The Surma Match and Industries (Private) Ltd. vs Commissioner of Taxes

G. Mehrotra, J.—The following question of law has been referred to this Court for opinion u/s 32 of the Assam Sales Tax Act, 1947 (Assam Act XVII of 1947), hereinafter called the Act;

Whether the delivery of tea-chests "free to steamer stations in the Cachar Zone or F.O.R., Karimganj" for despatch outside the State of Assam was complete at the steamer station in the State of Assam and constituted a ''sale'' for the purpose of the Assam Sales Tax Act, 1947 (Assam Act XVII of 1947) and for that matter formed part of the taxable turnover?

By an application to the Board of Sales Tax, Assam, the Assessee asked for reference to this Court of two questions of law:

(a) Whether goods booked at a station in Assam destined beyond Assam constitutes an Intra-State or Inter-State transaction for the purpose of the Assam Sales Tax for being delivered to the Railway inside Assam for carrying the same to the destination station in another State The term of the orders being F.O.R. supplier''s Station)?

(b) That there being no rule or any other notification in force about the manner of the discharge of the burden of proof of sale to the Registered dealer, whether it amounts to a failure on the part of the Assessee to discharge the on us if he could only supply the necessary particulars with States Tax Registration numbers of their registered dealers to whom they supplied the goods.

The Member, Board of Sales Tax was of opinion that question No. (b) did not arise out of the order of the Commissioner. He consequently refused to refer the aforesaid question for opinion to this Court He, however, recast question No. (a) and referred to this Court for opinion the said question in the form mentioned above. An application was made to this Court for issue of a mandamus directing the Board to refer question No. (b) which was allowed and in pursuance of the direction of this Court the question has been referred for opinion, and the Board has stated the case on the point raised. Regarding point No. (a) the opinion of the Member, Board of Sales Tax is that it should be answered in the affirmative. Regarding question No. (b) also the opinion of the Member, Board of Sales Tax is that it should be answered in affirmative.

The Petitioner company is a registered dealer under the Act. The principal business of the Petitioner is manufacture of tea chests and sale of the same to the tea gardens in Assam as well as outside the State of Assam. Supply was made to the tea estates outside the State of Assam through the Petitioner''s representative Messrs. Herbert and Company, Calcutta. Messrs. Duncan Brothers and Company which had its Head Office in Calcutta, on 3-10-1951 wrote a letter to the Messrs. Herbert and Company, representative of the Petitioner in Calcutta, asking them to supply certain quantity of tea chests to the tea gardens under their managing agency. The gardens to which supply was mode in pursuance of the order placed by Messrs. Duncan Brothers and Company Ltd., by Messrs. Herbert and Company, were outside the State of Assam.

Further supplies were made on the terms of the letter dated 7-10-1952. These two letters have been made parts of the statement of the case. The letter dated 3-10-1951 was sent by Messrs. Duncan Brothers and Company, Calcutta, to Messrs. Herbert and Company, Calcutta. By this letter the price quoted by the Petitioner''s representative was accepted and the goods were to be consigned to the respective garden managers, freight paid, and the documents had to be sent to Duncan Brothers and Company for disposal. The goods were to be sent free on board to steamer stations in the Cachar Zone. By the letter dated 7-10-1952, certain further supplies had to be made.

The Petitioner submitted his turnover for the period ending on 31-3-1953, to the Superintendent of Taxes, Karimganj. In his return (he?) showed the sale of the tea chests which had admittedly taken place in the State of Assam, but the turnover of the tea chests to the extent of Us. 97,200/ -, the sale of which was alleged to have taken place outside the State of Assam, was excluded from the return. The Superintendent of Taxes, Karimganj assessed the gross turnover of the Company at Rs. 3 lakhs and odd including the turnover of Rs. 97,200/ - after making certain deductions. The Petitioner claimed deduction of Rs. 2,00,229/- for sale to registered dealers u/s 15(1)(b); of the Act.

The Superintendent of Taxes allowed only Rs. 7,804/ - which was supported by a declaration under Rule 80 of the Assam Sales Tax Rules, 1947. and the difference of the balance was disallowed. An, appeal was filed to the Assistant Commissioner of Taxes challenging the order of the Superintendent of Taxes which was dismissed. Thereafter a revision was filed u/s 31 of the Act before the Commissioner of Taxes which was also dismissed. An application for reference was then made to the Member, Board of Sales Tax which was disposed of as indicated above.

