JUDGMENT 1. THE petitioner is a company of cement dealers, having its registered office at Bombay. For four quarters ending on July 31, 1956, the respondent, Commercial tax Officer assessed the petitioner company to sales-tax, amounting to Rs, 7,25,386/12/6, and after giving credit for tax already paid, called upon the petitioner Company to pay the balance, namely, a sum of Rs. 7,15,042/12/6. The petitioner company paid the aforesaid sum under protest, on March 23, 1957, and then moved against the order of assessment, under Article 226 of the constitution, and obtained a Rule, which was numbered as Matter No. 51 of 1957. 2. THE aforesaid Rule came up for hearing before P. B. Mukharji, J. and by an order, dated April 25, 1958, his lordship set aside the assessment with the following observation: "this assessment is set aside on the ground that the recent judgment of the Supreme Court in M. P. V. Sundararamier and Co. v. The State of Andhra and Anr., (as yet unreported) [since reported in (1958) S. C. A. 492-Ed.] has decided that the Sales Tax Laws Validation Act, 1956 is intra vires. But this Act so far as applicable to the case before me relates merely to a short period from 1.8.55 to 6.9.58 the Validation Act being good only from 1.4.51 to 6-9-55. The present assessment has not separated this period and therefore the whole of the assessment is set aside for reassessment on the basis of the Supreme Court Judgment. On the further question whether for the period excluding this one month from 1. 8. 55 to 6.9.55 the sale in this case is an inter-State sale and as such whether it attracts (a) Sales Outside West Bengal (b) Sales to Registered dealers (c) Other exemptions: (i) under section 5 (2) (a) (iii) (ii) under section 5 (2) (a) (iv) (iii) Direct sale from works according to the petitioner company the taxable turnover, after exemptions aforementioned, came up to rs. 2,03. 429/- only. (a) Sale to registered dealers (b) Sale outside West Bengal (c) Under section 5 (2) (a) (iv)the State Tax or not will be open to argument both on facts and law before the assessing officer at the time of the reassessment and the parties will have right of access to this court as they think fit under art. 226 of the Constitution. 226 of the Constitution. They will not be prejudiced in any manner by the assessment being set aside only on the ground mentioned above." 3. THEREAFTER, the petitioner company filed revised returns for its accounting year August 1, 1955 to July 31, 1956, and therein claimed exemption from taxation in respect of the following amounts from out of the gross turnover of Rs. 1,76,33,050/- (Rs. 1,76,58,405/- less cost of delivery Rs. 25,355/-), namely:- Rs . 18,35,853/- Rs . 89,55,619/- Rs . 57,533/- Rs . 60,157/- Rs . 65,20,459/- Rs . 66,38,149/- Rs . 66,38,149/- Rs . 1,74,29,621/- The Commercial Tax Officer took the gross turnover at Rs, 1,76,33,050/-and out of that he allowed the following exemptions only: Rs . 89,55,619/- . . . . Rs . 18. 03. 720/- . . . . Rs . 50,391/- . . . . Rs . 1,08,09,730/- He, therefore, found that the amount of taxable turnover came up to rs. 63,23,320/ -. On the aforesaid amount, he assessed a tax of Rs. 8,05,450. 20 np. The petitioner company having had already deposited a sum of Rs. 725,386. 7s np., he found (i ) Rs. 64,18,929/- . . (ii) Rs. 57,533/- . . (iii) Rs. 32,133/- . . Total Rs. 65,08,595/- . . 4. THE petitioner company further alleges that the disallowance of the above exemptions resulted in wrongful imposition of additional sales tax amounting to Rs. 2,91,361,32 np. In these circumstances the petitioner company moved this Court, under article 226 of the Constitution, asking for a Writ of Certiorari for the quashing of the award and for consequential writs and obtained this Rule. At the hearing of the Rule, the grievance in respect of Rs. 32,133/- (Out of sales outside "west Bengal) was given up by the petitioner company and I am not further concerned with that grievance. In disallowing the claim for exemption in respect of direct Sales from the works, which were claimed to be inter-State Sales, the Commercial Tax officer observed as follows: "the dealer claims a further deduction of Rs. 65,20,459/- alleging that the sales were effected that the excess tax paid amounted to rs. 4. 19,936. 58 np. only. In the petition before this Court the petitioner company contends that the Commercial-Tax Officer was wrong in disallowing the following exemptions : out of Rs. 65,20,459/- claimed as sales direct from the works of the petitioner company. 65,20,459/- alleging that the sales were effected that the excess tax paid amounted to rs. 4. 19,936. 