Inter-State sales tax jurisdiction fails where goods are delivered outside the State for consumption, despite booking in-state.

Article 286(1)(a) barred Orissa from levying sales tax on sales where goods were booked in the State but delivered outside the State for consumption. The inter-State character of the transaction meant that the place where property passed was immaterial; what controlled was that the cocoanuts were delivered outside Orissa and not for consumption within the State. On those admitted facts, Orissa lacked taxing jurisdiction over the sales, and the constitutional challenge succeeded.

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Issues: Whether sales tax could be levied by Orissa on sales of goods which were booked in Orissa but delivered outside the State for consumption.

Analysis: The transaction involved inter-State elements. The constitutional scheme under Article 286(1)(a), read with its Explanation, restricts the taxing power of a State in respect of sales where the goods are delivered outside the State for the purpose of consumption. The place where property passed was held to be immaterial. Since the admitted facts showed that the cocoanuts were delivered outside Orissa and were not delivered in Orissa for consumption, Orissa could not assert taxing jurisdiction over the sales.

Conclusion: The levy of sales tax by Orissa on the impugned sales was not sustainable and the petitioner succeeded on the constitutional challenge.

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