It is contended by the counsel for the Assessee that the contract for sale and purchase was completed in Calcutta. The price was to be paid in Calcutta. The actual physical delivery of the goods for consumption was to be made outside the State of Assam. Under these circumstances, the sale was of inter-State character and the, sale is, therefore, an outside sale for Assam and cannot be taxed under the Act. It is also contended that the State of Assam could not tax the disputed sales in view of the provisions of Article 286(1) of the Constitution.

The Advocate General who appears for the department contends that the transaction in question is an inside sale and not an outside sale. The provisions of Section 3(1)A of the Assam Sales Tax Act and the provisions of Article 286(1)(a) are not, therefore, attracted.

The matter was referred to a Special Bench as the correctness of the decision of the Division Bench of this Court in the case of Birendra Nath Guha Vs. Commissioner of Taxes, was challenged before the Division Bench. The Advocate General, however, contends that the aforesaid case is distinguishable on facts and therefore even if it is taken to have laid down good law, it will not help the Assessee. It is necessary to refer to some of the provisions of the Act Section 2(12) of the Act defines "sale" as a transfer of property in goods by any person in cash or deferred payment or other valuable consideration, and includes a transfer of property in goods involved in the execution of a contract, but does not include a mortgage, hypothecation, charge or pledge. It also includes a transfer of goods on the hire-purchase or other instalment system of payment, notwithstanding the fact that the vendor may retain the title in the goods as a security for payment of the price. The proviso to the Section is as follows:

Notwithstanding anything to the contrary in the general law relating to the sale of goods, the sale of any goods outside the State of Assam shall be deemed to have taken place in the State of Assam, if such goods have, as a direct result of such sale been actually delivered in the State of Assam for the purpose of consumption therein.

Section 3(1)A of the Act is as follows:

Nothing in Sub-section (1) shall, except in cases covered by the first proviso to Sub-section (12) of Section 2 of this Act be deemed to render any dealer liable to tax on the sale of goods where such sale takes place:

(i) outside the State of Assam;

(ii) in the course of the import of the goods into or export of the goods out of, the territory of India; or

(iii) in the course of inter-State trade or commerce except in so far as Parliament may by law otherwise provide.

Article 286 of the Constitution at the relevant time was as follows:

(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.

(2) Parliament may by law formulate principles for determining when a sale or purchase of goods takes place in any of the ways mentioned in Clause (1).

(3) Any law of a State shall, in so far as it imposes, or authorises the imposition of, a tax or the sale or purchase of goods declared by Parliament by law to be of special importance in inter-State trade or commerce, be subject to such restrictions and conditions in regard to the system of levy, rates and other incidents of the tax as Parliament may by law specify.

The contention of the Advocate General is that according to the definition of "sale" in the Assam Act, the sale is complete where the property in the goods passes and the effect of the proviso is only to enlarge the scope of the definition of "sale" so as to include sales in which though the property passes outside the State of Assam, the goods at the time of the contract have been actually delivered in the State of Assam for the purpose of consumption therein. The proviso does not exclude transactions in which the title to the goods passes within the State of Assam under the Sale of Goods Act; although the goods are despatched outside the State of Assam for consumption, from the definition of the word "sale".

As regards the provisions of Section 3(1)A and Article 286(1), it is contended that these provisions are not attracted where the sales are inside sales, that is they are intra-State sales and not inter-State sales. The Commissioner of Taxes held that the sales of the property having been completed in Assam as the delivery was to be made F.O.R. Karimganj in the Cachar Zone and the consignee did not reserve any right of disposal, the State of Assam had jurisdiction to tax such sales even though the goods might be delivered outside Assam for the purpose of consumption. According to the Commissioner, the nature of the sale was intra-State and not inter-States sale. The same view has been taken by the Member, Board of Sales Tax, Assam.

The provisions of the Sale of Goods Act only provide for when a contract of sale is complete, the title to the goods passes when the goods can be said to have been ascertained and such other matters. It does not deal with the question of situs of a sale. Any reference, therefore, to the provisions of the Sale of Goods Act for the purposes of ascertaining the situs of the sale will be irrelevant. When can the sale be regarded as an inside sale or an inter-State sale will not depend only upon the question as to where the title actually passes. For the purpose of deciding the question of the right and title to the goods as between the purchaser and the seller, the provisions of the Sale of Goods Act may be relevant.

