GULATI, J. - (1.) THIS is a reference under section 11(4) of the U.P. Sales Tax Act (hereinafter referred to as the Act).
(2.) THE dealer is a firm which carries on business at Hapur, District Meerut. During the assessment year 1956-57, the dealer collected gur from various parties in the State of Uttar Pradesh and consigned the same to destinations outside Uttar Pradesh. The railway receipts were made in the name of self. These railway receipts were subsequently sold to local parties. The dealer claimed exemption from tax in respect of the turnover of such transactions amounting to Rs. 1,13,524, on the ground that such sales were exempt from tax under article 286 of the Constitution. The Sales Tax Officer did not accept this contention. The contention, however, was accepted on appeal by the Assistant Commissioner (Judicial), Sales Tax. According to him, the gur purchased by the dealer had been consigned to places outside U.P. and the railway receipts were sold to local dealers by endorsement who took the delivery of the goods outside the State. In his opinion, such sales were covered by article 286 of the Constitution. The department went up in revision. The Judge (Revisions) has reversed this finding relying upon a decision of this court in Bansi Lal Ram Swaroop v. Commissioner of Sales Tax, U.P. [S.T.R. No. 195 of 1957 decided on 20th November, 1962 (Allahabad High Court)], where on similar facts it has been held that sales take place within Uttar Pradesh where property in goods passes to the buyers and there is no element of sale in places outside Uttar Pradesh where the delivery is taken. The Judge (Revisions) has, however, referred the following question of law for the opinion of this court : "Whether, on the facts and circumstances of the case, the sales were outside U.P. and were exempt under article 286 of the Constitution read with section 27 of the U.P. Sales Tax Act ?" Article 286 of the Constitution, as it stood at the material time, provided : "286. (1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place - (a) outside the State; or (b) in the course of the import of the goods into, or export of the goods out of, the territory of India. Explanation. - For the purposes of sub-clause (a), a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consumption in that State, notwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State. (2) Except in so far as Parliament may by law otherwise provide, no law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of any goods, where such sale or purchase takes place in the course of inter-State trade or commerce : Provided ....................."
(3.) IN order to give effect to this mandate of the Constitution, section 27 was added in the U.P. Sales Tax Act. That section reads : "27. (1) Notwithstanding anything contained in this Act - (a) a tax on the sale or purchase of goods shall not be imposed under this Act - (i) where such sale or purchase takes place outside the State of U.P.; or (ii) where such sale or purchase takes place in the course of import of the goods into, or export of the goods out of, the territories of India; (b) a tax on the sale or purchase of any goods shall not, after the 31st day of March, 1951, be imposed where such sale or purchase takes place in the course of inter-State trade or commerce except in so far as Parliament may by law otherwise provide. (2) The explanation to clause (1) of article 286 of the Constitution shall apply for the interpretation of sub-clause (i) of clause (a) of sub-section (1)." ;