Situs of sale and Article 286: delivery for multi-state use did not bar West Bengal's sales tax power.

Sales tax on wagons was examined against Article 286(1)(a) and its Explanation, which bars a State from taxing sales only where goods are actually delivered as a direct result of the sale for consumption in another State. Where the wagons were manufactured and delivered in West Bengal and property passed there, the Explanation did not apply merely because the Railway Board intended use across several States. A transaction not covered by the Explanation is not for that reason an outside sale. The situs of sale remained within West Bengal, so the State's taxing power was not constitutionally barred and the assessment was upheld.

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Issues: Whether the sales tax levied on the sale of wagons was barred by Article 286(1)(a) read with the Explanation to the Constitution on the ground that the sales were outside the State or whether the sales were taxable within West Bengal.

Analysis: The wagons were manufactured and delivered within West Bengal, and the property in the goods passed there. The Explanation to Article 286(1)(a) applies only where goods are actually delivered as a direct result of the sale for the purpose of consumption in that State. Here the wagons were delivered for use by the Railway Board on the Western Railway, spread over several States, so the delivery could not be treated as for consumption in West Bengal. A transaction not answering the Explanation is not for that reason an outside sale. The power of the State to tax sales arises under Article 245 read with Entry 54 of List II, subject only to the constitutional restrictions in Article 286. On the facts, the situs of the sale was within West Bengal, and the appellant failed to establish that the sales were outside the State.

Conclusion: The levy of sales tax was not prohibited by Article 286(1)(a) read with the Explanation, and the challenge to the assessment failed.

Final Conclusion: The appeal failed on the main constitutional challenge, and the assessment was sustained.

Ratio Decidendi: A sale is not outside the taxing State merely because the buyer intends to use the goods in several States; unless the delivery is as a direct result of the sale for consumption in that State, the Explanation to Article 286(1)(a) does not shift the situs of sale or bar the State's taxing power.

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