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PETITIONER: BENGAL TIMBER TRADING CO.  LTD.

       Vs.

RESPONDENT: COMMISSIONER  OF SALES TAX, MADHYAPRADESH

DATE OF JUDGMENT: 01/02/1967

BENCH: MITTER, G.K. BENCH: MITTER, G.K. RAO, K. SUBBA (CJ) SHAH, J.C. SHELAT, J.M. BHARGAVA, VISHISHTHA

CITATION:  1967 AIR 1348            1967 SCR  (2) 547

ACT: Constitution  of India, 1950, Art. 286(1)  (a)  Explanation, prior to amendment by the Constitution (Sixth Amendment Act) 1956-Sale  of railway sleepers-"Actually delivered"  meaning of--Question to be considered for decision whether  delivery within the State--"F.O.R. used in connection with price  and not  place-Effect of--Liability to sales-tax under C.P.  and Berar Sales Tax Act (21 of 1947).

HEADNOTE: The appellant entered into a contract with the President  of India  for the supply of railway sleepers.  The  consignees, to whom the sleepers were to be despatched ’according to the instructions  given to the appellant under cl. 11(a) of  the conditions  of  contract, were outside the State  of  Madhya Pradesh.  The sleepers were booked by rail to the consignees from  Dhamtari  railway station in Madhya Pradesh.   In  the third  column in the Schedule to the contract, Dhamtari  was shown as the place of delivery.  On the question whether the sales  came under the Explanation to Art. 286(1) (a) of  the Constitution  prior  to its amendment  by  the  Constitution (Sixth  Amendment) Act, 1956 and were therefore exempt  from sales-tax under the C.P. and Berar Sales Tax Act, 1947,  the High Court held : (1) that ’the property in the goods passed to  the  purchaser at Dhamtari, (2) that the  sleepers  were actually  delivered  to the purchasers at  that  place,  and (3)that  the  sales  were completed  at  Dhamtari  and  were therefore liable to tax. In appeal to this Court, HELD : The sales were covered by the Explanation and as such were not taxable by the State of Madhya Pradesh. [557 A-B] (1)  The  question is not when and where, under the  general law,  the title to the goods passed under the contract,  but whether  actual  delivery  of  the  goods  took  place,  for consumption outside the State of Madhya Pradesh so as to  be within the deeming provision of the Explanation. [556 B-C] (2)  In  the fifth column in the Schedule to  the  contract, relating  to  rate, the expression "F.O.R was used  only  in connection with the price of the goods.  Therefore, it  only

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meant  that the rate was to be inclusive of all  charges  of putting  the  goods on rail and had nothing to do  With  the place  of  delivery.   Further,  the  expression   "actually delivered" in the Explanation means physical delivery of the goods  or  such  other action as puts the  goods  1  in  the possession of the purchaser but does not include  symbolical or notional delivery such as entrustment to the railway as a common carrier, [550 C; 553 F-G; 555 D] Singareni  Collieries Co. Ltd. v. State of Andhra Pradesh  & Ors.,[1966] 2 S.C.R. 190 followed. Sup. Cl/67-6 548 (3)  All  the clauses of the contract have to be read  as  a whole  to find out the intention of the parties as to  where the actual delivery was to take place.  So read, cis. 3, 11. 12  and 14 of the contract are not merely conditions  super- imposed  after the actual delivery of the goods.  They  show that,  while  the  major  part  of  the  operations  of  the appellant  with regard to delivery were to be  performed  at Dhamtari,  he  was  not  relieved of  all  liability  as  to delivery  until  the  goods were  finally  accepted  at  the destination the consignee, and that actual physical delivery was  not  to  be taken as complete  before  the  goods  were accepted  by the consignee at the destination.  Clause  3(a) links  delivery with final acceptance, which,  according  to cl.  11(g), could only "be after the goods had  reached  the destination  and  were  acknowledged  as  accepted  by   the consignee.  Clause 11(g) also shows that notwithstanding the fact  that the goods had been passed by the Sleeper  Passing Officer  at Dhamtari, they had been put on rail  within  the period, of contract at the said station, the Sleeper Passing Officer  had  given the appellant a passing  certificate  in terms  of  cl.  10 and the Station Master  at  Dhamtari  had issued a tally receipt for the number of sleepers loaded the consignee  still had the right to inspect the goods  at  the destination  and reject any which were not in terms  of  the contract; and such rejected goods were to be treated as non- delivered.   The place of actual delivery, in the  light  of all  the circumstances., could only be the  destination  and the  goods  could  only be said to be  fully  delivered  and finally  accepted  after  they  were  acknowledged  at   the destination,  and since consumption took place only  in  the State  to  which the goods were despatched, the  gales  came within the purview of the explanation, [554 H; 55-5 A-D; 556 B-D] Birendranath  Guha & Co. v. Stwe of Bihar, 5 S.T.C. 273  and D.,N.  Dutta  v. Commissioner of Sales Tax,  Orissa,  I.L.R. [1961] Cuttack 622 overruled.

