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TMI Blog1964 (2) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... after for the sake of brevity called "the A.C.C."- under despatch instructions from that company. The Commercial Tax Officer rejected the claim of the appellant for deduction and that order was confirmed in appeal to the Deputy Commissioner of Commercial Taxes. In appeal to the Sales Tax Appellate Tribunal, the order was reversed, the Tribunal holding that the appellant was entitled to exemption in respect of the turnover for the goods supplied to the A.C.C. A revision petition presented against the order to the High Court of Andhra Pradesh was heard with a large number of other petitions which raised certain common questions. The High Court reversed the order of the Tribunal and restored the order passed by the Deputy Commissioner of Commercial Taxes. The factory of the appellant is situated at Guntur. The A.C.C. owns cement factories at many places (including one at Tadepalli in the State of Andhra called the Krishna Cement Works) and for the purpose of marketing its products it requires jute packing bags. For securing a regular supply of jute bags, the A.C.C. entered into a contract with the appellant of which the following four conditions are material: "1. All the goods are s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Under the Government of India Act, 1935, the Legislatures of every Province could legislate for levying tax on sales of goods in respect of all transactions, whether the property in the goods passed within or without the Province, provided the Province had a territorial nexus with one or more elements constituting the transaction of sale: Poppatlal Shah v. The State of Madras [1953] S.C.R. 677; 4 S.T.C. 188., and The Tata Iron and Steel Company Ltd. v. State of Bihar [1958] S.C.R. 1355; 9 S.T.C. 267. But this resulted in simultaneous levy of sales tax by many Provinces in respect of the same transaction each fixing upon one or more elements constituting the sale, with which it had a territorial nexus. With the dual purpose of maintaining an important source of revenue to the States, and simultaneously preventing imposition of an unduly heavy burden upon the consumers by multiple taxation upon a single transaction of sale, the Constitution made a special provision imposing restrictions upon the legislative power of the States in Article 286 which as originally enacted ran as follows: "(1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised only if it is not hit by any of the limitations. The restrictions are cumulative. The sales in the present case are not sales, which have taken place in the course of inter-State trade or commerce. The only point of contest is whether they are "outside the State" of Andhra. It is now well-settled that by Article 286(1) [as it stood before it was amended by the Constitution (Sixth Amendment) Act, 1956] sales as a direct result of which goods were delivered in a State for consumption in such State, i.e., the sales falling within the Explanation to Article 286(1) were fictionally to be regarded as inside that State for the purpose of cl. (1)(a) and so within the taxing power of the State in which such delivery took place and being outside all other States exempt from sales tax by those other States: Tobacco Manufacturers (India) Ltd. v. The Commissioner of Sales Tax, Bihar, Patna [1961] 2 S.C.R. 106; 12 S.T.C. 87.; India Copper Corporation Ltd. v. The State of Bihar and Others [1961] 2 S.C.R. 276; 12 S.T.C. 56., and The State of Kerala and Others v. The Cochin Coal Company Ltd. [1961] 2 S.C.R. 219; 12 S.T.C. 1. But the Explanation is not exhustive of what may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purchaser; it does not contemplate mere symbolical or notional delivery, e.g., by entrusting the goods to a common carrier, or even delivery of documents of title like railway receipts. In C. Govindarajulu Naidu and Company v. State of Madras A.I.R. 1953 Mad. 116; 3 S.T.C. 405., Venkatarama Ayyar, J., dealing with the concept of actual delivery of goods, so as to attract the application of the Explanation to Article 286(1)(a) rightly observed: "In the context it can mean only physical delivery and not constructive delivery such as by transfer of documents of title to the goods. The whole object of the Explanation is to give a power to taxation in respect of goods actually entering the State for the purpose of use therein and it will defeat such a purpose if notional delivery of goods as by transfer of documents of title to the goods within the State is held to give the State a power to tax, when the goods are actually delivered in another State." A similar view has been expressed in two other cases: M/s. Capco Ltd. v. The Sales Tax Officer and Another A.I.R. 1960 All. 62; 11 S.T.C. 34., and Khaitan Minerals v. Sales Tax Appellate Tribunal for Mysore A.I.R. 1963 Mys. 141; 13 S. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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