Reliance was placed on the provisions of Section 23 of the Sale of Goods Act to show that the property in the goods passes in the State of Assam wherein they were appropriated to the contract as soon as the delivery was made free on Board. The goods were consigned to outside gardens at the instance of the purchaser and the purchaser was both the consignor and the consignee. The seller had lost all control over the goods. Reliance is then placed on Section 39(i) of the Sale of Goods Act which provides as follows:

Where, in pursuance of a contract of sale the seller is authorised or required to send the goods! to the buyer, delivery of the goods to a carrier, whether named by the buyer or not, for the purpose of transmission to the buyer or delivery of the goods to a wharfinger for safe custody is prima facie deem- ed to be a delivery of the goods to the buyer.

It is urged that the delivery to the carrier was delivery to the agent of the purchaser and as soon as the delivery was made within the State of Assam, the sale was complete and thus it was an inside sale. We do not think that there is any Substance in this contention. The constructive delivery contemplated u/s 39 is only relevant for the purposes of ascertaining the rights and liabilities of the purchaser and the seller inter se. It cannot fix the situs of the sale for the purposes of taxation. Even assuming that u/s 39 for the purposes of the Sale of Goods Act, the delivery to the carrier will be deemed to be delivery to the purchaser, that by itself is not conclusive to hold that the sale was within the State of Assam and was not an inter-State sale.

The sale from its very nature consists of various elements, the contract, the existence of the goods, the passing of the title of the goods and actual delivery of the goods. Prior, to the coming in force of the Constitution, different States look any one of these elements of sale as its nexus for passing taxing legislation. The Constitution in order to avoid this confusion enacted Article 286(1) the effect of which was that the situs of a sale in which all the elements of the sale do not exist in one particular State but are spread over a number of States, was fixed with reference to the proviso to Article 286(1)(a). The following observation made by the Chief Justice of the Supreme Court in the case of The State of Bombay and Another Vs. The United Motors (India) Ltd. and Others, will make the position clear.

In the exercise of the legislative powers conferred upon them in substantially similar terms by the Government of India Act, 1985, the Provincial Legislatures enacted Sales Tax Laws for their respective provinces, acting on the principle of territorial nexus referred to above; that is to say they picked out one or more of the ingredients constituting a sale and made them the basis of their sales tax legislation. Assam and Bengal made among other things the actual existence of the goods in the Province at the time of the contract of sale the test of taxability.

In Bihar the production or manufacture of the goods in the province was made an additional ground. A net of the widest range perhaps was laid in Central Provinces and Berar where it was sufficient if the goods were actually ''found'' in the Province at any time after the contract or sale or purchase in respect thereof was made

Whether the territorial nexus put forward as the basis of the taxing power in each case would be sustained as sufficient was a matter of doubt not having been tested in a Court of law. And such claims to taxing power led to multiple taxation of the same transaction by different Provinces and cumulation of the burden falling ultimately on the consuming public. This situation posed to the Constitution makers the problem of restricting the taxing power on sales or purchases involving inter State elements, and alleviating the tax burden the consumer.

This position was accepted by the majority judgment in the case of The Bengal Immunity Company Limited Vs. The State of Bihar and Others, In the case of The State of Bombay and Another Vs. The United Motors (India) Ltd. and Others, the Supreme-Court by a majority had held that as soon as the situs of a sale is fixed with reference to the Explanation, it becomes an intra-State sale for the delivery State and it was taken out of the purview of Clause (2) of Article 286, and the delivery State had power to tax such a transaction. This view was not accepted by the majority in the ''Bengal Immunity case (S) AIR 1955 SC 661, wherein it was held that each clause of Article 286 is independent and even though the situs of a sale may be fixed under Article 286(1)(a) (Explanation), still it will be affected by Clause (2) of Article 286 so long as the ban was not removed by the Parliament. But the majority decision in the Bengal Immunity case (S) AIR 1955 SC 661 did not differ from the opinion of the majority in the earlier case of AIR 1953 SC 252 in so far as it laid down the scope of Article 286(1) and the purposes behind, enacting the same.