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 398 to 400 of 1966. Appeals by special leave from the judgments and orders dated March 6,1964 of the Madhya Pradesh High Court in M.C.C. Nos. 90, 91 and II 0 of 1963 respectively.  ... M. C. Setalvad, Shankar Ghosh and P. N. Gupta, for  the appellant (in all the appeals). B.  Sen  and I. N. Shroff, for the respondent  (in  all  the appeals). The Judgment of the Court was delivered by Mitter, J. These are three appeals by leave granted by  this Court  from orders of reference under section 44(1)  of  the Madhya -Pradesh General Sales Tax Act, 1958 at the  instance

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of the Commissioner of Sales Tax, Madhya Pradesh to the High Court in that State.  The question in each of the references was,  whether, in the facts and circumstances of  the  case, the  sales  of  sleepers (for railways)  made  by  the  non- applicant  (Bengal  Timber  Trading  Co.  I-Ad.)  under  the agreement  with the President of India came under  Art.  286 (1) (a) of the Constitution read with the Explanation there- to  and  therefore were exempt from the  imposition  of  tax under ’the C.P. and Berar Sales Tax Act, 1947 ?                             549 Except  for the amounts which varied from year to  year  in- volved in the sales, the facts and circumstances were common in  all  the  three cases.  The periods for  which  tax  was sought to be imposed were from 1st July - 1950 to 30th  June 1951,  :from  1st July 1951 to 30th June 1952 and  from  1st July 1952 to 30th June 1953.  It will be noted that all  the three periods are prior to the amendment of Art. 286 of  the Constitution  by  the Constitution’ (Sixth  Amendment)  Act, 1956.   The relevant portion of Art. 286 as it stood  during the years in question read as follows :-               "286.  (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 purposes  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  pur-               pose    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. The true meaning of the said Article and Explanation came up for  consideration in a number of decisions of  this  Court. Its  real  purpose was to prevent "imposition of  an  unduly heavy burden upon the consumers by multiple taxation upon  a single  transaction  of sale" Bajarang Jute  Mills  Ltd.  v. State  of Andhra Pradesh(1).  In effect the  Explanation  to the Article created a fiction and fixed the State "in  which the actual delivery of the goods took place for the  purpose of  consumption  there" as the only place  where  sales  tax could  be  levied  as was pointed  out  in  Bengal  Immunity Company Ltd. v. The State of Bihar and Ors.(2). There it was said  that "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".  The earlier decisions  of this Court were noted in Bajarang Jute Mills’ case(1) and it was there observed :               "It  is now well-settled that by  Art.  286(1)               [as  it  stood before it was  amended  by  the               Constitution  (Sixth  Amendment)  Act,   1956]               sales as a direct result of which goods               (1) 15 S.T.C. 430 at 433.               (2) [1955] 2 S.C.R. 603, 651,               550               were  delivered in a State for consumption  in               such State i.e., the sales falling within  the

