Sales tax exemption under Article 286 depends on proving out-of-State delivery and intended consumption in the destination State.

Sales of oil-seeds delivered outside Madhya Pradesh were not exempt under the Explanation to Article 286(1)(a) because the constitutional fiction applied only where the out-of-State delivery was a direct result of the sale and the goods were delivered for consumption in the State of first delivery. Mere proof of delivery outside the taxing State was insufficient. The burden to establish both statutory conditions for the exemption rested on the assessee, and that burden was not discharged, so the sales remained liable to sales tax.

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Issues: Whether the sales of oil-seeds worth Rs. 1,50,386-2-9, delivered outside Madhya Pradesh, were covered by the Explanation to Article 286(1)(a) of the Constitution and were therefore exempt from sales tax.

Analysis: The constitutional Explanation applied only where goods were delivered outside the taxing State as a direct result of the sale for the purpose of consumption in the State of first delivery. The assessee had shown only that the goods were delivered outside Madhya Pradesh, but had not established that the delivery was for consumption in the destination State. Mere delivery outside the State did not satisfy the statutory condition, and the burden of proving entitlement to the constitutional exemption lay on the assessee. The legal fiction under Article 286 could not be invoked unless both requirements were proved.

Conclusion: The sales did not fall within the Explanation to Article 286(1) of the Constitution and were not exempt from sales tax, so the answer was against the assessee and in favour of the Revenue.

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