Bachawat, J.
1. This appeal raises a question of the constitutional validity and the legality of sales tax levied in respect of a sale of 1800 wagons by the appellant to the Railway Board, By a letter dated July 2, 1951, the Director, Railway Board, New Delhi, placed with Martin Burn Limited, Calcutta, an order for 3500 Broad Guage, 4 wheeled, covered' Wagons 'CR' type against Railway Board's Programme for 1952-53. The special terms of the order provided for delivery F. O. R. seller's works siding and for payment by F. A. and C. A. O., E. I. Railway. Messrs. Martin Burn Limited are the Managing Agents of the appellant, Indian Standard Wagon Co., Ltd., as also of Burn and Co., Ltd. The order was accepted by Messrs. Martin Burn Limited by their letter dated July 28,. 1951. The letter of acceptance was posted from Calcutta to New Delhi. The letter stated that against the Order 1800 wagons were allocated to the appellant and the balance 1700 wagons were allocated to Burn and Co. Ltd. The wagons were required by the Railway Board for different Railways. Subsequent to the making of the contract and in course of manufacture of the wagons the Railway Board informed the sellers of the distribution by the Railway Board of the wagons to different Railways. Similar communications seem to have been made by the Railway Board with regard to orders for wagons for the 1953-54 and 1954-55 programmes also. On the record there is a letter dated the 13/14th April, 1952 from the Joint Director, Mechanical Engineering, Railway Board, to Martin Burn Limited. This letter encloses several statements. One of the statements shows the distribution to the different railways of the rolling stock ordered against the 1952-53 programme on Messrs. Martin Burn Ltd. The statement shows that 2300 wagons were meant for the Western Railway. A foot note to the statement shows that 500 of these wagons were to be manufactured by Burn and Co, Ltd. and the balance 1800 wagons were to be manufactured by the appellant. By a letter dated 25-7-1952 the General Manager of the Western Railway informed Burn and Co. of the marking to be made on the 2300 wagons meant for the Western Railway. The 1800 wagons allocated to the appellant were in due course manufactured. During the accounting year ending 31-3-1953, the appellant delivered 803 wagons to the buyers. The appellant in due course submitted a sales tax return for the year ending 31-3-1953, in which exemption for the sale of the 803 wagons was claimed on the ground that they were sales to railways for consumption outside West Bengal, This claim for deduction of the sale of 803 wagons was disallowed by the Commercial Tax Officer and he made the assessment on the footing that the sale of these 803 wagons should be included in the total taxable turnover. An appeal from the order of assessment was dismissed. During the year ending 31-3-1954, the appellant delivered the balance 997 wagons to the buyers. In due course, the appellant submitted sales tax return for the year ending 31-3-1954, in which also exemption for the sale of 997 wagons was claimed. This claim was again disallowed and the assessment to sales tax was made on the footing that the sale of 997 wagons should be included in the taxable turnover. The legality of the levy of the sales tax was challenged by the appellant by a writ petition which was presented on 8-9-1955. The principal challenge in that petition was with regard to the levy of sales tax on the sale of 1800 wagons. There was also a challenge to one other minor item to which I shall avert later on Sinha J., issued a rule on September 8. Subsequently the rule came up for hearing.
2. Sinha, J., repelled all the contentions urged before him against the constitutional validity and the legality of the sales tax and by his order dated 28-5-1958 discharged the Rule. The appellant has preferred the appeal from this order.
3. Before Sinha, J., the imposition of the tax was challenged on the ground that it was violative of Article 286 of the Constitution. In this appeal Mr. Das sought to urge a new point, namely, that the tax was also in violation of Article 19(1)(g) of the Constitution. In my opinion, Mr, Das ought not to be allowed to raise this new point in this appeal. A plea of contravention of Article 19(1)(g) of the Constitution should be distinctly averred and taken in the petition. In the present writ petition the levy of the tax was not challenged on this ground. Sinha, J., in his judgment noted that no point had been taken in this matter about any violation of the petitioner's fundamental rights under Article 19(1)(g) This new point was not argued before Sinha, J., nor is it taken in the memorandum of appeal. In these circumstances, we have thought it fit not to allow Mr. Das to urge this new point before us.
