JUDGMENT : Ansari, J. 1. The Deputy Commissioner of Sales-tax seeks to vary the order by the Sales-tax Appellate Tribunal, whereby the assessment on sales of tea under the Travancore-Cochin General Sales-tax Act (hereinafter referred to as the Act), has been set aside, and section 2 (j) of the Act been found contrary to Article 285 (1) (a) of the Constitution. The taxing authority had discovered that, in respect of the turnover for 1952-53, quantities of tea sold and delivered from the dealer's godown at Willingdon Island, which was then within the Travancore-Cochin State, had not been taken into account at the earlier assessment on February 16, 1955. A notice has therefore, been issued under Rule 33 (1) of the Travancore-Cochin General Sales-tax Rules, 1950, and served on the dealer, A. V. Thomas & Co., Ltd., Alleppey, as the agent of three tea estates, i.e., of Fring Ford's Estates, Ltd., the Kalpetta Estate, Ltd., and Neela Malai Tea and Coffee Estates. The Company has raised several objections, of the sales being exempt under Article 286 (1) (a) and (b), of their not being agents of the producer companies and of their being Managing Agents of only two of the tea estates. The assessing Officer has held that as the goods were delivered in Willingdon Island, the sales were liable to be assessed. The Appellate Assistant Commissioner has dismissed the appeal, but the Appellate Tribunal has allowed it. 2. It is common ground that though the teas, whose sales been taxed, were stored in Willingdon Island, the auctions, at which the sales were brought about, were held in Fort Cochin, which then formed part of Madras State, and the Madras General Sales Tax Act was then operative there. The system, generally followed at the auctions, is given in some detail by the Appellate Tribunal, and may be usefully summarised here. The teas would be graded, weighed, and packed in chests by the estates producing them, and forwarded with garden invoices, to the godowns of A. V. Thomas & Co., Ltd, in Willingdon Island, where they would be stored. The brokers at Fort Cochin after checking the chests, would take samples and group them in lots. Printed catalogues would then be issued, giving the names of the estates, the godowns, the number of the lots, the serial numbers and total number of chests in each lot. The brokers at Fort Cochin after checking the chests, would take samples and group them in lots. Printed catalogues would then be issued, giving the names of the estates, the godowns, the number of the lots, the serial numbers and total number of chests in each lot. The sales would be conducted by samples at Fort Cochin, confirmed in favour of the highest bidders, who would be entitled to take delivery from the godowns after inspection, in order to be satisfied about the bulk being in conformity with the samples, on which the sales had taken place. The payments were through Cochin Bank, and, on default, the tea would be liable to be resold. Shortly put, the sales were at a place different to where the goods were situated, with the option to the purchasers to reject the goods on inspection, should they fail to conform to the sample. 3. The Appellate Tribunal has held that as the ownership in the goods had passed at the auctions outside the State, the assessing authorities could not levy the sales- tax, for they would be outside sales. The Tribunal had further decided that where the ownership had passed by appropriation of the tea towards the sales at the godowns in Willingdon Island, the taxing authority would be entitled to levy the sales-tax, as the auctions at Fort Cochin would not constitute outside sales of such commodity. The Tribunal, has accordingly modified the order by the assessing authorities, directing them to exempt sales of full lots, and to determine what unascertained tea has been sold at the auctions, find the price and assess tax on such sales only, provided tea has been appropriated towards the sale at the company's godowns in Willingdon Island. The question, therefore, arising for adjudication in this petition, is how far Explanation 2 to section 2 (j) of the Act contravenes Article 286 (1) (a) and is, therefore, void. The question, therefore, arising for adjudication in this petition, is how far Explanation 2 to section 2 (j) of the Act contravenes Article 286 (1) (a) and is, therefore, void. Section 2 (j) reads as follows :— “‘Sale’ with all 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 valuable consideration and includes also a transfer of property in goods involved in the execution of a works contract, but does not include a mortgage, hypothecation, charge or pledge ; * * * * * * Explanation 2 :—Notwithstanding anything to the contrary in the Sale of Goods Act for the time being in force, the sale or purchase of any goods shall be deemed for the purpose of this Act, to have taken place in the State wherever the contract of sale or purchase might have been made- (a) if the goods were actually in the State at the time when the contract of sale or purchase in respect thereof was made; or (b) in case the contract was for the sale or purchase of future goods by description, then, if the goods are actually produced in the State at any time after the contract of sale or purchase in respect thereof was made ; * * * * * * ” 4. The dealer's case is that though under Explanation 2 (a) the sale of commodities, wherever concluded, is deemed to have taken place where the goods be situated, the assessing authorities cannot tax outside sales, and that 'outside sales' within the meaning of Article 286 (1) (a), are those where the ownership passes outside according to the Sale of Goods Act. The Appellate Tribunal has accepted the argument and has relied on several decisions wherein it has been held that the word ‘sale' in our Constitution should be taken to mean what amounts to sale under the Indian Sale of Goods Act, for that meaning was well-established when the Constitution was being framed. The decisions relied on by the Tribunal in support of the view, are The State of Travancore-Cochin v. The Shanmugha Vilas Cashewnut