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Issues: (i) Whether the sale of aviation spirit delivered at Dum-Dum Aerodrome to foreign-bound aircraft was an outside sale within Article 286(1)(a) of the Constitution of India; (ii) Whether such sale was in the course of export out of the territory of India within Article 286(1)(b) of the Constitution of India.
Issue (i): Whether the sale of aviation spirit delivered at Dum-Dum Aerodrome to foreign-bound aircraft was an outside sale within Article 286(1)(a) of the Constitution of India.
Analysis: The Explanation to Article 286(1)(a) creates a legal fiction limited to sales where goods are actually delivered as a direct result of the sale for consumption in another State. Here the sale and delivery both took place within West Bengal, and the goods were not delivered in another State for consumption there. Once the goods were delivered and the sale was complete inside the State, the transaction remained an intra-State sale for the purpose of the taxing power.
Conclusion: The transaction was not an outside sale and did not fall within Article 286(1)(a); the contention failed.
Issue (ii): Whether such sale was in the course of export out of the territory of India within Article 286(1)(b) of the Constitution of India.
Analysis: A sale is protected by Article 286(1)(b) only when it itself occasions export or forms part of the integrated process of export. The petitioner sold and delivered the aviation spirit inside the State to customers in India, and its role ended on delivery. The subsequent movement of the aircraft beyond India, and the use or consumption of the fuel during flight, did not convert the seller's completed local sale into an export sale. A sale for the purpose of a foreign journey is not the same as a sale in the course of export.
Conclusion: The transaction was not a sale in the course of export and did not qualify for exemption under Article 286(1)(b); the contention failed.
Final Conclusion: The State was entitled to levy sales tax on the impugned sales of aviation spirit, and the writ application was liable to be dismissed.
Ratio Decidendi: Article 286 exempts only those sales that are legally and directly outside the State or that themselves occasion export; a completed intra-State sale to a buyer in India does not become exempt merely because the goods are intended for use in foreign-bound movement.
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