58 np. only. In the petition before this Court the petitioner company contends that the Commercial-Tax Officer was wrong in disallowing the following exemptions : out of Rs. 65,20,459/- claimed as sales direct from the works of the petitioner company. Claimed as exemption under section 5 (2) (a) (iii) of the Bengal Finance (Sales Tax) Act. Out of Rs. 18,35,853/- claimed as Sale outside West Bengal. from Khalari (M. P.), Chaibasa and sindri (Bihar) to parties in West bengal and as such these transactions are not taxable at this end. It is admitted the dealer that the goods in question were sold to parties in West Bengal. I have considered the argument put forth by the learned Advocate and also the evidences produced before me. But I am unable to agree with the views expressed by him and as such the entire claim is disallowed. " 5. IN disallowing the claim for exemption under section 5 (2) (a) (iii) of the bengal Finance (Sales Tax) Act, the commercial Tax Officer observed: "the dealer claims deduction of Rs. 57,533/- and produced certificates issued by various collieries. As cement is not required directly for use in connection with the raising of coal, so the claim is disallowed " 6. THE petitioner company contends that the grounds relied upon by the commercial Tax Officer, as quoted above are wholly erroneous. In order to appreciate their contention it is necessary to refer to the following facts on which the petitioner company relied. The petitioner company states, in paragraphs 2 and 3 of the petition, that upto June 30, 1956, it was the Sales manager of Associated Cement Companies Ltd., a cement manufacturing concern. Thereafter, since July 1,1956, it became the selling agent of the State trading Corporation of India Private ltd., which latter company was, under the Cement Control Order, 1956, the owner of all cement, produced in India. The petitioner company is also registered as a dealer under the Bengal finance (Sales Tax) Act. Thereafter, since July 1,1956, it became the selling agent of the State trading Corporation of India Private ltd., which latter company was, under the Cement Control Order, 1956, the owner of all cement, produced in India. The petitioner company is also registered as a dealer under the Bengal finance (Sales Tax) Act. Upto June 30, 1956, the petitioner company, in its business, used to arrange for sale of cement, as Sales Manager, as aforesaid, to the Directorate General of Supplies and Disposals, Government of india, New Delhi, in accordance with the terms of Annual Rate Contracts between Associated Cement Companies ltd., (through the petitioner) and the said Directorate, Since after July 1956, the petitioner company, in its business, used to arrange for supply of cement, as selling agents as aforesaid, to the Directorate General of Supplies and Disposals, Government of India, under Rate Contracts between the state Trading Corporation and the said directorate. The petitioner company, in its business, also used to arrange sales of cement to other purchasers as well under contracts, the terms of which will be hereinafter referred to. The petitioner company further states that during the material period, it supplied cement from the Associated cement Companies' factories at Kymore (State of Madhya Pradesh) and at chaibasa, Khalari and Sindri (State of bihar) to purchasers in the State of west Bengal, who were either members of the public (other than registered dealers) or the Supply Department of the Government of India, under various contracts. The dispatches of cement were all made from factories outside west Bengal to the purchasers for consumption in West Bengal. The value of such supplies was: (a) To the members of the public (other than registered dealers) Rs . 15,21,861/- (b) To the supply department of Government of India . Rs . 49,98,598/- Rs . 65,20,459/- During the material period the petitioner company also supplied cement to certain coal companies in w. Bengal of the value of Rs. 57,533/ -. I need not concern myself with the other sales made by the petitioner company, in this Rule. In paragraph 4 of the petition ' the petitioner company also states that in terms of the relative contracts covering the supplies above mentioned, delivery of cement used to be made free on railways at the, works, siding of the aforementioned factories, all outside the State of West Bengal. In paragraph 4 of the petition ' the petitioner company also states that in terms of the relative contracts covering the supplies above mentioned, delivery of cement used to be made free on railways at the, works, siding of the aforementioned factories, all outside the State of West Bengal. In case of sales to the members of the public, the price was F. O. R. destination price and in case of sales to the Supply Department the price was F. O. R., ex-works. The relative railway receipts used to be made out in the name of the purchasers as consignees and the goods covered thereby were at the purchaser's risk from the time the delivery was made to the railway and railway receipts obtained there for. The contracts with the Directorate General of Supplies were all entered into at New Delhi and price of the supplies was paid to the petitioner company at bombay. 