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             Explanation to Art. 286(1) were fictionally to               be  regarded  as  inside that  State  for  the               purpose  of  cl.  (1) (a) and  so  within  the               taxing  power  of  the  State  in  which  such               delivery  took place and being out-, side  all               other  States exempt from sales tax  by  those               other States." The  last  mentioned case was considered by  this  Court  in Singareni Collieries Co. Ltd. v. State of Andhra Pradesh and others(1) and it was held :               ".......... the expression actually delivered’               in  the  context in which it occurs  can  only               mean  physical delivery of the goods, or  such               other   action  as  puts  the  goods  in   the               possession  of the purchaser.  The  expression               "actually  delivered’  does not  include  mere               symbolical  or  -notional  delivery  e.g.   by               entrusting the goods to a common -carrier,  or               even  by delivery of documents of  title  like               railway  receipts.  It was said that the  rule               contained  in s. 39 (1) of the Indian Sale  of               Goods Act, 1930 has no application in  dealing               with  a constitutional provision which  ’while               imposing  a restriction upon  the  legislative               power  of the States entrusts exclusive  power               to  levy sales tax to the State in  which  the               goods  have  been actually delivered  for  the               purpose of consumption". The  fiction  of the sale or purchase being deemed  to  have taken  place  in  the  State in which  the  goods  had  been actually  delivered as a direct result of sale  or  purchase for  the purpose of consumption in that State, was  resorted to in order to put the matter beyond all controversy on  the question as to where the property in the goods passed or  as to  any inquiry about the place where the goods may be  said to have been delivered. The  contract  in  this case was entered  into  between  the President of India and the appellant before us and contained terms  and conditions to be noted immediately.  The  recital to  the agreement shows that "the contractor has  agreed  to supply  and  deliver  to the State wooden  sleepers  to  the number  and of the description and quality at the  price  or prices  and  at  the  times and places  and  in  the  manner detailed  in the Schedule, specification and  conditions  of contract  hereinafter appearing all of which form  part  and parcel  of.  this agreement".  The  relevant  conditions  of contract are as follows :               Cl.  (1).   Time of delivery of  the  sleepers               shall  be of the essence of the  contract  and               the  contractor shall deliver the sleepers  on               or before the date or dates mentioned in the               (1)   [1966] 2 S.C.R. 190, 200.                                    551               Schedule or within such extended time or times               as may be allowed under cl. (2)............ Clause 2 provides that if the contractor shall be delayed in the  Supply  of  the  materials  so  as  to  necessitate  an extension  of the time .provided in the Schedule,  he  shall apply  in  writing to the Sleeper Control  Officer,  Eastern Group,   who,  if  reasonable,grounds  are  shown   to   his satisfaction,  shall grant such extension in writing  as  in his absolute discretion he may think fit.               Cl. 3 (a).  "The prices named in the  Schedule               shall cover everything required to be done  by               the  contractor in terms of the  specification

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             and  conditions  of  contract  including   all               loading  and handling charges  connected  with               the inspection and delivering of the  sleepers               on  rail and taxes and impositions in  respect               of  the sleepers till they are  delivered  and               finally  accepted  under  the  terms  of  this               contract." Cl.  3(b)  provides that in the event of  wagons  not  being available within a month after passing, the contractor shall stack and earth the passed sleepers.  Pending despatch,  the sleepers were to remain in the contractor’s custody.               Cl.  4. "The person or persons  authorised  to               inspect, pass and brand sleepers for the State               under  these conditions of contract . ..  will               be  appointed or nominated by  the  President,               Eastern  Group  Sleeper  Control  and/or   the               Sleeper Control Officer, Eastern Group               Cl. 5(a).  "The sleepers shall be offered  for               examination and passing within the  boundaries               of  the  railway  stations  mentioned  in  the               Schedule   unless  permission  -is  given   in               writing  by the Sleeper Control Officer,  Eas-               tern  Group, to the contractor to  offer  them               for inspection at other stations or sites."               Cl.  5  (g).  "The contractor shall  make  all               arrangements  with the railway  concerned  for               the lease of an adequate plot or plots of land               at stations where he desires to offer sleepers               for inspection and bear the charges thereof." Cl.  9 provides for testing of the sleepers by  the  Sleeper Passing officer and any sleepers which were rejected by  him were  to be removed from the railway premises at the  charge and  cost  of  the contractor.  Under  cl.  10  the  Sleeper Control  Officer  was  to  give  the  contractor  a  passing certificate  of  the  number passed  and  rejected  at  such station.   Under  cl 11(a) "After  passing,  the  contractor shall apply to and obtain from the Sleeper Control Officer, 552 Eastern  Group, his orders as to the despatch of the  passed sleepers  which would then be disposed of by the  contractor either  by handing them over to the consignee or by  loading into railway wagons and booking them under the risk note ’B’ by  rail  to  the  consignee  to  whom  the  sleepers   were allotted".    Cl.  11(f)  provides  that  oil   arrival   at destination,  the  consignee  shall  check  the  number   of sleepers  and  report  on any shortage  or  the  receipt  of defective  sleepers.  In  all  cases,  the  Sleeper  Control Officer  was  to be the final authority as to  whether  such sleepers   were   in  good  order  and  conformed   to   the specification  or  not.   Cls. 11(g), 11(i) and  12  ran  as follows:               Cl.  11(g).  "In the case of  passed  sleepers               booked   by   rail   the   contractor    shall               immediately after loading apply for and obtain               from  the despatching station master  a  tally               receipt for the number loaded.  Such  sleepers               as  are  acknowledged  by  the  consignee   as               possessing  the  passing mark of  the  Sleeper               Passing  Officer and the private mark of  the,               contractor  will  be deemed  fully  delivered,               sub, however, to the right of the consignee to               have such sleepers reinspected by the  Sleeper               Control  Officer, or his  representative,  and               all  sleepers rejected by the Sleeper  Control               Officer  shall be deemed to be  non  delivered

