EAST INDIA MATCH FACTORY Vs. STATE OF MADRAS

JUDGEMENT

(1.) THE questions that arise for determination in these two petitions are the same. THE assessees were manufacturers and dealers in matches in the State of Madras. THE assessments in dispute related to 1950-51, that is, after the Constitution of India came into force. THE assessee in T.R.C. No. 117 of 1953 denied his liability to sales tax on a turnover of Rs. 57, 393-10-6. THE turnover in dispute in T.R.C. No. 133 of 1953 was Rs. 5, 90, 619-9-0. THE turnover represented the sales of matches to buyers outside the State of Madras and the matches sold were sent to them out of Madras. What the assessees claimed in the first instance even before the Tribunal was that they were entitled under Section 7 of the Madras General Sales Tax Act, 1939 to rebate of one half of the tax levied on the sales. During the arguments before the Tribunal the assessees claimed that the sales themselves came within the purview of Article 286(1)(a) and the Explanation thereto of the Constitution, and that the sales were not subject to any tax in the State of Madras under the Madras Act.

(2.) THE Tribunal rejected that contention and granted them rebate under Section 7 of the Act, even which the department had refused. THE only point argued before us was whether the turnover was liable to sales tax under the Madras Act. Article 286 runs :-

(3.) THAT the turnover in dispute was that of inter-State trade of the assessees within the meaning of Article 286(2) of the Constitution cannot be in dispute. The goods sold by the assessees were despatched for delivery to the buyers in India but outside the Madras State. Were Article 286(2) alone to be considered, the ban imposed by that clause was not in operation till 31st March, 1951. The President's Order was issued under the proviso to Article 286(2). The right of the Madras State to tax such inter-State sales upto 31st March, 1951, could not be denied. The contention of the assessees was that the State of Madras could not invoke the benefit of the proviso to Article 286(2) and of the President's Order issued thereunder as the sales in question came within the scope of the Explanation to Article 286(1)(a) and the State of Madras had no right at all to tax such sales.It is not every inter-State sale that attracts to itself the provisions of the Explanation to Article 286(1)(a). With reference to inter-State sales effected in Madras, the Explanation could apply only to sales in which the goods have been actually delivered as a direct result of such sale for the purpose of consumption in a State other than Madras. THAT the delivery was the direct result of the sale, and further that the delivery of the goods was for the purpose of consumption in the State in which they were delivered have to be proved as facts. The necessary proof to sustain the claim advanced at a late stage before the Tribunal was not placed before the Tribunal, and the Tribunal had no occasion to find as a fact that the delivery of the goods in question was for the purpose of consumption in the States in which they were delivered. The assessees offered to file affidavits before us to prove that the delivery was for consumption in the States in which the goods were delivered within the meaning of the Explanation to Article 286(1)(a). It is not for us sitting in revision to reopen questions of fact. There was not material enough for the assessees to invoke the benefit of Article 286(1)(a) with the Explanation thereto, whatever the scope of the Article and the Explanation was. In that case, only Article 286(2) could apply and if it did, the proviso and the President's Order issued thereunder justified the levy of the tax by the State of Madras up to 31st of March, 1951.