7. THE petitioner company contends that the sales to the Supply Department from August 1,1955 to September 6, 1955 were unlawfully taxed since delivery and consumption were made in different States and as such the sales must be deemed to have taken place outside West Bengal and the same could not be taxed under the provisions of Article 286 (1) (a) of the constitution. The petitioner company further contends that in respect of the period from September 7, 1955 to June 30, 1956, the sales made to the members of the public were made in course of inter-state trade and commerce and the same were not liable to payment of sales-tax under the provisions of Article 286 (2) of the constitution. 8. THE petitioner company also contends that as regards sales during the period September 7, 1955 to June 30, 1956, made to the Supply department, deliveries were made in one State and the consumption took place in another State and such sales were not liable to sales tax both under articles 286 (1) (a) and 286 (2) of the constitution. 8. THE petitioner company also contends that as regards sales during the period September 7, 1955 to June 30, 1956, made to the Supply department, deliveries were made in one State and the consumption took place in another State and such sales were not liable to sales tax both under articles 286 (1) (a) and 286 (2) of the constitution. In respect of sales effected during July 1, 1966 to July 31, 1956, the contention of the petitioner company was that sales made to the public were made in course of inter-State trade and commerce and were exempt from taxation under article 286 (2) of the Constitution and the sales made to the Supply Department were exempt from taxation because (i) they were made in course of inter-State trade and commerce and (ii) because deliveries were made in one State and consumption took place in another and as such were saved under Article 2s6 (l) (a) and Article 286 (2) of the Constitution. Lastly, the petitioner Company contends that the sales necessitated transit of goods across the State boundaries, since such deliveries had to be made either from the factories at Madhya Pradesh or Bihar to purchasers in West Bengal, and as such the same must be treated to have been made in course, of inter-State trade and commerce. In support of the contentions the petitioner company relied on specimen contract forms (Annexure 'a' to the petition), specimen copies of documents illustrating the procedure followed in effecting supplies (Annexure 'b', 'b (l)', and 'b (2)' and 'c' to the petition ). On behalf of the respondents there is an affidavit-in-opposition, affirmed by the Commercial Tax Officer, filed on November 27, 1959, of which paragraph 4, seeking to controvert the statements contained in paragraphs 3 and 4 of the petition, reads as follows : "as regards statements made in paragraphs 3 to 6, I make no admission of any of the statements, beyond the assessment records of the petitioner company maintained in the Commercial Tax Office and 1 deny all statements and/or allegations contrary thereto, to which I crave leave to refer, if necessary," 9. AT the hearing of the Rule, however, it was contended, on behalf of the respondents, that none of the documents, on which the petitioner company sought to establish that the sales had been made either outside West bengal or in course of inter-State transactions, had been produced before the Commercial Tax Officer and that it was too late for the petitioner company to try to use those documents. This contention was disputed on behalf of the petitioner company. In these circumstances, I allowed the petitioner company to use a supplementary affidavit therein stating which documents were produced before the Commercial tax Officer. The petitioner company filed such, an affidavit, on August 1, 1961, and therein stated as follows: (a) That there was a statement of information filed before the Commercial Tax Officer, which contained total sales shown quarter-wise and also particulars of books and documents produced before the Commercial Tax Officer. (b) That there were produced before the Commercial Tax Officer, sales Registers, copies of Bills, copies of debit notes and credit note for the period material to this rule. (c) That in the Sales Registersales made to the Government of India and also sales made to the public were separately shown. Also there were shown in the said register sales from the Works outside West Bengal and sales from the go-downs in West Bengal separately. (d) That the documents relied upon by the petitioners in this rule had all been made annexures to the Writ petition in Matter No. . 