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             and all sleepers are to be at the risk of  the               contractor  until fully delivered and  finally               accepted at the destination."               Cl.  11 (i).  "If there is any shortage in the               number  of sleepers received by the  consignee               in any particular consignment i.e. covered  by               a single railway receipt, the contractor shall               be  paid for all sleepers shown on  the  tally               receipt provided all sleepers received by  the               consignee  are  passed sleepers and  have  not               been  rejected by the Sleeper Control  Officer               but  if any part of such consignment  consists               of  unpassed sleepers they shall  be  rejected               and   included   in  the  shortage   and   the               contractor shall be -held responsible for  the               total  shortage in that consignment and  shall               not receive any payment for such shortage."                Cl.  12.  "The sleepers shall be of the  best               description and in strict accordance with  the               specification and the contractor shall receive               payment   for  such  sleepers  only   as   are               approved,  branded and passed by  the  Sleeper               Passing  Officer  and duly  delivered  to  the               consignee in terms of the contract. Cf.  13  provides for payment of 90% on bills  submitted  in triplicate  supported  by  the  passing  certificate,  tally receipt  and by an acknowledgment from the consignee to  the Sleeper Control 553 Officer  certifying that the sleepers have been received  by him  and have been checked and found in order.  The  payment of  the  remaining 10% shall be made on bills  submitted  in triplicate  as soon as the sleepers have been  delivered  as provided in cl.  II (g).               Clause 14 reads :               "It  must be expressly understood that all  on               account  or advance payments are in no way  to               be  considered as relieving the contractor  in               any  way  from the liabilities  he  may  incur               under  the  terms of the contract.   This  has               express reference to cl.  II (g) above." The schedule to the contract was in tabular form  containing six columns.  The 3rd column was headed "places at which  to be delivered" and below it was mentioned "Dhamtari,  Eastern Railway."  The  5th  column was headed "rate  at  which  the sleepers  to  be  supplied at each place  inclusive  of  all demands,  F.O.R."  In this column were given the  rates  for different  kinds of sleepers i.e. of  different  dimensions. The 6th column was headed "month of completion" and in  this column (to quote from the document at page 112 of the  paper book) was given the date 15-10-1952.  The third note at  the foot  of the schedule provided that "the date of  completion of the contract shall be the last date of inspection at  the supplier’s  stations during the month in which the  contract is due to be completed." The  High  Court of Madhya Pradesh took the  view  that  the sales  were completed in Dhamtari, that the property in  the goods passed to the purchaser at that place and the sleepers were actually delivered to the purchaser at that place.   It was  further stated in the judgment of the High  Court  that the  place of delivery was specifically stated to be  F.O.R. Dhamtari.  The last observation does not seem to be  correct because, as noted already, the place of delivery as given in the  Schedule was Dhamtari, Eastern Railway and it was  only in  connection  with the price of the goods  that  the  exp-

