Judgment

KAPUR, J.: This appeal by certificate of the High Court of Kerala raises the question of the taxability of sales of tea under the Travancore-Cochin General Sales Tax Act, hereinafter termed the Act, and the Rules made thereunder. The assessment period is 1952-53 and the turnover was of a sum of Rs. 3,77,644/- on which a tax of Rs. 5900/11/- was levied. The appellant before us is the assessee company and the respondent is Deputy Commissioner of Agricultural Income-tax and Sales tax.

2. Mr. A. V. Viswanatha Sastri on behalf of Outcherloney Valley Estates (1938) Ltd. has applied for intervention on the ground that in case of that company also the State of Kerala has, on similar facts, levied sales tax on certain transactions, that the High Court of Kerala has upheld the taxability of the transactions relying on the judgment which is under appeal in the present case, and that the intervener has obtained special leave to appeal against that judgment and the records are under print. In view of these circumstances we have allowed that company to intervene in the present appeal.

3. The assessment was made on March 30, 1955 under R. 33(I) of the Act on the ground that the sales of tea had escaped assessment. The appeal against that order was unsuccessful and thereafter a further appeal was taken to the Sales tax Appellate Tribunal which by its order dated August 12, 1957, held that the ban under Art. 286 (1) (a) of the Constitution on sales which are outside the State applied in regard to the sales of full lots and therefore remanded the case to the Sales Tax Officer. Against that order a revision was taken to the High Court which held that the decision of the Appellate Tribunal in regard to the applicability of Article 286(1)(a) was erroneous and therefore the sales were subject to sales tax under the Act. It is against that judgment and order that the assessee company has come to this court on a certificate of the High Court.

4. Put shortly, the nature and procedure of sales of tea was this; that the teas were stored in the godowns at Willingdon Island which was in the State of Travancore Cochin, samples of those tea etc. were taken to Fort Cochin which at the relevant time was in the State of Madras. There by the samples the teas were sold by public auction in lots, some were purchased in their entirely and others in parts and after the consideration money was paid at Fort Cochin delivery orders were given to the buyers addressed to the godown keepers at Willingdon Island and actual delivery of tea was taken there. These teas were then sent out from Willingdon Island in Travancore Cochin for consumption either in other parts of India or were exported out of India.

5. The taxability of the sales of teas in the manner above-mentioned will depend upon whether the sales can be held to have taken place at Willingdon Island i.e. within the territory of Travancore Cochin State and were liable to the imposition of sales tax under the Act or they were that for convenience are called "outside sales" and therefore not subject to sales tax in the State of Travancore Cochin. The argument raised on behalf of the assessee company was that these sales were effected at Fort Cochin which was outside the territory of Travancore Cochin and therefore were not liable to tax because of the ban imposed by Art. 286(1)(a) of the Constitution. That Article with the Explanation at the relevant time was as follows :

"Art. 286(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) ...............................

Explanation :- For the purpose of sub-clause (a) sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consumption in that State, notwithstanding the fact that under the general law relating to sale of goods th