51 of 1957, excepting two documents, which are parts of Annexures 'b' and B2 to the petition in this Rule, and a copy of the said earlier Writ petition was on the file of Commercial Tax Officer. (e) That the annexures to the earlier Writ petition were shown to Commercial Tax Officer and were relied upon on behalf of the petitioner, at the hearing of the impugned assessment. (f) That the Commercial Tax officer examined the books of accounts also appeared from an order recorded by the Commercial Tax officer himself, bearing date November 11, 1956. (e) That the annexures to the earlier Writ petition were shown to Commercial Tax Officer and were relied upon on behalf of the petitioner, at the hearing of the impugned assessment. (f) That the Commercial Tax officer examined the books of accounts also appeared from an order recorded by the Commercial Tax officer himself, bearing date November 11, 1956. The respondent Commercial Tax officer filed a supplementary affidavit-in-opposition to the aforementioned supplementary affidavit, in which, he admitted that a statement of information had been filed before him on behalf of the petitioner company and further admitted that the books of account and the other documents mentioned in the supplementary affidavit were produced before him, He, however, states that the contracts of sale were not produced before him but does not deny that the annexures to the previous Writ petition were used before him, on behalf of the petitioner company. Regard -being had to nature of averments in the supplementary affidavit and the supplementary affidavit in-opposition, I have little doubt that the documents relied upon by the petitioner company in this Rule, excepting two hereinbefore referred to, had all been made available to the Commercial tax Officer, when he made the order of assessment and the objection raised on behalf of the respondents that it was too late for the petitioner company to rely upon them must fail. 10. I now turn to the grounds taken by the petitioner company in support of the Rule. The material portion of article 286 of the Constitution, on which reliance was placed by the petitioner company, reads as follows: "286 (1)No law of a State shall impose or authorise imposition of, a tax on the sale or purchase of goods where pale 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; 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 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 the property in the goods has by reasons of such sale and purchase passed in another State. (2) Except in so far as the parliament may by law otherwise provide, no law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of any goods where such sale or purchase takes place in the course of inter-State trade or commerce. The Article has since been amended by the Constitution (Sixth Amendment) Act but the sales in question were effected prior to the amendment. I need remind myself that in explaining the unamended Article 286, the supreme Court held that explanation was for the purpose of sub-clause (a), that is to say, for the purpose of explaining which sale or purchase taking place outside the State (See (1) Bengal Immunity Co. Ltd. v. State of Bihar, a. I. R. 1955 S. C. 661), The tests which have been laid down by the supreme Court to satisfy the conditions of sale in course of inter-State trade and commerce are: (a) That the transaction must involve movement of goods across the border, (Messrs, Mohanlal Hargovind v. State of Madhya Pradesh (2) A. I. R. 1955 S. C. 786); (b) That transaction is inter,. State in which as a direct result of such sale goods are delivered for consumption into another State (Messrs Ram Narain Sons Ltd. v. Assistant Commissioner of Sales tax, (3) A. I. R. 1955 S. C. 765); (c) That there must be a sale of goods and the contract of sale must involve transport of goods from one State to another under the contract of sale (Bengal Immunity Co. Ltd. v. State of Bihar (1) A. I,r, 1955 SC. 661), on the question when a sale or purchase takes place outside the State, within the meaning of Article 236 (1) (a), the Supreme Court observed as follows, in the case India Copper Corporation Ltd, v. State of Bihar (4) (A. I. R. 1961 S. C. 347) :- "the next question is, does a sale take place 'outside' the State, where as a result of the contract of sale, the property in the goods passes to the purchaser within the state; in other words, is a sale completed by the passing of property within the State not 'inside' a State, for the mere reason that as a direct result of the sale the goods are delivered outside the state. The