Place of actual delivery controls sales tax situs when goods are delivered outside the taxing State.

Coal purchases were treated as taking place outside Bombay because the goods were despatched from Bihar on f.o.r. terms, inspected by the buyer's agent at the Bihar railhead, and actually delivered there. Under Article 286(1)(a) and the then applicable constitutional explanation, the place of actual delivery as a direct result of the sale governed the situs of the purchase for tax purposes. Since delivery occurred in Bihar, the deeming provision did not treat the transaction as occurring in Bombay, and the passing of property there did not alter that result. The purchases were therefore not taxable as purchases within Bombay.

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Issues: Whether the coal purchases were effected outside the State of Bombay so that the purchase tax could not be levied by reason of Article 286(1)(a) of the Constitution of India and section 46 of the Bombay Sales Tax Act, 1953.

Analysis: The only material on record showed that the coal was despatched by the collieries in Bihar on f.o.r. basis to the nearest railhead in Bihar, that the assessees' agent inspected the goods there, and that actual delivery was taken at that railhead. Under the constitutional explanation then applicable, a purchase is deemed to take place in the State where the goods are actually delivered as a direct result of the sale for consumption in that State. Since actual delivery occurred in Bihar, outside the then State of Bombay, the deeming provision did not operate to treat the purchase as one taking place in Bombay. The passing of property in Bihar also supported the conclusion that the transaction was completed there.

Conclusion: The purchases were effected outside the State of Bombay and were not taxable as purchases within Bombay; the issue was answered in favour of the assessees.

Ratio Decidendi: For purposes of Article 286(1)(a), the place of actual delivery of goods pursuant to the sale determines whether the transaction is inside or outside the State, and if delivery is taken outside the State, the sale or purchase cannot be treated as having taken place within that State merely because property passed elsewhere.

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