The Advocate General contends that the present sale cannot be regarded as an outside sale and therefore it was an inside sale and the State of Assam had power to tax such sale. Cases where all the elements of a sale are completed within one State, such a sale cannot be regarded as an outside sale. But sale where any one of the elements of the sale, is to be found outside the State of Assam, it cannot be said to be a sale inside the State of Assam. In the present case, as we have already pointed out, the contract for sale took place in Calcutta, the price was to be paid in Calcutta, the goods were to be delivered outside the State of. Assam for the purpose of consumption. In this view of the matter, even if the goods at the time of the contract existed within the State of Assam and the title to the goods passed in Assam under the Sale of Goods Act, it cannot be said that it is an inside sale, Once'' it is established that it is an inter-State sale and not an inside sale, the situs of the sale will have to be fixed in accordance with the provisions of the Explanation to Article 286(1) of the Constitution and it will be an inside sale only in respect of the State wherein it is delivered for consumption and for all other States including the exporting. State or the "title State" (to use the phraseology adopted in the judgment of the Bengal Immunity i case), it will be an outside sale and they will have no power to tax such sale.

In the Bengal Immunity case (S) AIR 1955 SC 661 it was observed as follows by Das, Acting Chief Justice:

The situs of an intangible concept like a sale can only be fixed notionally by the application of artificial rules invented either by Judges as part of the judge-made law of the land, or by some legislative authority. But as far as we know, no fixed rule of universal application has yet been definitely and finally evolved for determining this for all purposes. There are many conflicting theories

One, which is more popular and frequently put forward and is referred to and may, indeed, be urged to have been adopted by the Constitution in the ''non-obstante'' clause of the Explanation, favours the place where the property in the goods passes, another which is said to be the American view fixes upon the place where the contract is concluded, a third which prevails in the continental countries of Europe prefers the place where the goods sold are actually delivered, a fourth points to the place where the essential ingredients which go to make up a sale are most densely grouped.

In this situation if the Explanation were not there and the ban under Clause (2) were to be raised unconditionally it would become necessary for the Courts to reach a conclusion and choose between these conflicting views.

Reliance was placed by the Advocate General on the case of Indian Standard Wagon Co. Ltd. Vs. Commercial Tax Officer etc., In this case the Petitioner Indian Standard Wagon Co. Limited had its registered office in Calcutta. This company had a common managing agent, namely, Messrs. Martin Burn Limited with Messrs. Burn and Co. Ltd. Both companies manufactured railway rolling stock including wagons. On 2-7-1951 the Railway Board placed an order with Messrs. Martin Burn Limited as managing agents of the two companies for 3,500: wagons. The delivery was to be F.O.R. work siding of the company and the work was to be completed by 31-3-1953.

It was held that the sale of the wagons was of intra-state character inasmuch as the contract was made in West Bengal, the goods were manufactured in that State and the delivery was made inside that "State and where also the payment ought to have been received. The contract was for delivery at the work siding of the manufacturing company within the State of West Bengal. It was held further in this case that the sale was in the course of interstate trade, and as such, Article 286(2) would have been attracted, but as the sales were effected between 1-4-1955 and 6-9-1955, levy of tax was validated by the Sales Tax Laws Validation Act, 1956. The following passage at page 559 of the report in the judgment was relied upon in support of his contention:

The sale of goods is governed by the Sale of Goods Act, but that Act does not deal with the situs of a sale. It provides as to when a contract for sale is complete and such other matters but is silent with regard to the situs of a sale. Therefore, if a sale is completed within a particular State and the delivery made therein, it is difficult to consider it as an outside sale. Then comes the Explanation in Article 286, which has been incorporated in Section 27(2) of the Bengal Act. It has however, been held in (S) AIR 1955 SC 661 that the Explanation to Article 286(1) introduces a fiction and must be strictly complied with. In the present case it cannot be said that the wagons were delivered outside West Bengal, the sale cannot be called an "Explanation sale." In my opinion, we are not dealing with an outside sale in this case.

This decision is based on two findings. On the facts of that case it was found that the contract was completed in West Bengal, the title to the property passed in West Bengal, the price was to be paid within the State of West Bengal, the delivery was made in the State of West Bengal and as such, the sale was an inside sale and not inter-State sale. The second finding was that it could not be said that the wagons were delivered outside West Bengal for consumption outside the State. On these two findings it was held that the State of West Bengal had power to tax sales. The fats of the present case are entirely different. It cannot be said that all the elements of sale took place or existed within the State of Assam, and thus it can be regarded as an inside sale in relation to this State.