Factory (4 S.T.C. 205), Bahubar Co., Ltd. v. Commissioner of Taxes (8 S.T.C. 417 )and The Sales - tax Officer v. Budh Prakash Jai Prakash (5 S.T.C. 193). The decisions relied on by the Tribunal in support of the view, are The State of Travancore-Cochin v. The Shanmugha Vilas Cashewnut Factory (4 S.T.C. 205), Bahubar Co., Ltd. v. Commissioner of Taxes (8 S.T.C. 417 )and The Sales - tax Officer v. Budh Prakash Jai Prakash (5 S.T.C. 193). We think the Appellate Tribunal has erred in holding that the words ‘outside sales' in Article 286 (1) (a), mean transfer of ownership according to the Sale of Goods Act, and the cases holding what the word ‘sale' in item 48 of List II of the Government of India Act, 1935, or the same word in item 54 of List II of Schedule VII of the Constitution mean, should not be relied upon to interpret the words 'outside sales' in Article 286 (1) (a). It is well known that the Article was framed in order to circumscribe the earlier wide use by the Provinces of their powers of taxing sales of goods and thereby several limits were imposed. One was that outside sales were exempted. Next, sales in the course of exports and imports, were excluded. Thirdly, sales or purchases in the course of inter-State commerce, were exempted subject to the Parliament lifting the ban. It is equally well known that after the Bengal Immunity Case (6 S.T.C. 446), the Article has been amended by the Constitution (VI Amendment) Act, 1956, and Parliament has been authorised to formulate principles for determining when a sale or purchase of goods takes place in any of the ways mentioned in clause (1). It is equally well known that after the Bengal Immunity Case (6 S.T.C. 446), the Article has been amended by the Constitution (VI Amendment) Act, 1956, and Parliament has been authorised to formulate principles for determining when a sale or purchase of goods takes place in any of the ways mentioned in clause (1). The amended Article now reads thus :— Article 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) in the course of the import of the goods into, or export of the goods out of the territory of India.” It is also well known that in pursuance of the direction given by Article 286 (2), The Central Sales Tax Act, 74 of 1956, has been enacted, whose section 4 reads as follows :— "(1) Subject to the provisions contained in section 3, when a sale or purchase of goods is determined in accordance with sub-section (2) to take place inside a State, such sale or purchase shall be deemed to have taken place outside all other States; (2) A sale or purchase of goods shall be deemed to take place inside a State if the goods are within the State— (a) in the case of specific or ascertained goods, at the time the contract of sale is made ; and (b) in the case of unascertained or future goods, at the time of their appropriation to the contract of sale by the seller or by the buyer, whether assent of the other party is prior or subsequent to such appropriation. Explanation: Where there is a single contract of sale or purchase of goods situated at more places than one, the provisions of the sub section shall apply as if there were separate contracts in respect of the goods at each of such places." 5. It is therefore clear that ‘outside sales' under the old as well as the new Article, have been exempted, and the words now mean sales of goods situated elsewhere. It follows that the State, where the goods be situated, can alone tax the sales. It is therefore clear that ‘outside sales' under the old as well as the new Article, have been exempted, and the words now mean sales of goods situated elsewhere. It follows that the State, where the goods be situated, can alone tax the sales. In other words, Parliament has now expressly accepted that transfer of movables should be according to lex situs, and the latter may be composed of enactments, in addition to Sale of Goods Act. Sales liable to taxation now are what amount to sales according to State laws where the goods be located, and the question is whether that was not the position even earlier. Should the intention by exempting outside sales be found originally to be of barring States from taxing sales of goods that be not located within their territories, it is clear that Explanation 2 to section 2 (j) of the Act would not be violative of Article 286(1) (a). 6. It is well known that writers on the Conflict of Laws were not unanimous as to which law should govern sale of movable property, and three views had been taken. One was that it should be according to the law of domicile, another that it must be by law of contract, and the third that it should be by lex situs. At the time when our Constitution was being framed, the preponderance of authorities was in favour of lex situs. Thus Dicey’s Conflict of Laws (Dicey’ Conflict of Laws, 7th Edn. P.537) summarised the legal position in these words :— “Rule 86, (1) A transfer of tangible movable which is valid and effective by the proper law of the transfer had by the law of the place where the movable is at the time of the transfer (lex situs) is valid and effective in England. (2) A transfer of a tangible movable which is invalid or ineffective by the proper law of the transfer and by the lex situs of the movable at the time of the transfer is invalid or ineffective in England”. "Rule 87. Subject to the Exception hereinafter mentioned, when the proper law of the transfer differs from the lex situs of the tangible movable at the time of the transfer, the lex situs governs the effect of the transfer on the proprietary rights of the parties thereto and of those claiming under them in respect thereof ”. "Rule 87. Subject to the Exception hereinafter mentioned, when the proper law of the transfer differs from the lex situs of the tangible movable at the time of the transfer, the lex situs governs the effect of the transfer on the proprietary rights of the parties thereto and of those claiming under them in respect thereof ”. Clive M. Schmittoff in his English Conflict of Laws (The English Conflict of Laws, 3rd Edn. P. 194) observes : — "Whether a conveyance of a chattel, which is in due form and is made by a party who has capacity to convey it, is in other respects valid is determined by the law of the State where the chattel is at the time of the conveyance. " Graveson in his Conflict of Laws (The Conflict of Laws of Graveson, 3rd Edn. P. 233) says:- "The theory that the validity of an assignment of movables which can be touched is governed by the law, of the country in which they are situated has been generally accepted in English and American law, and, supported by Foelix and Savigny, has become the rule in most Continental systems. Various reasons have been adduced in support of the theory, but its chief value would seem to lie in the fact that in the majority of cases it provides a single and easily ascertainable system of law based on the focal point of the transaction, namely, the goods with which the transaction deals”. 