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ression  ‘F.O.R.’  occurred.   It is  well  known  that  the expression  ’F.O.R.’ when used in connection with the  place of delivery means that the delivery prima facie takes  place when  the goods are put on rail and when the  expression  is used in connection with the price, it means that the rate is to be inclusive of all charges of putting the goods on rail. In order to find out whether the Explanation to Art. 286(1) (a)  was applicable, we need not consider where the property in  the  goods passed nor are we to guide  ourselves  by  s. 39(1)  of the Indian Sale of Goods Act which only  raises  a prima  facie  inference as to delivery.  In  this  case  the consignee  of  the  goods was always to  be  outside  Madhya Pradesh   according  to  the  instructions  given  to.   the contractor  with  regard  to  the  despatch  of  the  goods. Counsel 554 on  behalf  of the State of Madhya  Pradesh  contended  that actual delivery of the goods took place at Dhamtari in  that State.  In aid of his contention, he relied on the following factors : (a) The Schedule which was a part of the  contract showed  that  the place of delivery  was  Dhamtari,  Eastern Railway; and (b) Cis. 1 and 2 of the conditions of  contract referred both to the time and place of delivery as mentioned in  the  schedule’  The net result  of  these  two  clauses, according  to  counsel,  was  that the  time  and  place  of delivery  both pointed to Dhamtari.  According  to  counsel, cl.  3(b) went to show that after the goods were brought  to the railway yard at Dhamtari and were passed by the  Sleeper Passing Officer, the contractor became the bailee in custody of  the goods and the charges which he incurred in  earthing up  the goods during the months of April to June were to  be borne  by the buyer.. This was sought to -be  reinforced  by cl.  3(a)  which  provided that  all  loading  and  handling charges  and  expenses  in connection with  the  putting  of sleepers on rail and taxes and impositions were to be on the sellers’s account at Dhamtari. Counsel  argued  that cl. 5(g) went to show that it  was  to suit  the convenience of the purchaser that  the  contractor had to take on lease a plot of land belonging to the railway for storing the sleepers.  Cis. 9 and 10, according to  him, went to show that the rejected sleepers had to be taken  out of the railway yard leading to the inference that only  such goods as had been passed by the Sleeper Passing Officer were to  be  considered as the property of  the  railway.   Great reliance was placed on cl.11(a) which according to  counsel, clinched  the matter.  It was urged that if the  goods  were actually  handed over to the consignee at  Dhamtari  railway station,  there  could  be no manner of  doubt  that  actual delivery  took  place  there.   According  to  counsel   the position was the same if the goods were loaded into  railway wagons  and booked to the consignee under risk note  ’B’  in terms  of the contract.  This was sought to be fortified  by reference to cl. 11(i) according to which the contractor was to be paid for all sleepers shown on the tally receipt. Counsel urged that all the above provisions in the  contract went  to show that as soon as the goods were put on rail  at Dhamtari  after they had been brought into the railway  yard and  passed  by the Sleeper Passing Officer, and  marks  had been  put  on them, delivery of the goods was  complete  and nothing remained to be done by the contractor. In  our  opinion,  we  have got to take  the  whole  of  the contract into account and then find out the intention of the parties  as  to  where actual delivery  was  to  take  place thereunder. while there can be no doubt that the major  part of the operations of the contractor with regard to  delivery

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were to be performed at Dhamtari he was not relieved of  all liability as to delivery until the goods                             555 were  finally accepted at the destination by the  consignee. In  this respect, we cannot overlook cls. 3(a), 11  (g),  12 and 14 of the conditions of contract when the consignee  was outside  Madhya Pradesh.  Cl. 3 (a) speaks of  delivery  and final acceptance under the terms of the contract.   Delivery here is linked with final acceptance which according to  cl. II  (g)  can  only  be after  the  goods  had  reached  the. destination  and  were  acknowledged  as  accepted  by   the consignee.   Cl. 11 (g) makes it clear that  notwithstanding the  fact  that  the goods had been passed  by  the  Sleeper Passing  Officer at Dhamtari -and that they had been put  on rail  within the period of the contract at the said  station and  the Sleeper Passing Officer had given the contractor  a passing  certificate  in  terms of cl. 10  and  the  station master at Dhamtari had issued a tally receipt for the number of  sleepers  loaded, the consignee still had the  right  to inspect  the goods at the destination and reject  any  which were  not in terms of the contract and such  rejected  goods were  to  be  treated as non-delivered. -All  this,  in  our opinion,  puts  the  matter beyond  doubt  that  the  actual physical delivery was not taken as complete before the goods were  accepted by the consignee at the destination.  In  all such cases, the consumption took place in the State to which the  goods  were despatched with the result that  the  sales came  within the purview of the Explanation to Art. 286  (1) (a)   as  it  stood  before  the  Sixth  Amendment  of   the Constitution.  Our  attention was drawn to a judgment of the  Patna  High. Court  in  Birendranath Guha and Co. v.  State  Of  Bihar(1) where  ,the assessee had taken lease of a timber  forest  in Nepal  and had built godowns and offices in Nepal  territory close to Jogbani railway station in the State of Bihar.  The assessee   supplied  to  the  railways  And  despatched   to different  destinations various quantities of sleepers  from Jogbani  railway station after obtaining  instructions  from the Sleeper Control Office.  The assessee contended that  no sale  took  place  in  Bihar since  the  sleepers  had  been manufactured  in .Nepal and despatched from Jogbani  railway station  to  places outside Bihar.  The full  terms  of  the contract in that case are not to be found in the report  but it appears that it was worded very similarly to the contract before   us.    The  Patna  High  Court  held  that   on   a consideration of all the provisions of the contract, it  was manifest that the goods in question had been unconditionally appropriated  ’to  be contract at Jogbani  railway  station. Alternatively,   the   High  Court  held  that   there   was appropriation of the goods within the meaning of s. 23(2) of the  Sale  of  Goods  Act at  Jogbani  railway  station  and accordingly  it  was  held that there was  delivery  to  the carrier at Jogbani railway station coupled with an  uncondi- tional  appropriation of the goods within the meaning of  s. 23  (2)  of’  the Sale of Goods Act.  With  regard  to  cls. 11(g), 11 (j) and 13(a) the High Court said that these  were merely additional stipulations. (1)  5 S. T. C. 273. 556 Superimposed on the contractor who agreed to act as  insurer of  the goods till the stage of final destination  and  also agreed  to  the  other  ,conditions,  but  these  additional conditions  had no bearing on the ,question as to where  and when the title to the sleepers passed ,to the buyer. We find ourselves unable to agree with the above  expression

