Inter-State sales for consumption exemption applies when goods are delivered outside the State; actual consumption need not be proved.

Goods delivered outside a State for intended consumption there are covered by the constitutional exemption in Article 286(1)(a) if the sale directly results in such delivery. Actual proof that the goods were in fact consumed in the destination State is not required. The governing legal position is that delivery outside the State for consumption there is sufficient, and earlier reasoning demanding proof of actual consumption was incorrect in law.

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Issues: Whether sales of goods despatched outside the State for consumption there were taxable under the Orissa Sales Tax Act despite the constitutional bar in Article 286(1)(a), and whether proof of actual consumption in the destination State was necessary.

Analysis: The Court held that for the purpose of the Explanation to Article 286(1)(a), it is enough if the assessee shows that the goods were delivered outside the State as a direct result of the sale for consumption in that State. Actual proof of consumption is not required. On the record, the goods had been sent to places outside Orissa for intended consumption, so the earlier view requiring proof of actual consumption was incorrect in law.

Conclusion: Actual consumption in the destination State need not be proved, and delivery outside the State for intended consumption is sufficient to attract the constitutional exemption.

Final Conclusion: The reference was not answered on the merits, and the proceeding was disposed of without costs, although the Court expressed a clear view on the governing legal position.

Ratio Decidendi: For the purposes of the Explanation to Article 286(1)(a) of the Constitution of India, a dealer need only show that goods were delivered outside the State as a direct result of the sale for consumption there; proof of actual consumption is not necessary.

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