Rajagopala Ayyangar, J.-This is a revision petition filed by an assessee against the decision of the Sales Tax Appellate Tribunal raising for consideration the correct construction of the Explanation to Article 286(1) (a) of the Constitution.

The assessee is a registered manufacturer of and a licensed dealer in groundnut oil carrying on business in Pollachi and the assessment relates to the year 1950-51. During the accounting year he sold oil to Messrs. Tata oil Mills Co., Ltd., under the terms of a contract on conditions embodied in an order in the form below:

To

Messrs. Tata Oil Mills, Co., Ltd.,

Coimbatore.

Dear Sirs,

Ref: Sales Contract-Groundnut Oil.

This is to confirm that I have this day sold groundnut oil to you as per terms and conditions given below:-

Quantity.-Tons of 2240 lbs. each.

Price:Rs.2,025 (rupees two thousand and twenty five only per ton of 2,240 lbs. net loose F.O.R. Pollachi Junction including Sales Tax.

Quality: Pure expeller groundnut oil with six per cent F.F.A. or below.

Delivery: F.O.R. Pollachi Junction Oil to be supplied during the month of February (within the 15th) 1951.

Containers.: are to be supplied by you F.O.R. Pollachi Junction R.R, as usual.

The course of business between the assessee and the purchasers was as follows: As the sale of the oil was “loose” the containers were supplied by the purchasers who sent their own drums to the assessee for the carriage of the oil. These containers were checked up by the sellers and they were filled in at the assessee’s mills. The drums were transported to Pollachi Junction and then loaded on Railway waggons by the sellers who obtained railway receipts in the name of the buyers as consignors, the consignees of course being the same. There is also no dispute that on the instructions of the buyers all the oil sold under these contracts were routed to Ernakulam where they were cleared by the buyers and the commodity was consumed in the latter’s mills. The railway receipts were with the relative invoices handed over at Coimbatore to the buyers where they had an office and the sellers received a good portion of the price. The balance was paid after weights were checked and fatty acid tests were carried out by the buyers at Ernakulam.

The total turnover of the goods involved in these contracts for the assessment year was Rs.1,80,738-13-4.

Before the Deputy Commercial Tax Officer the assessee raised a contention that he was entitled to a rebate of one half of the sales tax due in respect of the turnover under section 7 of the Madras General Sales Tax Act. That section runs in these terms:

“In respect of such finished articles of industrial manufacture as may be notified by the State Government and subject to such restrictions and conditions as may be prescribed, a rebate shall be allowed of one-half of the tax levied on sales of such articles for delivery outside the State if such articles are actually so delivered.”

The assessing officer rejected this claim and held that the assessee was not entitled to the exemption claimed. The assessee filed an appeal to the Commercial Tax Officer and at that stage raised the contention that he was entitled to exemption in respect of the whole of the tax paid by reason of the Explanation to Article 286(1) (a) of the Constitution. The appellate authority decided against the assessee and a further appeal to the Sales Tax Appellate Tribunal was also rejected. Hence this revision.

Before us two points were argued. The first was that the petitioner was entitled to exemption under the Explanation to Article 286(1)(a). The Article and the Explanation are in these terms:

" 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 purposes of sub-clause (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 direct result of suc

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