Judgment

Patanjali Sastri, C.J.I.- These are connected appeals from the judgement and order of the High Court of Travancore-Cochin quashing the assessments under the United State of Travancore and Cochin Sales tax Act (No. 11 of 1125 M. E.) (hereinafter referred to as "the Act") on the respondents on the turnover of the sale of the commodities (coir products in C. A. 25, lemon grass oil in C. A. 28, and tea in C. A. 29) in which they respectively deal.

2. The dealings followed more or less the same pattern in all the cases and consisted of export sales of the respective commodities to foreign buyers on c. i. f. or f. o. b. terms as the case may be.

3. The respondents in each case claimed exemption from assessment in respect of the sales effected by them on the ground, inter alia, that such sales took place "in the course of the export of the goods out of the territory of India" within the meaning of Art. 286 (1) (b) of the Constitution. The Sales Tax Authorities rejected the contention as, in their view, the sales were completed before the goods were shipped and could not, therefore, be considered to have been taken place in the course of the export.

4. Thereupon the respondents by separate petitions applied on the High Court of the United State of Travancore and Cochin (hereinafter referred to as the State) under Art. 226 of the Constitution for issue of writs of certiorari and prohibition quashing the assessments made on them and prohibiting such assessment in future. The applications were heard, along with nine other applications for similar reliefs by dealers in cashew nuts, by a Division Bench (Kunhiraman C. J. and Subramania Iyer J.) who upheld the claim of exemption and quashed the assessment orders in respect of the transactions subsequent to the commencement of the Constitution. From that decision the State has preferred appeals in all the cases on a certificate granted by the High Court under Art. 132 (1) of the Constitution.

5. As the appeals involved important questions of law which may have a bearing on the sales tax legislation of the various States in India, this Court directed notice of these proceedings to the Attorney-General for India and the Advocates-General of those States, and they have intervened and participated in the debate at the hearing of these appeals.

6. When the argument had proceeded for some time, it was discovered that the material facts relating to the course of dealings in cashew nuts, which were more complex in character, had not been clearly ascertained and consequently the relative appeals were remitted to the High Court for findings on certain points agreed upon by the parties. These three appeals were, however, fully heard as they were found to admit of disposal on the materials on record.

7. Article 286 (1), on which the respondents found their claim to exemption, runs thus :

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.

Explanation. - For the purposes of sub-cl. (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 consumption in that State, notwithstanding the fact that under the general law relating to sale of goods the property in the goods by reason of such sale of purchase passed in another State.

8. On the scope and meaning of cl. (b), the learned Judges expressed their view as follows :

"The words in the course of make the scope of this clause very wide. It is not restricted to the point of time at which goods are imported into exported from India. The series of transactions which necessarily precede export or import of goods will come within the purview of this clause. Therefore, while in the course of that series of transactions the sale has taken place, such a sale is exempted from the