Constitutional taxing field limits prevent a non-situs State from taxing inter-State explanation sales or treating out-of-State buyers as last purchasers.

A State can tax only sales that fall within its territorial taxing field under the constitutional fiction in Article 286. Inter-State explanation sales delivered for consumption in Kerala were treated as sales inside the State of delivery and outside Madras, so the Sales Tax Laws Validation Act, 1956 removed the inter-State ban but did not authorise Madras to tax them as local sales. Rule 4-A also did not make the Trichur purchasers the last purchasers in Madras, because they were not purchasers within that State. The stated ratio is that removal of the inter-State trade restriction does not expand a non-situs State's taxing competence.

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Issues: (i) Whether the Sales Tax Laws Validation Act, 1956 could make inter-State "explanation sales" taxable by the Madras State notwithstanding Article 286 of the Constitution. (ii) Whether the purchasers at Trichur were the last purchasers in the State for the purposes of rule 4-A of the Turnover and Assessment Rules.

Issue (i): Whether the Sales Tax Laws Validation Act, 1956 could make inter-State "explanation sales" taxable by the Madras State notwithstanding Article 286 of the Constitution.

Analysis: The transactions were found to be inter-State sales falling within the explanation to Article 286(1)(a), with actual delivery for consumption in Kerala, the delivery-cum-consumption State. The constitutional scheme treated such sales as inside the State of delivery and outside all other States. The Validation Act removed the ban under Article 286(2), but it did not convert outside sales into inside sales or abrogate the prohibition against taxation by a State that was not the situs State under the constitutional fiction. Accordingly, the Madras State could not tax these transactions on the footing urged by the petitioners.

Conclusion: The contention that the Validation Act made the disputed sales taxable in Madras was rejected, and the finding that the sales were outside the Madras State was affirmed.

Issue (ii): Whether the purchasers at Trichur were the last purchasers in the State for the purposes of rule 4-A of the Turnover and Assessment Rules.

Analysis: Rule 4-A fastened liability on the last purchaser in the State, and the burden lay on the dealer to show otherwise. Since the sales were inter-State explanation sales with the situs fixed in Kerala, the Trichur mills were not purchasers in the Madras State for the purpose of the taxing provision. Once the transactions were outside the Madras State's taxing competence, the mills could not be treated as the last purchasers in that State. The petitioners therefore failed to discharge the burden cast upon them.

Conclusion: The purchasers at Trichur were not the last purchasers in the Madras State, and the petitioners remained liable.

Final Conclusion: The revisions were dismissed because the disputed sales were not taxable by Madras on the pleaded basis and the petitioners could not avoid assessment by treating the Kerala buyers as the last purchasers.

Ratio Decidendi: A State can tax only those sales that, under the constitutional fiction, fall within its territorial taxing field; removal of the inter-State trade ban does not authorize a non-situs State to tax an explanation sale or to treat an out-of-State buyer as the last purchaser within its taxing statute.

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