answer depends on the meaning to be attributed to the words 'a sale or purchase which has taken place outside the State' occurring in the body of Art. 286 (1). The expression 'outside the State' is capable of being understood in more senses than one. It could be understood as comprehending cases where no element or ingredient which constitutes, a sale takes place within the State; in other words as applying solely to those cases where there exists no territorial nexus between the State imposing the tax and the sale. Obviously, this could not have been intended to be incorporated in Art, 286 (1) because the tax in such cases would be beyond the legislative power of the State under entry 54 of the State List read with Art. 246 of the Constitution, the expression 'outside' has therefore to be understood not as a sale so 'outside' as not to have any territorial connection between the state in question and the sale, but in a somewhat narrower sense." 11. THE real difficulty arises in ascertaining the precise content of the narrower sense in which the word is used as meaning a sale in substance 'outside' the State, though there might be some elements of the sale which if the exemption under Art. 286 (1) (a) were not enacted, would enable a State to levy a tax on the sale on the ground that it was within the legislative power of the State under Art. 246 read with Entry 54. As already pointed out, the situs of a sale is not easy to determine and several factors which constitute a completed transaction of sale including the delivery of the goods, lay claim to be considered as in themselves constituting sufficient next to justify their being treated as determining the locus of a sale. Thus, merely by way of illustration the place where the goods are at the time of the contract of sale, the place where the contract of sale is concluded, the place where the property in the goods passes and that in which the delivery takes place compete for recognition as constituting the locus of a sale. Before the Constitution these and other similar factors were treated as affording sufficient territorial connection to endow the state in which any of the events occurred with legislative competence to tax the sale. Before the Constitution these and other similar factors were treated as affording sufficient territorial connection to endow the state in which any of the events occurred with legislative competence to tax the sale. This led to a multiplicity of the taxation of the same transaction of sale by a plurality of states, with the result that the consumer was hard hit and trade itself, and national economy suffered in the process. It has been pointed out that Art 286 (1) (a) was designed to counteract that state of affairs. 12. IF a single State was designed to have the power to tax any particular transaction of sale, the question that next falls to be 'considered is the determination of that State in regard to which it could be predicated that the sale in question was not 'outside' that state or in other words, the determination of the particular State in regard to which it could be said that the sale was 'inside' that State, the key to the problem is afforded by two indications, in the Article itself: (1) the opening words of Art. 286 (1) which speak of a sale or purchase taking place and (2) the non-obstante clause in the Explanation which refers to the general law relating to 'sale of goods under which property in the goods has, by reason of such sale or purchase, passed in another state'. These two together indicate that it is the passing of property within the State that is intended to be fastened on, for the purpose of determining, whether the sale in question is 'inside' or 'outside' the state, and therefore, subject to the operation of the 'explanation' that state in which property passes would be the only State, which would have the power to levy a tax on the sale. As was explained in the recent decision of this Court in Burmah Shell Oil Storage distributing Co. of India, Ltd. v. Commercial Tax Officer, C. A, no. 751 of 1957 and C. A. No. 10 of 1958; (A. I. R. 1961 S 315): 'by sale here [art 286 (1) (a), is meant a completed transaction by which property in the, goods passes before the property in the goods passes, 'the contract of sale is only executory, and the buyer has only a chose in action. . . . . . . . . . . The Constitution thinks in terms of a completed sale by the passing of property and not in terms of an executory contract for the sale of goods. ' Notwithstanding that is not an 'outside' sale, the power of the state to tax might be negatived by the operation of the Explanation which by its non-obstante clause-shifts the situs of the sale and renders the sale transaction one within the delivery-cum-consumption