Statutory exemption on inter-State sales cannot be denied by circular-based constructive delivery rules or fixed transit deadlines.

Administrative circulars cannot override the statutory conditions for exemption on subsequent inter-State sales, and a fixed 10-day or 30-day transit limit could not be used to treat retained goods as constructively delivered. The court held that such directions intruded into the assessing authority's quasi-judicial function and were ultra vires. It further held that constructive delivery could not be imported to defeat exemption where movement under the statutory scheme continued and the required declarations and certificates were furnished; mere invoices, entries, challans, or passage of time did not end transit.

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Issues: (i) Whether the Commissioner could, by circular, prescribe a fixed period of 10 days or 30 days and direct the assessing authorities to treat retention of goods beyond that period as constructive delivery so as to deny exemption under section 6(2) of the Central Sales Tax Act, 1956. (ii) Whether the doctrine of constructive delivery could be imported to defeat exemption for subsequent sales effected by transfer of documents of title during movement of goods.

Issue (i): Whether the Commissioner could, by circular, prescribe a fixed period of 10 days or 30 days and direct the assessing authorities to treat retention of goods beyond that period as constructive delivery so as to deny exemption under section 6(2) of the Central Sales Tax Act, 1956.

Analysis: Section 6(2) grants exemption where the statutory conditions are satisfied. The judgment holds that no provision in the sales tax law empowered the Commissioner to impose a rigid time limit or to bind assessing authorities by an administrative view on the legal end-point of transit. Such instructions also interfered with the quasi-judicial function of the assessing authorities and were contrary to the jurisdictional precedent governing the field.

Conclusion: The circulars prescribing 10 days and 30 days were held ultra vires and quashed.

Issue (ii): Whether the doctrine of constructive delivery could be imported to defeat exemption for subsequent sales effected by transfer of documents of title during movement of goods.

Analysis: The statutory scheme in section 3(b) and Explanation 1 fixes commencement and termination of movement by reference to delivery to and from the carrier or bailee. The decision applies the settled meaning of transit under the Sale of Goods Act and holds that constructive delivery arises only where the carrier changes character and holds the goods on behalf of the buyer by agreement. Mere entries, invoices, challans, or lapse of time do not amount to constructive delivery, and the statutory exemption cannot be denied on that basis when the prescribed declarations and certificates are furnished.

Conclusion: Constructive delivery could not be invoked to deny exemption under section 6(2), and the assessee remained entitled to the benefit of the statutory exemption.

Final Conclusion: The revision petitions failed because the impugned circulars had no legal basis and the assessee's subsequent sales satisfied the statutory requirements for exemption under the Central Sales Tax Act.

Ratio Decidendi: Administrative circulars cannot override the statutory conditions governing exemption on subsequent inter-State sales, and transit ends only on actual delivery or a legally recognised change in the carrier's character, not by a presumed constructive delivery based merely on passage of time.

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