7. Apart from such a consensus, some of the Provincial legislations on the sales-tax had also recognised lex situs as the test for determining when sales would be inside sales. Thus, Explanation 2 to the definition of ‘sale’ in section 2 (b) of the Madras General Sales-tax Act, which was added before the inauguration of the Constitution, clearly accepted lex situs as the correct principle on which sales should be treated to be inside State. Therefore, the framers of our Constitution were fully aware of what was the prevailing view on the transfer of ownership of movables where different laws came into conflict, and we do not think that by the use of the words ‘sale outside the State' in Article 286 (1) (a), they contemplated transfer of ownership in accordance with lex actus, which was, by that time, the discarded view. Article 286 (1) (a) has a wider canvas, and the words 4 ‘sale outside the State ' in such a context, do not mean transfer of movables under the Sale of Goods Act alone. Had that been the intention, there would be no point in making the Explanation (now repealed) part of Article 286 (1) (a). The Explanation is based on a different principle, and the incorporation is, therefore, a clear indication of the framers or the Constitution accepting transfer of ownership of movables to be governed by lex situs. In this connection, it is well to remember that lex situs is not of much assistance where the location of the movables be uncertain, and, in such a situation, the ultimate destination of the goods is presumed to be the situs. Now, this is exactly what the repealed Explanation had provided, by enacting that a sale should be deemed to have taken place where the goods had actually been delivered for purposes of consumption. In other words, the Rule concerning presumption of sale taking place where the commodity be ultimately destined to, would not have been enacted, had the transfer of ownership in movables according to lex situs been not accepted. The presumption becomes necessary only when the principle is accepted. We are fortified in this view by the observation of Bose, J., in Tata Iron and Steel Co., Ltd v. State of Bihar (9 S.T.C. 267 at P. 287), where the learned Judge says : "Our present Constitution did not adopt Cheshire's view. It made another choice. In the old Explanation to Article 286 (now repealed) it selected the place where the goods are actually delivered as a direct result of the sale or purchase, as the situs." In Bengal Immunity Case (6 S.T.C. 446 at P. 593), Venkatarama Ayyar, J., has also observed :- “In my opinion, if you must decide in what country any appropriation of goods by consent takes place, it takes place not where the consent is given, but where the goods are at the time situate." 8. It follows that there has been no departure by section 4 of the Central Sales-tax Act, providing what should be deemed to be ‘inside sale’ and the section is but a later clarification of the principle, on which the Article was originally framed. It follows that there has been no departure by section 4 of the Central Sales-tax Act, providing what should be deemed to be ‘inside sale’ and the section is but a later clarification of the principle, on which the Article was originally framed. That being the correct position, it follows that Explanation 2 to section 2 (j) of the Travancore-Cochin Act, is not violative of Article 286 (1) (a). On the other hand, it provides what is consistent with the Article and section 4 of the Central Sales Tax Act, that the ownership in movables is transferred according to the law of the place where the goods be situated, and the sales of such goods are within such a State, because of the Rule governing the transactions. Therefore, the view that the sales of tea in this case having been concluded at Fort Cochin, in accordance with the Sale of Goods Act, would be sales outside the State, is incorrect, because the sales would be governed by the law of Willingdon Island, and that law provides for their being inside the State. There is nothing in Explanation 2 which is contrary to Article 286 (1) (a) and, therefore, the Article is not contravened. 9. There is another aspect of the case which is covered by decisions, and that is about the modification of the Sale of Goods Act by Explanation 2 not being bad. In Louis Dreyfus and Co., Ltd. v. State of Madras (5 S.T.C. 307) a similar Act has been upheld, and in Peri Kameswara Rao v. State of Madras (6 S.T.C. (143)) like view has been taken by the Andhra High Court. In these circumstances, it cannot be said that the variation of the Sale of Goods Act by Explanation 2 to section 2 (j) of the Act, infringes the rule of occupied field. Therefore, consistently with our view that the 'sale outside the State' in Article 286 (1) (a) means transfer of ownership according to the law of the locality, where the goods be found, Explanation 2 cannot be held to be bad. It follows that the Constitutional ground taken by the Appellate Tribunal is incorrect, and the Appellate Assistant Commissioner would now assess the tax afresh after determining the prices of the tea sold at the auctions. The petition succeeds with costs, and the counsel's fee is fixed at Rs. 150.