S.26 of the United State of Travancore-Cochin General Sales Tax Act of 1125 takes transactions falling within the categories specified under Article 286 of the Constitution out of the purview of the Act, rendering them non-liable to tax under the Act.

1. This appeal with a certificate of fitness under Art.132 (1) of the Constitution is directed against the order of the High Court of Travancore-Cochin dismissing the Original Petition No. 53 of 1954 filed by the appellant under Art.226 for quashing the order of the Sales Tax Officer, 2nd Circle, Quilon, assessing him to sales tax on a net assessable turnover of Rs. 7,54,144-8-4 for the year 1951-52 (1st April, 1951, to 31st March, 1952) and for issuing proper directions to the Sales Tax Authorities to assess the same according to law.

2. The appellant is a registered manufacturer of cocoanut oil and cake who has obtained a certificate of registration in form VI as per sub-rule (1) of R.20 of the Travancore-Cochin General Sales Tax Rules, 1950. The business of the appellant for the purpose of this appeal consisted in the purchase of copra, manufacture of cocoanut oil and cake and sale of the same to parties inside the State of Travancore-Cochin and sale of the oil to parties outside the State.

3. In the year 1951-52, the appellant purchased copra of the value of Rs. 7,16,048-1-4 and after manufacturing oil therefrom" in his oil mills he sold the oil partly in the State and partly outside the State and the cake entirely within the State. The total value of the oil sold was Rs. 6,76,719-0-11 out of which the sales outside the State were of the value of Rs. 3,67,816-10-1 and the value of the cake sold in the State was Rs. 67,155-15-5. The total gross turnover of the appellant was thus Rs. 14,59923-1-8 and he claimed to deduct therefrom the whole of the purchase price of the copra under R.7 (I) (k) read with R.20. The net turnover according to him was therefore only Rs. 7,43,875-0-4 and he claimed to deduct out of this a further sum of Rs. 3,67,816-10-1 being the sale price of oil in inter-State transactions which could not be taxed under Art.286 of the Constitution, thus showing a net assessable turnover of only Rs. 3,76,058-6-3.

4. The Sales Tax Officer, 2nd Circle, Quilon, however, fixed the net assessable turnover of the appellant at Rs. 7,54,144-8-4. He took the purchase value of the copra at Rs. 7,16,018-1-4 but added thereto Rs. 3,08,902-6-10 and Rs 67,155-15-5 being the respective values of the oil and the cake sold inside the State, excluding the sale price of inter-State sales of oil, namely, Rs. 3,67,816-10-1, from such computation. Having thus excluded the sale price of inter-State sales of oil he deducted only the value of the copra corresponding to the oil sold inside the State, namely, Rs. 3,35,216-0- as against the sum of Rs. 7,16,048-1-4 deducted by the appellant. He added a sum of Rs. 3 385-0-3 being the price of gum sold by the appellant and deducted a further sum of Rs. 6,130-15-6 being the sales tax collected by him. He thus' arrived at the net assessable turnover of Rs. 7,54,144-8-4 and assessed the appellant for sales tax on the same.

5. The appellant preferred an appeal to the Assistant Sales Tax Commissioner (S. T. A. No. 1480 of 1953-54) who dismissed the same by his order dated 10th May, 1954. A further petition to the Government for redress met with the same fate and the appellant thereupon filed the petition in the High Court of Travancore Cochin being O. P. N. 53 of 1954 with the result indicated above.

6. The decision of this appeal turns on the construction of the relevant provisions of the United State of Travancore-Cochin General Sales Tax Act of 1125 (Act XI of 1125 M. E.) and the Travancore-Cochin General Sales Tax Rules, 1950, made thereunder which may be conveniently set out here.

The preamble to the Act stated that it was enacted to provide for the levy of a general tax on the sale of goods in the United State of Travancore and Cochin.

S. 2 0) defined a "sale" as under:

"Sale" with all its grammatical variations and cognate expressions means every transfer of the property in goods by one person to another in the course of trade or business for cash or for deferred payment or other valuab