4. With regard to the attack on the tax as being violative of Article 286, it is necessary to remember the facts of this case. The contract under which the sale was made was effected by correspondence. The offer was made by letter posted from New Delhi and the acceptance was made by letter sent by post from Calcutta to New Delhi. The Railway Board administers various Railways including the Western Railway. The Railways are all inter-State in character. The Western Railway has railways in several States other than the State of West Bengal and has its headquarters in Ajmer. The Railway Board has its headquarters in New Delhi and the local agents within the State of West Bengal. The seller, Indian Standard Wagon Co., Ltd., carries on business within the State of West Bengal. It has its factory at Burnpore within the State. The wagons were manufactured at Burnpore. The contract provided for delivery F.O.R., works siding of the seller, at Burnpore. In accordance with the contract the wagons were delivered free on rail at Burnpore within the State of West Bengal. The deliveries were taken by the Railway Board through the Western Railway. It is admitted in the petition that the wagons were delivered to the Western Railway at the petitioner's works siding at Burnpore. The wagons were actually handed over to the Divisional Superintendent, Eastern Railway, Asansol, on behalf of the buyers. The property in the goods passed and the sale was completed at Burnpore as soon as the delivery was effected. Under the terms of the contract the payment was made within the State of West Bengal. All the wagons were marked with the letter 'W R' and were required by the Railway Board for the Western Railway.
5. Article 286 of the Constitution as it stood at the relevant time is as follows :
'1. No law of a State shall impose, or authorise the imposition of, a tax On the sale or purchase of goods where such sale or purchase takes place :
(a) outside the State; or
(b) in the course of the import of the goods into, or export of the goods out of, the territory of India.
EXPLANATION : For the purpose of Sub-clause (a), a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consumption in that State, notwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State.
2. Except an so far as Parliament may by law otherwise provide, no law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such Sale or purchase takes place in the course of inter-State trade or commerce : Provided that the President may by order direct that any tax On the sale or purchase of goods which was being lawfully levied by the Government of any State immediately before the commencement of this Constitution shall, notwithstanding that the imposition of such tax is contrary to the provisions of this clause, continue to be levied until thirty-first day of March, 1951.'
6. It may be recalled that subsequently Article 286 was amended by the Constitution (Sixth Amendment) Act, 1956. The history of the amendment is well-known. The effect of the State of Bombay v. United Motors (India) Ltd., : [1953]4SCR1069 , was that all sales which were explanation sales were inter-State sales and were necessarily not sales in course of inter-State trade or commerce and were therefore outside the bans of Article 286(1)(a) as also of Article 286(2). This view was reversed by the Supreme Court itself in the subsequent Bengal Immunity Co. Ltd. v. State of Bihar, (S) : [1955]2SCR603 , which held that an Explanation-sale, though outside the ban of Article 286(1)(a) could still be a sale in course of inter-State trade and commerce and as such within the ban imposed by Article 286(2). This decision occasioned the Sixth Amendment of the Constitution and the enactment of the Sales Tax Validation Ordinance No. III of 1956 which was later replaced by the Sales Tax Laws Validation Act No. VII of 1956. In this appeal we are concerned with the state of law as it stood before the Constitution 'Sixth Amendment) Act, 1956 and with the effect of the Sales Tax Laws Validation Act No. VII of 1956.
7. Before Sinha, J., the imposition of the tax was impugned on the ground that it was violative both of Article 286(1)(a) read with the Explanation and of Article 286(2) of the Constitution.
8. With regard to the complaint regarding the contravention of Article 286(2) of the Constitution Sinha, J., held that the sales were sales in course of niter-State trade or commerce.
9. The learned Advocate General attacked this finding. He contended that the goods were actually delivered in the State of West Bengal in accordance with the terms of the contract of sale which provided for delivery within the State, that though the goods were transported by the buyer outside the State it was no part of the contract of sale that the goods should be so transported, that the sale did not occasion the movement of the goods across the borders of the State that the sale preceded the movement of the goods from one State to another and that though at the time of the delivery the parties might have intended that the goods should be transported across the border of the State the contract of sale itself did not contemplate and did not necessarily involve such transport. There is force in this contention. But for the purposes of this case it is not necessary to decide whether the sales took place in course of inter-State trade or commerce.
