v. Kartick Das, (1994) 5 SCC 225

Shares cannot be considered "goods" under the law until they are formally allotted, as they do not exist in that form prior to allotment.

10.   Badri Prasad v. State of Madhya Pradesh, AIR 1970 SC 706  

The Supreme Court of India clarified that items physically attached to the land can be legally classified and sold as "goods" under the Sale of Goods Act, 1930, if the contract explicitly provides for their severance before the sale is completed. This established a critical distinction in property law regarding the sale of standing timber or growing crops.

11.   State of Madras v. Gannon Dunkerley & Co. (Madras) Ltd., 1959 SCR 379

The Supreme Court held that for a transaction to be considered a legal "sale," it must involve a transfer of property in goods resulting from a contract, distinguishing it from an "indivisible works contract" where labor and service are dominant. The Court affirmed the common law definition of "sale" from the Sale of Goods Act, 1930, as a contract to pass ownership of goods.

12.   Consolidated Coffee Ltd. v. Coffee Board, Bangalore, AIR 1980 SC 1468 -

The principle that an auction sale is complete when the auctioneer announces its completion by the fall of the hammer or in another customary manner is codified in Section 64(2) of India's Sale of Goods Act, 1930.

13.   Arihant Udyog v. State of Rajasthan, (2017) 8 SCC 220

The Supreme Court clarified that the transfer of title in goods occurs only upon the sale of goods, and the timing of such transfer depends on the intention of the parties.