SUBBA RAO, C.J. -
(1.)THE assessees in this revision case are dealers in copra. They was assessed on a net turnover of Rs. 3,11,977-15-9 for the year 1951-52. An appeal was preferred to the Commercial Tax Officer objecting to the inclusion of a turnover of Rs. 2,33,399-14-0 on the ground that the goods were delivered outside the State and that, therefore, they were protected from tax on this turnover under Article 286(1)(a) of the Constitution of India. The appeal was dismissed. The assessees preferred an appeal against that order to the Sales Tax Appellate Tribunal, Andhra. The Appellate Tribunal held that the goods were delivered to the buyers within the State but they made their own arrangements to remove them to their place outside the State by lorry. On those facts, the Tribunal came to the conclusion that there was no scope for the application of the Explanation to Article 286(1)(a) of the Constitution. The Explanation to Article 286(1)(a) reads :-
"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.)THE Supreme Court in State of Bombay v. United Motors (India) Ltd. ( 4 S.T.C. 133;  S.C.R. 1069), having regard to the aforesaid explanation, held that sales or purchases shall be deemed to have taken place only in the State in which the goods are actually delivered for the purpose of consumption. In the case of a transaction of sale involving inter-State elements, it is clear that only that State where the goods are actually delivered for the purpose of consumption would be entitled to tax the transaction but the fact, viz., that the goods are delivered for consumption within a particular State, should be established by evidence. It is not enough, to attract that explanation, that the goods purchased in one State have ultimately reached a different State where they were utilised for consumption in that State. But it is also necessary to prove that the delivery for consumption was as the direct result of the sale or purchase as the case may be. If the goods were sold and delivery effected to the buyer in a particular State, the mere fact that subsequently the buyer took those goods to another State for purposes of consumption would not affect the liability of the goods for sales tax in the State where delivery was effected, for in that case, the goods were not delivered in the second State as a direct result of the sale.
Having regard to the aforesaid legal position, can it be said that, in the instant case, the goods were delivered for consumption outside the Madras State ? The assessees have produced no contracts or agreements to indicate that they were obliged to consign the goods to the buyer's destination. They have also produced no accounts to show that their men were deputed along with the lorries to give delivery of the goods to the buyers at their end. The only affidavits relied upon by them in support of their case were obtained from their constituents long after the sale for the express purpose of producing them before the Commercial Tax Officer to support their plea and the Tribunal righty rejected them as of no evidentiary value. In the circumstances, the Appellant Tribunal came to the conclusion that the goods were delivered only in the Andhra State and the buyer carried them by lorries subsequently outside the State. If that finding is correct and on the material placed before the Tribunal, we agree no other finding is possible, there is no scope for the application of the aforesaid explanation.
(3.)IN Mohammed Ishok v. State of Madras ( 6 S.T.C. 230), Rajagopalan and Rajagopala Ayyangar, JJ., had to consider a similar question. There, the assessee was a registered manufacturer of groundnut oil carrying on business in Pollachi in the Madras State. He sold oil to a company in Ernakulam outside the Madras State. The buyers sent their own drums to the assessee for the carriage of the oil. They were filled in at the assessee's mills. They were transported to Pollachi railway junction and then loaded on waggons by the assessee, who obtained railway receipts in the name of the buyers as consignors, the consignees being the same. On the instructions of the buyers, all the oil sold under the contracts were routed to Ernakulam where they were cleared by the buyers and they used the commodity in their mills. The railway receipts, with the relative invoices, were handed over at Coimbatore in Madras State to the buyers where they had an office and the sellers received a good portion of the price. On those facts, the learned Judges found that, though the purchases by the company was "for the purpose of consumption" in Ernakulam, the goods had not actually been delivered outside the Madras State and, therefore, the constitutional exemption was not attracted. Rajagopala Ayyangar, J., in dealing with that question, stated at page 235 as follows :-
"In the circumstances, on the terms of this contract we are clearly of the opinion that the delivery of these goods at Pollachi junction was a delivery to the purchaser and if the goods were transported from Pollachi to Ernakulam, it was really by or on behalf of a buyer, who had taken delivery of the goods, that the journey was performed. If the delivery has taken place within the State of Madras the tax liability has accrued and this is not altered or affected by reason of the subsequent despatch of the goods at the instance of the buyer from the State of Madras to Ernakulam outside the State."