10. Sinha, J., also held that the levy of the sales tax on the sales was validated by the Sales Tax Laws Validation Act No. VII of 1956, although such sales were sales in the course of inter-State trade or commerce. Before Sinha, J., it was argued that having regard to Section 27 of the West Bengal Finance (Sales Tax) Act, it could not be said that during the relevant period there was any law of the State of West Bengal imposing or authorising the imposition of tax on a sale which had taken place in the course of inter-State trade or commerce. This argument was repelled by Sinha, J., relying upon the decision of the Supreme Court in Sundararamier and Co. v. State of Andhra Pradesh, : [1958]1SCR1422 . The attack on the tax as being violative of Article 286(2) of the Constitution was not pressed further by Mr. Das in this Court. He conceded that having regard to the decision of the Supreme Court in the case just cited, it must be held in this Court that the levy of the tax on these sales have been validated by the Sales Tax Laws Validation Act no. VII of 1956, even though such sales are sales in the coursel of inter-State trade or commerce. He stated that it might be open to him to argue this point elsewhere,but that he could not urge this point any further in this Court.
11. In this Court Mr. Das concentrated his attack on the legality of the sales tax on the ground that the imposition of the tax was in violation of the constitutional protection given by Article 286(1)(a) read with the Explanation.
12. Quite clearly, the goods were actually delivered as a direct result of the sale in the State of West Bengal. Having regard to the wording of the Explanation to Article 286(1)(a), the further question arises : Was it delivered for the purpose of consumption in any State and if so, in what State
13. Now the Railway Board required the wagons for the purpose of the Western Railway which the Board administers and represents. The Railway Board is not a dealer. As representing the Western Railway the Railway Board is the actual consumer of the wagons. The wagoas of course could not be consumed by eating them. They could be consumed by using them. The wagons are permanent rolling stock. They could not be consumed by one single user. They could be used and enjoyed from time to time. The wagons are ordinarily used for purposes of transporting goods from one point of railway to another. The wagons being meant for the Western Railway they would ordinarily be used for transporting goods from one point of the Western Railway lines to another point of that railway. The railway lines of Western Railway are spread over several States and are all outside the State of West Bengal. In case of through transport of goods the wagons would sometimes be used for carriage of goods from the Western Railway to other Railways and vice versa. In these circumstances it is not possible to say that the wagons were delivered for the purpose of consumption in any one State. It will, therefore, appear that although the wagons were delivered in the State of West Bengal as a direct result of the sale, it cannot be said that such delivery was for the purpose of consumption in the State of West Bengal. On this finding it cannot be said that the sales were Explanation-sales, that is to say, sales as a direct result of which the goods were delivered in any one Stats for consumption in that State.
14. Mr. Das contended that a State can tax only as sale which is an Explanation-sale, that is to say, a sale as a direct result of which the goods were delivered in that State for consumption in that State. His argument is that only an Explanation sale is an inside sale and that if a sale is not an Explanation sale, it must necessarily follow that it is an outside sale, that is to say, a sale outside the State and, therefore, subject to the protection given by Article 288(1)(a) I am unable to accept this contention.
