1967 (1) TMI 65 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of the Explanation to Article 286(1)(a) of the Constitution regarding sales tax exemption for goods delivered outside the State for consumption.

Analysis:
1. The case involved a reference by the Sales Tax Tribunal regarding the applicability of the Explanation to Article 286(1)(a) of the Constitution to determine if goods worth Rs. 1,50,386-2-9 delivered outside the State were exempt from sales tax.

2. The Sales Tax Commissioner and Tribunal found that while some sales of oil-seeds were exempt under the Explanation, transactions worth Rs. 1,50,386-2-9 were taxable as the delivery for consumption outside the State was not proven by the assessee.

3. The burden of proof lies on the assessee to demonstrate that goods were delivered outside the taxing State for consumption in the State of first delivery, as established in previous Supreme Court decisions such as India Copper Corporation Ltd. v. State of Bihar.

4. The Supreme Court rulings emphasize that the purpose of delivery under the sale must be for consumption in the State of first destination, and actual consumption in that State need not be proven by the assessee to claim exemption under the Explanation.

5. The contention that goods delivered outside the State were intended for consumption in the delivery State was not accepted, as the assessee failed to prove this purpose of delivery, leading to the conclusion that the sales did not fall under the Explanation to Article 286(1) of the Constitution.

6. Ultimately, the Court held that the sales of goods worth Rs. 1,50,386-2-9 to persons outside the State did not qualify for exemption under the Explanation to Article 286(1) of the Constitution, and directed the assessee to pay the costs of the reference.

This detailed analysis of the judgment provides a comprehensive understanding of the legal issues involved and the reasoning behind the decision rendered by the High Court of Madhya Pradesh.