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of Opinion as we have already pointed out that the  question is  not  when  the  title to  the  goods  passed  under  the contract,  but to ascertain whether actual delivery  of  the goods  took place outside the State ,of Madhya  Pradesh  for the  purpose  of consumption there so as ,to be  within  the deeming  provision of the Explanation to Art. -286.(1).  The contract  has to be considered in the setting of  the  facts and  circumstances  of the case as a whole and  cls.  11(g), 11(i),   12,  13  and  14  cannot  be  read  as   conditions superimposed  after the -actual delivery of the goods.   The place   of  actual  delivery  in  the  -light  of  all   the circumstances  of  the  case can  only  be  the  destination of  .the  goods and the goods can only be said to  be  fully delivered  and finally accepted after they are  acknowledged at the destination by the Sleeper Control Officer. A  similar  contract came up for  consideration  before  the Assam  High  Court in Birendranath Guha v.  Commissioner  of Taxes(1) and the.High court took a view different from  that of the Patna High Court mentioned above. In  D..N. Dutta v. Commissioner of Sales Tax, Orissa(2)  two ,,questions  were  referred to the High Court, one  of  them being, whether there was a completed sale in Orissa so as to confer  jurisdiction  on  the State of  Orissa  to  tax  the impugned  transactions and secondly, whether even  if  there was  a  completed sale in Orissa, the State  Government  was prohibited from taxing those transactions in view of the ban imposed  by  cl.  (1)  and  cl.  (2)  of  Art.  286  of  the -Constitution.  ’The contract, according to the judgment  of the  High Court, was identical With the one which  came  for consideration in the Patna case in Birendranath Guha and Co. v.  State  of Bihar(3) -The Orissa High Court held  that  in respect  of the impugned transaction, none of  the  sleepers had  been subject to reinspection by the  :,Sleeper  Control Officer  or  rejected  by him at the  destination;  all  the sleepers  were  fully delivered when the  passing  mark  was given  by  the  Sleeper  Passing Officer  at  the  place  of despatch and the seller had loaded them in the wagon at  the despatching station and obtained the tally receipt from  the station  master concerned.  It is not ,necessary to  examine the case in detail but it is sufficient to say that ,even if there  was no rejection at the place of destination,  actual delivery  would  not be completed until  they  were  finally accepted (1) 10. T.C. .327        (2) 1. L. R. [1961] Cuttack 622. (3)  5 S.T.C. 273.                             557 at  destination and to that extent we find ourselves  unable to agree with the decision of the Orissa High Court. In the result, it must be held that the sales in these cases were covered by the Explanation to Art. 286 (1) and as  such not taxable by the State of Madhya Pradesh.  The appeals are therefore allowed with costs.  One set of hearing fee. V.P.S.                                                Appeal allowed. 558