15. The fallacy of the argument lies in the assumption that the source of the taxing power is to be found in the Explanation to Article 230(1)(a) of the Constitution. The power of the State to tar sales arises independently of Article 286. The State has power to tax sales by virtue of Article 245 of the Constitution read with the State List, Entry 54. Article 286 imposes certain restrictions on this power. One of such restrictions is contained in Article 286(1)(a). In view of Article 286(1)(a) a State cannot tax a sale which has taken place outside the State. The Explanation to Article 286(1)(a) introduces 3 fiction. In a case where as a direct result of the sale the goods have actually been delivered in a State for the purpose of consumption in that State, the sale must be deemed to have taken place in that State and by necessary implication must be deemed to have taken place outside all other States. The purpose of the Explanation is to explain what is a sale outside the State. Consequently, the Explanation though affirmative in form is negative in substance. Though in form it states what in certain circumstances should be considered to be an inside sale, its purpose is to define what is a sale outside the State. If the situs of the sale can be fixed by recourse to the Explanation in any particular State, the sale is necessarily outside all other States and is outside even the State in which under the general law the property in the goods has passed by reason of sale. But in a case where the sale does not fulfil the requirements of the Explanation and is, therefore, not an Explanation-sale, its situs cannot be fixed with reference to the Explanation, Mr. Das argues that in such a case the sale must necessarily be an outside sale. I cannot accept this argument. A sale which is not an Explanation-sale may yet be an inside sale, that is to say, a sale inside that State. The Explanation does not say that a sale which is not an Explanation-sale must necessarily be an outside sale. Take a simple case : A, a buyer, buys goods from B in Calcutta. Both are in West Bengal. The contract of sale is effected in West Bengal. The goods are located in West Bengal at the time when the sale is completed and the property in the goods passes. The goods are delivered in West Bengal. The purpose of the buyer, however, is not to consume the goods In West Bengal, but to consume them in some outside place, say Nainital, to which place he intends to depart shortly after the sale. Such a sale is a purely domestic sale. The fact that the buyer intends to consume the goods in some outside place does not convert such a domestic sale into a sale of an inter-State character or make it a sale outside the State. The consumption of the goods bought is not an ingredient of the sale. The place where the goods are consumed cannot localise the sale or fix its venue or situs.
16. In the present case the goods were delivered in West Bengal for purposes of consumption in several States. It is plain, therefore, that the sale is not an Explanation-sale and the situs of the sale cannot be fixed by recourse to the Explanation. The fiction introduced by the Explanation does not come into play. The Eplanation, therefore, does not make the sale a sale outside West Bengal.
17. We have, therefore, to determine independently of the Explanation whether the sale took place inside or outside the State of West Bengal. I think that under the general law independently of and apart from any statutory provision the place of sale of goods for purposes of taxability to sales tax is the place where the goods are situated at the time of sale i.e., at the time when the property in the goods passes. In (S) : [1955]2SCR603 , Venkatarama Ayyar, J., at page 738 observed :
'Considering the matter with particular reference to the power of a State to impose tax, sale is a practical conception having relation to the right to enjoy and dispose of the goods and it is a well-settled feature of all sales-tax legislation that the power to tax the sale is annexed to the place where the goods are located at the time of the contract. Under the general law also, the position is that title to the goods passes in the State in which the goods are situated at the time of the sale.'
18. In this case at the time of the contract of sale the goods were not specific or ascertained. They were subsequently manufactured and were appropriated to the contract of sale. At the time of such appropriation the goods were located in the State of West Bengal. The property in the goods passed within the State of West Bengal. For purposes of taxability it may, therefore, be well said that the sale took place in the State of West Bengal.
19. It is true that the contract of sale was effected by correspondence which passed between New Delhi and Calcutta. The contract, therefore, may be said to have been made partly in Delhi and partlyin the State of West Bengal. But the sale did not take place by the contract itself. The goods were not then in existence. The goods were subsequently manufactured. The sale took place when the property in the goods passed and within the State where the goods were situated when the property so passed.
20. It is true that the goods were meant for consumption in several States. But consumption is not an ingredient of sale and it cannot be said that the sale took place in any of the States where the consumption was to take place.
21. But for Article 286(1)(a) the State of West Bengal had undoubted power to tax the sales. The appellant relies upon the restriction imposed by Article 286(1)(a). It is for the appellant to establish that the sale took place outside the State of West Bengal. The appellant has failed to discharge this burden.
22. The construction of Article 286(1)(a) and of the Explanation is elaborately discussed in the several judgments which were delivered in the Bengal 'Immunity Company's case (S) : [1955]2SCR603 and also in the United Motors' case : [1953]4SCR1069 . Stary passages from those judgments necessarily give a somewhat artificial view of the opinion expressed therein. I think, however, that the following passage in the judgment of Das, Acting C. J., in the case of (S) : [1955]2SCR603 , fairly represents one aspect of the view which was taken by the majority of the Judges in that case :
'The shifting of the 'situs' of a sale or purchase from its actual 'situs' under the general law to a fictional 'situs' under the Explanation takes the sale or purchase out of the taxing power of all States other than the State where the 'situs' is fictionally fixed. That is all that Clause (1) (a) and the Explanation do.
