Delivery to carrier completes local sale when risk passes there, defeating outside-State and inter-State tax exemptions.

Where a contract provides for delivery at the factory siding and risk passes on handing the goods to the carrier, delivery to the carrier is treated as delivery to the buyer under Section 39(1) of the Sale of Goods Act. On that basis, the goods are actually delivered within the State, so the sale is not outside the State under the Explanation to Article 286(1)(a). The same contract terms also mean there is no sale in the course of inter-State trade under Article 286(2), because the seller is not obliged to move the goods to another State; the later movement occurs under the buyer's arrangements. The result is that the turnover remains taxable within the State.

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Issues: (i) Whether the sales were outside the State within the Explanation to Article 286(1)(a) of the Constitution because the cement was despatched to destinations outside the State under F.O.R. destination contracts; (ii) Whether the sales were in the course of inter-State trade or commerce within Article 286(2) of the Constitution.

Issue (i): Whether the sales were outside the State within the Explanation to Article 286(1)(a) of the Constitution because the cement was despatched to destinations outside the State under F.O.R. destination contracts.

Analysis: The Explanation applies only where the goods are actually delivered outside the State as a direct result of the sale. The contractual terms showed that delivery was at the factory siding, that risk passed when the goods were handed to the carrier and a railway receipt was obtained, and that claims for loss or damage lay against the carrier. Under Section 39(1) of the Sale of Goods Act, delivery to the carrier was prima facie delivery to the buyer. The carrier was therefore treated as the buyer's agent for receipt of the goods, and the goods were actually delivered within the State.

Conclusion: The sales were not outside the State within the Explanation to Article 286(1)(a), and the assessee was not entitled to that exemption.

Issue (ii): Whether the sales were in the course of inter-State trade or commerce within Article 286(2) of the Constitution.

Analysis: A sale is in the course of inter-State trade only if the contract itself requires movement of goods from one State to another. On the terms of the contracts and the course of dealings, there was no obligation to deliver the cement at any place other than the factory site. Once the goods were consigned to the railway wagons, the sale was complete within the State and the subsequent movement to destinations outside the State was under the buyers' arrangements and not under a contractual obligation of the seller.

Conclusion: The sales were not in the course of inter-State trade or commerce and Article 286(2) did not bar the levy of sales tax.

Final Conclusion: The disputed turnover remained taxable within the State, and the revision failed.

Ratio Decidendi: Where, under the contract of sale, the seller's responsibility ends on delivery of the goods to the carrier at the factory siding and the carrier is the buyer's agent for receipt, the sale is completed within the State and neither the outside-State delivery exemption nor the inter-State trade prohibition applies.

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