Court exempts transactions from sales tax under Constitution, issues certiorari, grants appeal.

The court found that the transactions were exempt from sales tax under Article 286(1)(b) of the Constitution. Writs of certiorari were issued to annul the sales tax authorities' orders, with refunds and costs awarded to the petitioners. The court affirmed its jurisdiction under Article 226(1) for certiorari despite the availability of revision to the Board of Revenue. Leave to appeal to the Supreme Court was granted under Article 132(1).

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Issues Involved:
1. Legality of the levy of sales tax under Article 286 of the Constitution of India.
2. Interpretation of the phrase "in the course of" in Article 286(1)(b).
3. Scope of Article 286 in exempting certain transactions from sales tax.
4. Applicability of writs of certiorari and prohibition under Article 226(1) of the Constitution.

Detailed Analysis:

1. Legality of the Levy of Sales Tax under Article 286 of the Constitution of India:
The primary contention of the petitioners was that the levy of sales tax was illegal as it contravened Article 286 of the Constitution of India. Article 286 is incorporated into the local Sales Tax Act as Section 26. Thus, the question was whether the levy of sales tax opposed the provisions of this section. The court had to determine if the transactions in question were exempt from sales tax under these provisions.

2. Interpretation of the Phrase "in the Course of" in Article 286(1)(b):
The court emphasized the importance of the phrase "in the course of" in Article 286(1)(b), which exempts sales that occur "in the course of" the import into or export out of India. The court noted that this phrase makes the scope of the clause very wide, encompassing the series of transactions that necessarily precede export or import. Therefore, if a sale takes place during this series of transactions, it is exempt from sales tax, even if the sale occurs within the state boundaries.

3. Scope of Article 286 in Exempting Certain Transactions from Sales Tax:
The court analyzed the debates in the Constituent Assembly when Article 286 was passed, highlighting that the phrase "in the course of" was deliberately chosen to prevent loopholes that could allow businessmen to escape taxation. The court noted that the intention of the framers was to ensure that trade and commerce across the country were not adversely affected by state-imposed sales taxes. The court also referred to the relevant entries in the Union and State Lists, emphasizing that taxes on imports, exports, and inter-state trade are matters of national concern and beyond the purview of individual states.

4. Applicability of Writs of Certiorari and Prohibition under Article 226(1) of the Constitution:
The court found that the transactions in question were indeed exempt from sales tax under Article 286(1)(b). The court granted the prayer for writs of certiorari to quash the orders of the sales tax authorities and ordered a refund of any amounts paid or collected. The court also noted that the petitioners were entitled to costs and advocate's fees. The court further acknowledged that even if the petitioner had a remedy by way of revision to the Board of Revenue, the jurisdiction of the High Court to issue a writ of certiorari was not excluded.

Conclusion:
The court concluded that the transactions involved in the petitions were exempt from the levy of sales tax under Article 286(1)(b) of the Constitution. The court ordered the issuance of writs of certiorari to quash the proceedings of the original and appellate tribunals that sanctioned the levy of sales tax. The petitioners were also entitled to refunds and costs. The court granted leave to appeal to the Supreme Court under Article 132(1) of the Constitution.

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