State, i. e., as the State in which the sale transaction must be deemed to take place. Where the terms of the Explanation are satisfied, the sale transaction will, by a legal fiction created by it, be deemed to take place 'inside' the state of delivery and therefore 'outside' the State in which the property passes. The conclusion reached therefore is that where the property in the goods passes within a State as a direct result of the sale, the sale transaction is not outside the State for the purpose of Art 286 (1) (a) unless the Explanation operates. We need also add that the power of the State to impose the tax might still not be available unless the transaction in question is unaffected by the other bans imposed under sub-cl. (1) (b), (2) and (3) of Article 286. The submission therefore of learned counsel for the appellants that in respect of non-Explanation sales the State of Bihar has no power to levy a tax by reason of such sales being 'outside' the State within Art. 286 (1) (a) must be rejected. " 13. KEEPING the aforesaid tests in mind. I have to see whether the petitioner company has succeeded in bringing the transactions which were not exempted from taxation, either within the description of sales outside the State of west Bengal or sales in course of inter-State trade or commerce. It appears from the documents annexed " to the petition and collectively marked with letters 'b' and 'b (l)' that the modus operendi for an intending purchaser to obtain cement was to obtain authorisation from a Government authority, which nominated the factory from which the intending purchaser was to get his supplies of cement. That authorisation with an order used to be given to the petitioner company, and when sale was made, the factory supplied the cement to the purchaser. That authorisation with an order used to be given to the petitioner company, and when sale was made, the factory supplied the cement to the purchaser. The choice of factory, which was to supply the cement was indicated in the authorisation and the petitioner company had no hand in the matter of selection of the source of supply. The contract of sale involved movement of goods from the factory to the purchaser and since all the factories, with which the petitioner company had anything to do, were outside West Bengal, the supply occasioned movement of goods from other States to West Bengal Taking the nature of the transaction and the preliminaries necessary for the sale and purchase of cement, it may not be said that the sale did not occasion movement of goods from one State to another. Also, regard being had to mode of delivery agreed upon, and hereinbefore stated, it may not be said that the transactions did not amount to non-explanation sales. The Commercial Tax Officer did not take any of the above-mentioned aspects of the sale into consideration but disallowed the claim for exemption of those sales from taxation merely on the ground that the sales were made to parties in West bengal. In my opinion the Commercial Tax Officer resorted to a wholly erroneous approach in deciding the claim for exemption made by the petitioner. 14. ALTHOUGH of that opinion, it is not possible for me to decide whether the entirety of the sale price of Rs. 64,18,929/- was covered either by Article 286 (1) (a) or 286 (2) of the Constitution, because the documents relating to all the transactions are not before me. Nevertheless, the case made by the petitioner company was not decided according to law and the order made by the Commercial Tax Officer suffers from an error apparent. I, therefore, quash the order and direct the Commercial Tax Officer to proceed afresh in the matter of assessment, bearing in mind the observations contained in this judgment. If it becomes necessary for the Commercial Tax Officer to examine further documents relating to the transactions, in connection with the fresh assessment he should do that. I now turn to the other branch of the argument made on behalf of the petitioner company. If it becomes necessary for the Commercial Tax Officer to examine further documents relating to the transactions, in connection with the fresh assessment he should do that. I now turn to the other branch of the argument made on behalf of the petitioner company. Nothing was shown to me that the cement sold to the coal companies were required directly for use in connection with the raising of coal. I am, therefore, unable to interfere with that part of the order of the Commercial Tax Officer disallowing the petitioner's claim for exemption of a sum of Rs, 57,533/-under section 5 (2) (a) (iii) of the Bengal Finance (Sales Tax) Act. In the result this Rule succeeds to the extent indicated above. Let a writ of Certiorari accordingly issue. There will be no order as to costs.