This fixing of a 'situs' for a sale or purchase in any particular State either under the general law or under the fiction does not conclude the matter. It has yet to be ascertained whether that sale or purchase which by virtue of the Explanation has taken place in the delivery State was made in the course of inter-State trade or commerce. For this purpose the Explanation can have no relevancy or application at all.'
These observations clearly seem to bring out two things. They show firstly mat it is sometimes possible to fix the situs under the general law. Secondly, they also show that the Explanation has a limited function and that it shifts the actual situs of only the Explanation-sales under the general law to a fictional situs.
23. Mr. Das strongly relied upon the following observations of Patanjali Sastri, C. J., in : [1953]4SCR1069 :
'We are, therefore, of opinion that Article 286(1)(a) read with the Explanation prohibits taxation of sales or purchases involving inter-State elements by all States except the State in which the goods are delivered for the purpose of consumption therein in the wider sense explained above. The latter State is left free to tax such sales or purchases, which power it derives not by virtue of the Explanation but under Article 246(3) read with Entry 54 of List II.'
24. I think that in this passage the learned Chief Justice was dealing with a sale which involves inter-State elements and as a direct result of which the goods have been delivered in a State for the purposes of consumption in that State. Now in the present case though the delivery was in the State of West Bengal such delivery was not for the purposeof consumption therein. The present case, therefore, is not a case to which the learned Chief Justice was referring.
25. It may be recalled that in the Bengal Immunity Company's case (S) : [1955]2SCR603 , Ven-katarama Ayyar, J,, was inclined to follow the view of the majority in the United Motors Ltd, case, : [1953]4SCR1069 . Now observe how Venkatarama Ayyar, J., in the case of (S) : [1955]2SCR603 deals with the matter. The learned Judge there observed :
'Thus, if A in Bengal sells to B in Bihar, and if in his turn B sells the same goods to C in U.P. for local consumption, there will be inter-State commerce under Article 286(2) and in the course thereof, there will be two sales. Taking first the sale from Bengal to Bihar, Bengal can tax it under Article 286(1)(a) because the Explanation thereto is not applicable as the delivery to Bihar is not for localconsumption. But Article 286(2) would interpose a bar.'
In this illustration the first sale was by the seller in Bengal to the buyer in Bihar, but the sale was not for local consumption in Bihar. The sale was not, therefore, an Explanation-sale and yet the learned Judge points out that the State of Bengal could tax the sale. If this observation is to be followed, there can be no doubt that the State of West Bengal had power to tax the sales though the sale was not an Explanation-sale for the sale was in West Bengal and there is no question of any ban under Article 286(2). The learned Judge then continued :
'Bihar cannot tax the sale under Article 286(1)(a)because that is an outside sale, the Explanation being inapplicable. Coming next to the sale by Biharto U. P., Bihar .will be entitled to tax it under thebody of Article 286(1)(a) as the sale took place insideits limits. But it cannot do so as under the Explanation, it becomes an outside sale. But U. P. will beentitled to tax the sale under the Explanation as itwas for consumption within that State. Thus, theeffect of the combined operation of both Article 286(2)and Article 286(1)(a) read with the Explanation isthat the only State which can tax the sale is theone in which the goods are sold for local consumption.'
26. Now we have to Judge the present case in the light of the fact that the ban under Article 286(2) has been removed. The only question is whether the case comes within the restriction imposed by Article 286(1)(a) read with the Explanation. In my opinion for the reasons given above the sale cannot be said to be a sale outside the State of West Bengal and the power of the State of West Bengal to tax the sale is not taken away by Article 286(1)(a) read with the Explanation.
