1955 (9) TMI 38 - SUPREME COURT

Whether that proviso to Article 286(2) also saves the transactions of sale or purchase covered by the Explanation to Article 286(1)(a) from the ban imposed therein?

Held that:- The whole theory, therefore, of "inside sales" falls to the ground and the only thing which we are left with is that these transactions were inter-State transactions in which as a direct result of such sales the goods were actually delivered for the purpose of consumption in the State of Uttar Pradesh. The Explanation to Article 286(1)(a) deter- mined the State of Uttar Pradesh to be the State in which the sales took place and which alone was entitled to tax these transactions, the State of Madhya Pradesh becoming an "outside" State for the purpose.

Apart from the ban imposed on the State of Madhya Pradesh under Article 286(1)(a) and the Explanation thereto, these transactions were also in the course of inter-State trade or commerce and were hit by the ban of Article 286(2). The President's order no doubt lifted that ban but was not competent to lift the ban under Article 286(1)(a) and the Explanation thereto with the result that in spite of that order the State of Madhya Pradesh was not in a position to impose a tax on these transactions during the post-Constitution period. The assessment of these transactions to tax for the post-Constitu- tion period, therefore, is invalid and cannot be sustained. Allow the petition, set aside the said order dated the 14th July, 1954, and the matter will go back to the Assessment Officer for re-assessment of the petitioners in accordance with law.