In the statement of the case, it has also been found that the goods in the present case were despatched outside the State of Assam for consumption. It cannot, therefore, be said that the sales in question were inside sales. The other case relied upon is the case of A.M. Mohammed Ishok Vs. The State of Madras, . The Assessee in this case was a registered manufacturer of groundnut oil carrying on business in Pollachi within the State of Madras. Oils were sold by the Assessee to Messrs. Tata Oil Mills Company Limited under the terms of a contract on the following conditions:

(1) Delivery F.O.R. Pollachi Junction oil to be supplied during the month of February, 1951. Containers are to be supplied by Messrs. Tata Oil Mills-Company F.O.R. Pollachi junction as usual.

The course of business between the Assessee and the purchasers was that the sale of the oil was "loose", the containers were supplied by the purchasers who sent their own drums to the Assessee for the carriage of the oil. The seller checked up these containers and filled in at the Assessee''s mills. The drums were transported to Pollachi Junction and then loaded on Railway wagons by the sellers 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 these contracts were routed to Ernakulam where they were cleared by the buyers and used in their mills. Ernakulam is situated outside the State of Madras." It was held by the Madras High Court under these circumstances that

The carrier was constituted an agent of the buyer for accepting delivery of the goods on his behalf with the result that the goods had "actually been delivered to the buyer at Pollachi within the Madras State." As the delivery had taken place within the State of Madras, the tax liability had accrued and this was 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.

In respect of the sales, an exemption was claimed by the asses-see u/s 7 of the Madras Sales Tax Act which runs as follows:

In respect of such finished articles of industrial manufacture as may be notified by the State Government and subject to such restrictions and conditions as may be prescribed, a rebate shall be allowed of one-half of the tax levied on sales of such articles for delivery outside the State if such articles are actually so delivered.

In that case the question which was considered by the Madras High Court was as to the applicability of Section 7 of the Madras Sales Tax Act. Relying upon the Explanation to Article 286(1) it was urged by the Petitioner that the requirements of the Explanation were complied with and as such, it was a sale at Erakulam outside the State of Madras. This contention was repelled and it was observed that although it was true that under the Explanation to Article 286(1)(a) the passing of the property is immaterial for the purpose of judging whether a sale has taken place within the State or not. 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.

If under the contract, there is a delivery of these goods at Pollachi there could not possibly be a delivery of the same goods again in Ernakulam. The fact that the purchase by the Tata company was for the purpose of consumption in Ernakulam was not by itself sufficient to attract the Constitutional exemption which could satisfy only when the goods were actually delivered outside the State. In that case all the ingredients which go to constitute sale were completed within the State of Madras and the exemption was claimed on the ground that the Explanation to Article 286(1)(a) was attracted and the goods were actually delivered in Ernakulam outside the State of Madras for consumption. The Madras High Court held that all the elements of the sale having been completed within the State of Madras the mere fact that the goods were despatched at the instance of the purchaser outside the State of Madras and were in fact consumed there, will not make the sale outside sale so far as the State of Madras was concerned.

It was not contended in that case that the sale was not of an inter-State character inasmuch as none of the ingredients of the sale took place outside the State of Madras. The only point urged was that as the goods were actually consumed outside the State of Madras, it must be deemed as if actual delivery took place outside the State of Madras and Section 7 of the Madras Sales Tax Act applied. Repelling this contention it was held that the actual delivery took place within the State of Madras when the goods were given to the carrier as the agent of the purchaser and thereafter despatched at the instance of the buyer to stations outside the State of Madras

The next case which is relevant to the consideration of the question is the case of Ram Narain Sons Ltd. Vs. Asst. Commissioner of Sales Tax and Others, The Appellant in this case entered into agreements with several mills situated outside Madhya Pradesh by which they undertook to purchase ''kepas'' in the various markets in Madhya Pradesh as their agents on their account arid on their behalf. The Appellants worked as such agents for the period 1-10-49 to 30-9-50. These transactions were included in the Appellant''s turnover under the orders of the Assistant Commissioner of Sales Tax. The Appellant challenge ed the position and contended that the State of Madhya Pradesh had no power to tax these sales and the assessment was invalid in view of Article 286(1)(a) of the Constitution. The main question considered in this case was that the removal of the ban under Article 286(2) by the President''s order did not affect the ban imposed by Article 286(1)(a). It was held that:

Where the transactions in which as a direct result of sales the goods manufactured in Madhya. Pradesh were actually delivered for the purpose of consumption in U.P. the Explanation to Article 286(1)(a) determined the State of Uttar Pradesh to be the State in which the sales took place and which alone was entitled to tax these transactions, the State of Madhya Pradesh becoming an ''outside" State for "the purpose.

It was further held that

apart from the ban imposed on the State of Madhya Pradesh under Article 286(1)(a) and the Explanation thereto these transactions were also in the course of inter-State trade or commerce and were hit by the ban of Article 286(2). The President''s Order no doubt lifted that ban but, was not competent to lift the ban under Article 286(1)(a) and the Explanation thereto with the result that in spite of that Order the State of Madhya Pradesh was not in a position to impose a tax on these transactions during the post-Constitution period.

It was observed by the Supreme Court at page 769 of the report as follows:

So far as Article 286(1)(a) is concerned, the Explanation determines by the legal fiction created therein the situs of the sale in the case of transactions coming within that category and when at transaction is thus determined to be inside a particular State it necessarily becomes a transaction outside all other States. The only relevant enquiry for the purpose of Article 286(1)(a), therefore, is whether a transaction is outside the State and once it is determined by the application of the Explanation that it is outside the State it follows as a matter of course that the State with reference to which the transaction can thus be predicated to be outside it can never tax the transaction.

The following passage at page 770 also goes against the contention of the learned Advocate-General in the present case.

Suppose the goods are in the State of Madhya Pradesh at the time the contracts of sale of those goods are made in, say, the State of Bombay. Suppose further, that the property in the goods has by reason of such sales passed in the State of Bombay but the goods as a direct result of such sales have been delivered for consumption in the State of Madras. According to the Respondents, the President''s order made under the proviso to Article 286(2) saves the transactions from the ban of Article 286(1)(a) read with the Explanation.

Then the State of Madras will be able to tax by virtue of Article 286(1)(a) read with the Explanation or on the nexus theory by reason of the goods being delivered there for consumption; the State of Bombay will be able to tax because the title to the goods passed there; and the State of Madhya Pradesh will also be able to tax under the Explanation II to Section 2(g) of the Act because the goods were in the State of Madhya Pradesh at the time when the contracts of sale were made in the State of Bombay. Nobody will say that the Constitution-makers intended to perpetuate multiple taxation of this kind and yet that will be the result if we were to accede to the arguments advanced by the Respondents.

Similar results will follow if the arguments of the Advocate-General are accepted in the present case. The State of Assam, according to him, will be entitled to tax because goods at the time of the contract were in Assam and the title to the goods passed in Assam, as soon as the delivery was made to the carrier. The State of West Bengal will be entitled to tax it because the contract is completed in West Bengal, the price is paid there and the other States outside Assam where the goods are actually delivered for consumption will be able to tax on the ground that the goods were delivered for consumption therein as a direct result of the contract.

In the case of Sales Tax Officer, Cuttack and Another Vs. B.C. Patel and Co., the Respondent firm was carrying on business of collection and sale of Kendu leaves, had its headquarters at Pallahara, a feudatory State, which merged in the then Province of Orissa by a merger agreement dated 1-1-1948. The admitted position was that the goods were delivered for consumption at various places outside the State of Orissa. The Sales Tax Authorities assessed the Respondent to sales tax in respect of the sales of Kendu leaves which took place in the State of Orissa. It was held in this case by the Supreme Court affirming the order of the High Court that "so far as the post Constitution period is concerned, the assessment orders were invalid by reason of the provisions of Article 286 of the Constitution. In this case the goods were sent either F.O.R. Talchar or F.O.R. Calcutta. Talchar is within the State of Orissa. It was observed by the Supreme Court at page 631 of the report as follows:

The admitted position was that the goods sold were delivered for consumption at various places outside the State of Orissa. Therefore, under Clause (1)(a) of Article 286 read with the Explanation as also u/s 30 of the Act, the sales were outside Orissa It is true that the Bengal Immunity decision took a view different from that of the earlier decision in so far as it held that inter-State sales were converted into intra-State sales by the Explanation; but it was pointed out that the State''s power with respect to a sale or purchase might be hit by one or more of the bans imposed by Article 286. * * * * Obviously, therefore, even on the Bengal Immunity decision the assessments for the post-Constitution period in this case were hit by Clause (1)(a) of Article 286 as also Section 30(1)(a)(i) of the Act and were rightly held to be without jurisdiction.

