Appana Venkatraju vs State of Andhra

Subba Rao, C.J.—The Assessees in this revision, case are dealers in copra. They were assessed on a net turnover of Rs. 3,11,977-15-9 for J the year 1951-52. An appeal was preferred to the! Commercial Tax Officer obtectln"r to the inclusion of a turnover of Rs. 2,33,499-13-0 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 sthe state but they made their owa arrangement if 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) of the Constitution. The Explanation to Article 286 (1) (a) reads:

For the purposes of Sub-clause (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 purposes of consumption in that State, notwithstanding the iact tha undu'' the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in Anr. State.

The Supreme Court in the The State of Bombay and Another Vs. The United Motors (India) Ltd. and Others, having gard to the aforesaid Explanat on, held that sales or purchases shall be deemed to have taken place only in the Stute in which the goods are actually delivered for the purpose of ''consumption. In the case of transaction of sale involving inter-State elements, it is clear that only that Statu 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 ar-a 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 buyers in a particular Stat, the mere fact that subsequently the buyer took those goods to Anr. 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 gocds 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 fr ronsumntton outside the Madras State? The Assessees have produced no contract 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 tile 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 rightly rejected them as of no evidentiary value.

In the circumstances, the Appellate Tribunal eame to the conclusion that the goods were delivered only in the Andhra State and the buyers earried them by lorries subsequently outside the State. If that rinding 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.

In Mohammed Ishok v. The State of Madras 1955 6 STC 230 (SC) AIR 19 Mad 502) (B) 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 utside the Madras St te. The buyers sent their own drums to the Assessee for the carriage of the oil. They were filed in at the Assessee''s mills. They were transported to Polalchi Rilway stattion and the waggons by the Assessee, who obtained railway receipts in the names of the buyers as consignors, the consignees being the same. On the instructions oi 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 ofRoe and the sellers received -a good portion of the price. On those facts the Larned Judges found that, though the purchase by the company was for the purpose of consumption in Ernakulam, the goods had actually not 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 (of STC): (at p 504 of AIR) us 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 wad a delivery to the purchaser and if the goods were transported from Pollachi to Ernakulam, it wast 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.

At Anr. place, the learned Judge expressed the same idea in the following terms:

But the crucial fact which has to be established before the exemption could be claimed is that there should be an ''actual delivery'' of the goods outside the State.

We respectfully agree with these observations. Indeed, this legal position was not canvassed by the learned Counsel but his at''errpifl was only to establish thai delivery was not made to the buyers within the Andhra State and we hold that he has failed to do so.

In the result, the revis''on case is dismissedi with costs. Advocate fee. fixed at Rs. 150.