Outside sales under Article 286 turn on where title passes, not where goods are stored, in auction sales.

For sales not covered by the constitutional Explanation to Article 286(1)(a), the decisive test is where property in the goods passes. Auction sales of tea completed at Fort Cochin, where title passed on the fall of the hammer, were therefore treated as outside sales even though the tea was stored in godowns in Travancore-Cochin. Physical storage within the taxing State did not change the situs of the sale because the contract was concluded and title transferred in another State. The controlling prior ruling displaced the contrary High Court view, and the sales were held immune from sales tax by Travancore-Cochin.

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Issues: Whether auction sales of tea concluded at Fort Cochin, where title passed on the fall of the hammer, were "outside" sales within Article 286(1)(a) of the Constitution of India and therefore immune from sales tax in Travancore-Cochin.

Analysis: The governing principle, as applied in the controlling prior decision, is that for sales not covered by the constitutional Explanation, the decisive factor is the State in which property in the goods passes. The fact that the tea was physically stored in godowns within Travancore-Cochin did not alter the situs of the sale where the contract was completed and title passed at Fort Cochin. The contrary view taken by the High Court had already been displaced by the later authoritative ruling on the same factual pattern, and the Court declined to permit a new factual challenge that had not been urged below.

Conclusion: The sales were outside sales for purposes of Article 286(1)(a) and were not taxable by Travancore-Cochin. The assessee succeeds.

Ratio Decidendi: For sales falling outside the constitutional Explanation, the State competent to tax is the State where property in the goods passes, and a sale completed by passing of title in another State is an outside sale immune from taxation by the taxing State.

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