Section 30(1)(a)(i) of the Orissa Sales Tax Act corresponds to Section 3A of the Assam Sales Tax Act.

On a careful consideration of these cases it will appear that the sales in which various ingredients of sale are spread over different States, such a sale will be an inter-State sale and not an inside sale for any of the States in which any one of the ingredients exist. In these circumstances, the situs of the sale will be fixed in accordance with the provisions of Article 286(1)(a) read with the Explanation attached to it, and the only State where the goods are delivered for consumption may have power to tax after the removal of the ban under Article 286(2) by the President. But for all other States it will be an outside sale. Cases where all the ingredients constituting sale take place in one particular State stand on a different footing.

Where the sale completely takes place at one place and the goods are only despatched thereafter on the direction of the purchaser to some State outside the State where the transactions were completed, it may not be possible to contend that such a sale is an outside sale for the State where the transaction has been completed. In the present case we have already examined the facts found by the assessing authorities which go to show that a number of ingredients of the sale took place in West Bengal and that the goods were admittedly delivered outside Assam for the purpose of consumption. This will appear from the order of the Commissioner of. Taxes passed in revision.

The opinion of the Member, Board of Sales Tax is that because the title in the goods passed to the buyer in view of the provisions of Section 39(1) of the Sale of Goods Act when the goods were delivered at the steamerghat at Karimganj, the sale was complete in Assam and since the sale was complete in Assam, the sales tax authorities in Assam had power to tax although the actual delivery took place outside the State of Assam for the purpose of consumption as a direct result of the contract. This view in our opinion is not correct. We accordingly answer Question No. (a) in the negative.

Coming to the second question referred to us on a mandamus being issued by this Court, the contention raised by the Assessee is that the assessing authorities were not justified in rejecting the claim of the Assessee for exemption u/s 15(1)(b) of the Assam Sales Tax Act in respect of sales to registered dealers to the tune of Rs. 2,00229/ -. ID is urged that the only ground on which the deduction claimed under. Section 15(1)(b) of the Act has been refused is that the Assessee failed to produce, a declaration from the purchasers in the form prescribed under Rule 80(2) of the Rules framed under the Assam Sales Tax Act. But the aforesaid rules has teen declared ultra vires by a Division Bench of this Court. The Assessee had contended that they had produced all the relevant materials in their possession which will go to show the registered number of the purchasing dealers.

No particular form of declaration could be insisted upon in view of the declaration by this Court that Rule 80 was ultra vires. There are two answers to this contention. From a perusal of the order of the Assistant Commissioner of Taxes in appeal, it will appear that this point was not pressed before him. No challenge was made to this statement in'' the order of the Assistant Commissioner before the Commissioner in revision. The Commissioner in dealing with this question in revision has observed as follows:

Regarding the second point, the burden of proof that sales were made to registered dealers in Assam lies with the Petitioner but he never produced any document tot show that the sales were really made to registered dealers inside the State of Assam. As a matter of fact, the Petitioner did not press his claim for the deduction of Rs. 1,92,425, before the Assistant Commissioner of Taxes.

This observation also indicates that it was not urged before the Commissioner that the statement of the Assistant Commissioner of Taxes in his appellate order that the point was not pressed, was incorrect. The point, therefore, cannot be said to arise out of the order of the Commissioner. Moreover, the question whether the Assessee had sold the goods to a registered dealer who had mentioned these goods in his certificate of registration and further mentioned that the goods were intended for resale, is a question of fact which was within the competence of the assessing authority to investigate and decide. No question of law can be said to arise in this connection. It is also necessary in this connection to examine the decision of this Court in the case of Ramesh Chandra Dey Vs. The State of Assam and Others, on which reliance is placed in support of the contention that Rule 80 has been declared ultra vires. Section 15 of the Act provides as follows:

The net turnover shall be determined by deducting from a dealer''s gross turnover during any given period (1) his turnover during that period on'' -- (a) the sale of goods exempted u/s 6 and Section 7; (b) sale to a registered dealer of -- (i) goods specified in the purchasing dealer''s certificate of registration as being intended by him for resale in the State.

