Actual delivery for consumption controls sales tax nexus; carrier dispatch outside the State does not validate the levy.

Sales consigned to buyers outside the State were treated as outside Mysore sales tax where the goods were not actually delivered in Mysore for consumption in the State. Delivery to a common carrier for despatch outside the State was not actual delivery to the purchaser or his agent, so the constitutional bar under Article 286(1)(a) and its Explanation applied. A presidential continuance order under Article 286(2) was explained as lifting only the inter-State trade bar and not the separate prohibition in Article 286(1)(a). On that basis, the levy on the disputed outside-State sales was negatived.

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Issues: (i) Whether sales of goods consigned from Mysore to buyers outside the State were exempt from Mysore sales tax because they were not actually delivered in Mysore for the purpose of consumption in the State; (ii) whether the President's continuance order under Article 286(2) of the Constitution of India removed the constitutional bar against taxing such sales.

Issue (i): Whether sales of goods consigned from Mysore to buyers outside the State were exempt from Mysore sales tax because they were not actually delivered in Mysore for the purpose of consumption in the State.

Analysis: Article 286(1)(a) and its Explanation prohibit a State from taxing a sale where the sale is outside the State, while the Explanation treats a sale as taking place in the State only when the goods are actually delivered there as a direct result of the sale for consumption in that State. Delivery to a common carrier for despatch to an outside destination does not amount to actual delivery to the purchaser or his agent. On the facts, the goods were consigned for consumption outside Mysore and were not actually delivered in Mysore to the buyers.

Conclusion: The sales were not taxable in Mysore and the issue is decided in favour of the assessee.

Issue (ii): Whether the President's continuance order under Article 286(2) of the Constitution of India removed the constitutional bar against taxing such sales.

Analysis: The President's order under the proviso to Article 286(2) only lifted the ban relating to inter-State trade or commerce under that clause. It did not affect the independent prohibition contained in Article 286(1)(a) and its Explanation. Since the sales were hit by Article 286(1), the continuance order could not validate the levy.

Conclusion: The continuance order did not authorise the tax and the issue is decided in favour of the assessee.

Final Conclusion: The reference was answered against the revenue, and the assessee's liability to Mysore sales tax on the disputed outside-State sales was negatived.

Ratio Decidendi: Delivery to a common carrier for despatch outside the State is not actual delivery within the meaning of Article 286(1)(a) of the Constitution of India, and a presidential continuance order under Article 286(2) does not override that separate constitutional prohibition.

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