The sale of bunker coal by the respondent-company fell within the Explanation to Art. 286(1)(a) of the Constitution, as the delivery of the coal was effected in the State of Travancore-Cochin for the purpose of consumption in that State.

Judgment

AYYANGAR, J. : This is an appeal from the judgment of the High Court of Travancore-Cochin on a certificate of fitness granted by it under Art. 133(1) of the Constitution and raises for consideration the liability of the respondent- The Cochin Coal Company Ltd-to sales-tax under the United State of Travancore and Cochin General Sales Tax Act 1125 (1950).

2. The following are briefly the facts which it is necessary to state in order to appreciate the points in controversy in the appeal. The Cochin Coal Company Ltd. which will be referred to as the respondent-company are, as their name indicates, dealers in coal. The commodity, the sales of which have given rise to the dispute in this appeal is what is known as Bunker coal . The company have their offices at a place called Fort Cochin which was formerly within the State of Madras. They import and keep stocks of "bunker coal" stacked at a place called Candle Island which at the date relevant to these proceedings was also within the State of Madras. Part of the activities of the respondent-company consist in the supply of "bunker coal" from their depots in Candle Island to steamers arriving in or calling at, the port of Cochin (in the State of Travancore-Cochin) for the outward voyage of the steamers from the said port. The usual procedure by which "bunker coal" was thus supplied by the respondent-company was briefly this : Before the arrival of the steamers, the steamer agents would enter into contracts with the respondent-company for trimming coal into the bunker of the steamer. As soon as a steamer arrived in Cochin port, the steamer-agents would inform the respondent-company and those agents after securing the necessary papers from the customs and the port authorities for the loading of the coal into the steamer, would take these papers to the respondent-company s office in Fort Cochin for enabling the latter to perform their part of the contract. The respondent-company would thereupon send the goods ordered to the steamer through their transport contractor. Delivery orders would be issued to the transport contractor on the strength of which goods would be released from their stock in Candle Island. Coal would then be taken to the steamer berthed in the port in Travancore-Cochin State waters. The Chief Engineer of the steamer would inspect the coal and when the same was to his satisfaction as regards quality, the coal would be permitted to be trimmed into the bunkers of the ships. The price of the coal would thereafter be paid to the respondent-company on bills drawn on the steamer-agent. The above being the nature of the transactions conducted by the respondent-company, sales-tax was claimed on the sales of bunker coal by the Travancore-Cochin State. The assessment years with which this appeal is concerned are 1951-52 & 1952-53, and the assessment therefor was completed on February 2, 1954, by the sales-tax officer, I Circle, Mattancherry. The respondent-company s contention that no sales-tax could be levied on the value of the "bunker Coal" supplied, since the sale was either "in the course of export , or "in the course of inter-State trade" and therefore exempted from taxation by the State under sub-cl. (1) (b) or (2) of Art. 286 was rejected by the assessing officer for the reason that the sales in question fell within the Explanation to Art. 286 (1)(a) and were therefore "inside" the State of Travancore-Cochin, since the delivery in pursuance of the sale took place within the State and the goods were delivered for the purpose of consumption within the State and that notwithstanding that there was an inter-State element involved in the sale, by the goods being moved from Candle island, the same did not affect the power of the delivery State to levy the tax. The point urged by the company, that the same sales had been assessed to tax in Madras State as sales actually taking place there, was also rejected as irrelevant. The respondent-company thereafter filed an appea