The words "in the State" were inserted by Assam Act IV of 1951. From the exemption of this section it is clear that the deduction can be claimed by an Assessee in respect of the sales to a registered dealer of goods specified in purchasing dealer''s certificate of registration as being intended by him for resale. There is no bar to the rule making authority prescribing a particular method of proving the fact whether it has been specified in the certificate of registration of the purchasing dealer that particular, goods were intended for resale.

In the case referred to above the constitutionality of the amendment made in Section 15 by Assam Act IV of 1951 by which the words in the State were added after the word resale was challenged. It was held that the effect of adding these words was to authorise the State of Assam to tax sales in contravention of Article 286(2) of the Constitution. But the whole section was not declared to be ultra vires. The following observation will make the position clear:

The amendment to Section 15(1)(b) made Section 4 of the Amending Act of 1951 and Rule 80 are illegal and ultra vires, being in violation of Article 286(2) of the Constitution, inasmuch as the amended section authorises the imposition of tax on the sale and purchase of goods which may take place in the course of inter-State trade or commerce and Rule 80 compels the dealer to purchase for resale only within the State or pay the sales tax. The application of Section 3 does not improve the situation.

Only that part of Rule 80, therefore, can be said to have been declared illegal which gave effect to the amendment made in Section 15. The requirement of Rule 80 which could be insisted upon oven after declaring the additions made by Assam Act IV of 1951 to Section 15 ultra vires, cannot be said to have been declared ultra vires by the decision of this Court. Rule 80 reads as follows:

Production of documents in support of claims for deductions from gross turnover u/s 15(1)(b). -- (1)A dealer who wishes to deduct from his gross turnover the amount of sales on the ground that he is entitled to make such deductions under Clause (b) of Sub-section (1) of Section 15 shall, on demand, produce in respect of such sales the copy of the relevant Cash Memo or bill according as the sale is a cash sale or a sale on credit, and a true declaration in writing by the purchasing dealer or by such responsible person duly authorised by the purchasing dealer in this behalf that the goods in; question are specified in the certificate of registration of such dealer.

Clause (2) of Rule 80 then sets out the forms of declaration.

The rule only requires the Assessee to produce a true declaration in writing of the purchasing dealer or by such responsible person duly authorised by the purchasing dealer in this behalf that the goods in question are specified in the certificate of registration of such dealer. The form prescribed under this rule no doubt contains a column in which the dealer had to specify that the goods were purchased by him for resale in the State of Assam, but it further contains a clause wherein the purchaser has to specify that the goods purchased were covered by his registration certificate.

In view of the decision of this Court no objection could be taken to the insistence by the authorities on the production of a declaration by the purchaser to the effect that the goods purchase ed by him under the transaction in question were specified in his registration number and they were intended for resale. To that extent the provisions of Section 15 ware not held to be ultra vires. As we have already pointed out, before granting a deduction, the assessing authorities under the provisions of Section 15 could insist upon the proof of the fact that the goods purchased were specified in the registration certificate of the purchasing dealer and were purchased for resale, and thus could insist upon a particular mode of proof of the said facts. The transactions of inter-State character could not be taxed in view of the ban imposed under Article 286(1) and (2) of the Constitution and the ban so far as Article 286(2) is concerned has been removed by the President''s Order and subsequent legislation by the Parliament.

The sales therefore which wore of inter-State character were hit by Article 286(1) of the Constitution only and if the goods were delivered for consumption in the State of Assam they could always be taxed by the State of Assam the saler could be entitled to charge sales tax from the (sic) and sold to the dealer (sic) the therefore he should (sic) same (sic) Rule in so far (sic) getting a deduction u/s 15 to produce a declaration in writing by the purchasing dealer that the goods were mentioned in purchasing dealer''s certificate of registration and were intended for resale.

In ''this view of the matter we answer the second question in the affirmative. In the circumstances, the parties should bear their own costs.

C.P. Singa, C.J.

I agree.

Deka, J.

I agree.