Actual delivery controls outside-sale exemption, while indirect use in electricity generation defeats the statutory exemption.

Actual delivery, not mere transfer of title, risk, or railway receipts, determines whether cement despatched from Madhya Pradesh to purchasers outside the State is treated as an outside sale under article 286(1)(a); on the stated facts, the goods were not delivered in Madhya Pradesh, so the outside-State sales were not taxable there. An exemption for cement sold to the Madhya Pradesh Electricity Board applied only where the goods were directly used in generation or distribution of electrical energy; cement used for office buildings and staff quarters did not satisfy that condition, so the exemption was unavailable. Availability of an appellate remedy was only a discretionary factor under article 226 and did not bar relief where the facts were admitted.

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Issues: (i) whether the cement sales despatched from Madhya Pradesh to purchasers outside the State were exempt from taxation as outside sales under article 286(1)(a) of the Constitution; (ii) whether sales of cement to the Madhya Pradesh Electricity Board were exempt under section 2(j)(a)(iii) of the Central Provinces and Berar Sales Tax Act, 1947; and (iii) whether the existence of an alternative appellate remedy barred relief under article 226 of the Constitution.

Issue (i): whether the cement sales despatched from Madhya Pradesh to purchasers outside the State were exempt from taxation as outside sales under article 286(1)(a) of the Constitution.

Analysis: The decisive question was the place of actual delivery. Under the constitutional explanation, a sale is deemed to take place in the State where goods are actually delivered as a direct result of the sale for consumption in that State, and actual delivery means physical delivery or delivery putting the purchaser in possession. Mere passing of property, transfer of risk, or delivery of railway receipts does not amount to actual delivery. The goods were not put in the possession of purchasers in Madhya Pradesh but were received at destinations outside the State under the contract of sale.

Conclusion: The outside sales fell within the constitutional explanation and were not taxable by the State of Madhya Pradesh; this issue was decided in favour of the assessee.

Issue (ii): whether sales of cement to the Madhya Pradesh Electricity Board were exempt under section 2(j)(a)(iii) of the Central Provinces and Berar Sales Tax Act, 1947.

Analysis: The exemption applied only to goods sold to an undertaking supplying electrical energy for use in the generation or distribution of such energy. Cement used for constructing office buildings and staff quarters had only a remote connection with generation or distribution and was not directly used in those activities. The statutory condition of direct user in generation or distribution was not satisfied.

Conclusion: The sales to the Electricity Board were not exempt under section 2(j)(a)(iii); this issue was decided against the assessee.

Issue (iii): whether the existence of an alternative appellate remedy barred relief under article 226 of the Constitution.

Analysis: The existence of an appellate remedy is only a discretionary factor and does not constitute an absolute bar. Where the facts are admitted and the tax demand is heavy, refusal of relief merely because an appeal was available would not be a proper exercise of discretion.

Conclusion: Relief under article 226 was not barred by the alternative remedy; this issue was decided in favour of the assessee.

Final Conclusion: The petitions succeeded only in part. The assessment orders were quashed to the extent that they denied exemption for the outside-State sales, while the disallowance of exemption for sales to the Electricity Board was upheld.

Ratio Decidendi: For the constitutional deeming provision on inter-State sales, actual delivery requires physical delivery or delivery placing the purchaser in possession, and not merely transfer of title, risk, or railway documents; a statutory exemption tied to use in generation or distribution applies only to direct use in those activities.

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