Judgment

HEGDE, J.: This is an appeal by special leave. It arises from the judgment of the High Court of Patna in a Reference under S. 25 (3) of the Bihar Sales Tax Act, 1947. That reference was called for by the High Court at the instance of the assessee company (the respondent herein). The questions referred for the opinion of the High Court by the Board of Revenue were:

"(1). With regard to the sales which took place in the period from 1st of April, 1955, to the 6th September 1955, whether the assessee is entitled, upon the facts found by the Board of Revenue with regard to these categories of sales, to exemption from liability under the Bihar Sales Tax Act because of the provision of Article 286 (l) (a) of the Constitution as it stood at the relevant date read with the explanation to that article.

(2) With regard to the sales which took place in the period from 7th September, 1955 to 31st March, 1956 whether the assessee is entitled, upon the facts found by the Board of Revenue with regard to these categories of sales, to exemption from liability under the Bihar Sales Tax Act on the ground that the sales took place in the course of inter-State trade or commerce under Art. 286 (2) of the Constitution as it stood at the relevant period."

2. The High Court answered the first question in the negative and against the assessee. It answered the second question in the affirmative and in favour of the assessee. The assessee has not come up in appeal. This appeal has been brought by the State of Bihar contesting the correctness of the opinion given by the High Court on the second of the two questions referred to earlier.

3. The assessee is a Public Limited Co., incorporated under the Indian Companies Act, 1913. It carries on business of manufacturing and selling inter alia trucks and bus chassis and spare parts thereof to their appointed dealers, State Transport Organizations and individual buyers throughout India The registered office of the assessee is at Bombay but its factory where manufacturing process is being carried on is at Jamshedpur in Bihar. The assessee has appointed several dealers all over India for the sale of its trucks, bus chassis and spare parts. Those dealers are appointed under agreements entered into between them and the assessee. The turn-over in dispute relates to the sales made by the assessee to its dealers of trucks, bus chassis, of spare parts for being sold in the territories assigned to them under the dealership agreements. The agreements between the assessee and its dealers appear to be similar. Under the agreements, each dealer is assigned a territory in which alone he can sell the trucks, bus-chassis and other spare parts purchased by him from the assessee company. He is forbidden from selling any one of those articles to any purchaser outside his territory. As per the agreements dealers will have to place their indents, pay the price of the goods to be purchased and obtain delivery orders from the Bombay office of the assessee. In pursuance of those delivery orders, trucks, bus chassis and other spare parts were delivered in Bihar to be taken over to the territories assigned to them. Under the contracts of sale, the dealers were required to remove the trucks, bus chassis and the spare parts delivered to them in the State of Bihar to places outside Bihar. These are facts found by the Board of Revenue and affirmed by the High Court. On the basis of these facts, we have to decide whether the sales with which we are concerned in this appeal are sales that took place in the course of inter-State trade and commerce as contemplated by Article 286 (2) of the Constitution as it stood at the relevant time. In other words the question for decision is whether the sales in question were sales for the purpose of inter-State trade or commerce or whether they were sales in the course of inter-State trade or commerce. As seen earlier, the High Court has held that those sales took place in the course of inter State trad