27. It must also be remembered that in the later Bengal Immunity Company's case, ((S) : [1955]2SCR603 , the majority of the Judges of the Supreme Court while expressly overruling the view of the majority Judges in the United Motors' case, : [1953]4SCR1069 with regard to the effect of the Explanation to Article 286(1)(a) on Article 286(2) severely commented upon the opinion generally expressed by Patanjali Sastri, C. J., with regard to Article 286(1)(a) and the Explanation. The matter is discussed by Das, Acting C. J, in (S) : [1955]2SCR603 .
28. The other cases relied upon by Mr. Das tire all distinguishable and may be briefly noticed. In Sakhigopal Cocoanut Growers Co-operative Society v. State of Orissa, : AIR1953Ori334 , the 'Orissa High Court had occasion to deal with a case of sale in which the goods were actually delivered outside the State of Orissa for consumption outside the State and it was held that the State of Orissa had no power to tax the sale. The sale was an Explanation-sale and on the facts of the case was necessarily, having regard to the Explanation to Article 286(1)(a), a sale outside the State of Orissa.
29. In Firm Raghubar Dayal Kallu Mal v. State of U. P. Lucknow, (S) : AIR1955All653 , relied upon by Mr. Das, a single Judge of the Allahabad High Court had to deal with a case of sale and purchase outside the State of Uttar Pradesh under which the goods were actually delivered in the State of Uttar Pradesh. The learned Judge held that the sale could not be taxed in U. P. without enquiring into the question whether or not the delivery of cloth in question in U. P. was for the purpose of consumption therein. The case was decided in the background of the United Motors' case : [1953]4SCR1069 , The sale was a sale in course of inter-State trade or commerce and according to the United Motors' case it could be taxed by the State in which the goods were actually delivered for the purposes of consumption therein.
30. In my opinion, the sales in this case cannot be said to have taken place outside the State of West Bengal and as such the levy of the sales tax cannot be said to have been banned or prohibited by Article 286(1)(a) read with the Explanation.
31. The learned Advocate General also contended that even though the levy of the sales tax might have been banned by Article 286(1)(a) read with the Explanation, such a ban had also now been lifted by the Sales Tax Laws Validation Act VII of 1956. Having regard to my conclusion on the main question, it is not necessary to deal with this point.
32. The attack on the constitutionality and legality of the sales tax with regard to the sales of 1800 wagons must, therefore, fail.
33. In this appeal Mr. Das also sought to attack the legality of the assessment order in respect of sales for the period ending March 31, 1954 in so far as the assessing authorities included in the gross turnover, sales of the value of Rs. 66492/- on the ground that such sales were prior to March 31, 1949, and as such were exempt from the payment of sales tax under Section 5 (2) (a) (iii) of the Bengal Finance (Sales Tax) Act of 1941. The point was pleaded in paragraph 24 of the petition. Mr. Das pointed out that in the affidavit-in-opposition there was no proper denial of the facts averred in paragraph 24 of the petition. It seems to me, however, that Mr. Das ought not to be allowed to raise this point in this Court. In his judgment Sinha, J., has stated that nothing was heard in the argument with regard to this item and that he, therefore, need not deal with it. It seems clear that the point was not pressed before him. No complaint is made in the memorandum of appeal with regard to this item, nor is it said that the learned Judge erroneously failed to deal with the attack based on it. Besides, the materials on the record with regard to this item are somewhat scanty. There is no reliable evidence on the record as to show that the sales in respect of which this deduction of Rs. 66,492/-was claimed were made Prior to March 31, 1949. The verification in support of the petition and of the further affidavit of Dhirendra Nath Banerji show that the statements and in the statement (Exhibit C) annexed to the further affidavit are based on information derived from the records kept at the office of the petitioner. The records relied upon are not before this Court. The materials on the record do not show clearly whether the deduction claimed on this ground was at all disallowed and if so, on what ground. I have no doubt that if the points were pursued before Sinha, J,, he would have called for further materials. In these circumstances, it will be a travesty of justice if we allow Mr. Das to raise this point. We have, therefore, decided that Mr. Das ought not to be allowed to raise this point in this appeal.
34. No other point has been argued before us.
35. It must follow, therefore, that the appeal must fail. The appeal is dismissed with costs. Certified for two counsel.
Lahiri, C.J.
36. I agree.