Territorial nexus and deeming fiction justified Bihar sales tax on goods manufactured in the State despite out-of-State delivery.

Section 2(g) of the Bihar Sales Tax Act, as amended, was upheld as within legislative competence because the deeming fiction located the situs of sale in Bihar where the goods were in Bihar at the agreement date or were produced or manufactured there. That territorial nexus was sufficient to support taxation under Entry 48 of List II, so sales of Bihar-manufactured goods remained taxable in Bihar even if completion or delivery occurred outside the State. The challenge to the provision failed and the assessments were sustained.

---

---

Issues: Whether section 2(g) of the Bihar Sales Tax Act, XIX of 1947, as amended, was within the legislative competence of the Bihar Legislature and whether sales of goods manufactured in Bihar but completed or delivered outside Bihar could nevertheless be treated as sales in Bihar for the purpose of sales tax.

Analysis: The charging provision fastened liability on sales, and the second proviso to section 2(g) did not enlarge the concept of sale but created a deeming fiction locating the situs of the sale in Bihar in specified circumstances. Where the goods were actually in Bihar at the date of the agreement of sale, or were produced or manufactured in Bihar by the seller, the State had a sufficient nexus with the transaction to support taxation under Entry 48 of List II of the Government of India Act, 1935. The validity of the provision had already been upheld in the earlier binding decision, and the present appeals raised the same question of competence and taxability.

Conclusion: Section 2(g), as amended, was valid and sales of goods produced or manufactured in Bihar were taxable in Bihar even if the sale was completed or delivery was made outside the State.

Final Conclusion: The challenge to the taxing provision failed, and the assessments based on the impugned sales were sustained.

Ratio Decidendi: A State may validly tax a sale where the statute, by a deeming fiction, treats the sale as having occurred within the State on the basis of a sufficient territorial nexus created by the presence, production, or manufacture of the goods in that State.

---