Place of delivery controls taxability: timber sales remained taxable where contract fixed delivery within the State

Where the contract fixed delivery and inspection at Mandla Fort within the State, timber sales were treated as intra-State transactions unless actual delivery outside the State was proved. The purchaser's residence outside Madhya Pradesh and a right of further inspection on arrival did not, by themselves, shift the place of delivery. Applying the prima facie rule under section 39(1) of the Sale of Goods Act, the Court inferred delivery at the contractual place in the absence of contrary evidence. The assessment therefore remained valid because the record did not establish delivery outside the taxing State under Article 286(1)(a) and its Explanation.

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Issues: Whether the timber sales were actually delivered outside the State so as to fall outside the taxing State under Article 286(1)(a) of the Constitution and the Explanation thereto.

Analysis: The contract documents placed before the Court showed that the place of delivery and inspection was Mandla Fort, that the timber was to be tendered there, put on rail from there, and that the railway receipt was to be sent to the consignee. The mere circumstance that the consignee was outside the State and had a right of further inspection on arrival did not, by itself, shift the place of delivery from Mandla Fort. On the materials available, there was no evidence that actual delivery took place at the destination outside the State. The Court also applied the prima facie rule under section 39(1) of the Sale of Goods Act that, in the absence of contrary evidence, delivery is inferred at the place shown by the contract.

Conclusion: The sales were not shown to have been actually delivered outside Madhya Pradesh, and the challenge to the tax assessment failed.

Ratio Decidendi: Where the contract fixes the place of delivery within the State and the record does not establish actual delivery outside the State, the sale is taxable in the State notwithstanding that the goods are ultimately consigned to a purchaser outside the State.

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