Article 286 limits state sales tax despite validation law; out-of-state delivery for consumption remained untaxable, affidavits challenge failed.

The constitutional bar in Article 286(1)(a) remained independent of Article 286(2), so the Sales Tax Laws Validation Act, 1956 did not authorise Madras to tax sales where goods were delivered outside the State for consumption there, despite the statutory explanation in section 2(h) of the Madras General Sales Tax Act, 1939. The court also treated the challenge to affidavits received in revision under section 38 of the Madras General Sales Tax Act, 1959 as unsustainable because no objection had been raised before the High Court. The State's appeals therefore failed and the exemption from tax was sustained.

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Issues: (i) Whether sales of goods delivered outside Madras State for consumption there were liable to sales tax under section 2(h) of the Madras General Sales Tax Act, 1939, after the Sales Tax Laws Validation Act, 1956; (ii) Whether the High Court could take affidavits into evidence in revision under section 38 of the Madras General Sales Tax Act, 1959, when no objection was raised before it.

Issue (i): Whether sales of goods delivered outside Madras State for consumption there were liable to sales tax under section 2(h) of the Madras General Sales Tax Act, 1939, after the Sales Tax Laws Validation Act, 1956.

Analysis: The Validation Act removed only the constitutional ban under Article 286(2) on taxation of inter-State sales for the specified period. It did not remove the independent ban under Article 286(1)(a), which continued to prohibit taxation by a State where the sale, by constitutional fiction, was outside that State because the goods were actually delivered there for consumption. The statutory explanation in section 2(h) of the Madras Act could not enlarge the State's taxing power beyond the constitutional limitation.

Conclusion: The goods delivered outside Madras State for consumption there were not taxable by Madras State, and the challenge to their exclusion from tax failed.

Issue (ii): Whether the High Court could take affidavits into evidence in revision under section 38 of the Madras General Sales Tax Act, 1959, when no objection was raised before it.

Analysis: Although the scope of section 38 and the propriety of receiving additional material were discussed, the objection was not taken before the High Court. In those circumstances, the appellate challenge to the reception of affidavits could not be sustained.

Conclusion: The objection to the affidavits was rejected.

Final Conclusion: The State's appeals failed, and the High Court's view that the disputed transactions were not taxable by Madras State was sustained.

Ratio Decidendi: The constitutional prohibition in Article 286(1)(a) is independent of Article 286(2), and Parliamentary validation of inter-State sales tax cannot authorize a State to tax sales that are deemed outside its territory because delivery for consumption occurred elsewhere.

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