Satyanarayana Raju, J.:— This is a revision filed by the assessee to ??? the order of the Sales-Tax Appellate Tribunal, Madras, in T.A No. ??? 1952.

2. The assessees are dealers in pulses etc. at Nidadavole. For the year of assessment 1950-1951, they submitted a return of a gross turnover of Rs. 2,61,030-2-10 and a net turnover of Rs. 1,92,824-11-1. Finding, on an inspection made that the books of account maintained by the assessee contained several omissions the Deputy Commercial Tax Officer determined the turnover of the assessee at Rs. 3,62,668-9-10. The assessing authority also added a sum of Rs. 11,476/- calculating the gross profit at 6 per cent since the margin of profit of 3.5 per cent shown by the assessee was too low. An appeal preferred by the assessee to the Commercial Tax Officer was dismissed. The assessee preferred an appeal to the Sales-Tax Appellate Tribunal at Madras. The Tribunal directed the deletion of Rs. 32,128/- from the taxable turnover and allowed the appeal to that extent.

3. Mr. C.V Dikshitulu, learned Counsel for the petitioners has raised four points before us: (1) that the groundnut kernel purchased by the assessee within the province and exported to Calcutta is exempt from tax in view of Article 286 of the Constitution; (2) that the purchase of railway receipts to groundnut exported to and deliverable at Calcutta is also exempt from tax under Article 286; (3) that a sum of Rs. 11,476/- being the amount included in the turnover on the ground that the gross profits returned by the petitioner were too low must be deducted because it is arbitrary and capricious; and (4) that a sum of Rs. 62,280/- being the amount added to the turnover on the ground that these are suppressions as shown by boat extracts must also be deducted.

4. With regard to the first of the contentions, the Tribunal came to the conclusion that there was no scope for the application of the Explanation to Article 286(1)(a) of the Constitution.

5. Article 286 of the Constitution, so far as it is now material, reads 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………(i) outside the state; or,

“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 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 in 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 any 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 ??? to the provisions of this clause, continue to be levied until the thirty-first ??? 1951”

6. The interpretation of this Article has been the subject-matter of controversy both in the Supreme Court and in the several High Courts of India. The Supreme Court has laid down the law in this regard in The State of Bombay v. United Motors (India) Ltd. 1953 S.C.J 373, State of Trauancore-Cochin v. S.V.C Factory 1953 S.C.J 471. and Himmatlal Harilal Mehta v. State of Madhyapradesh 1954 S.C.J 445. In a recent Full Bench decision4, which is as yet unreported (T.R.C Nos. 83 etc., of 1953), this court summarised the conclusions reached by the Supreme Court in the State of Bombay v. United Motors (India) Ltd. thus:

“(1). Cl. (1)(a) of Art. 286 read with the Explanation enacts a prohibition of taxation of sales or purchases involving inter-state elements by all States except the State in which the goods are actually delivered as a direct result of such sales or purchases, for consumption in that State.

“(2). Art. 986(a) banning the imposition of tax by a State on sales or purchases taking place in the course of inter-State trade or commerce applies only to cases not covered by the Explanation, such as inter-state sales or purchases where goods are imported into the State, not for consumption there but for re-export to other States.

(3). Art. 286(2) does not affect the power of a State where goods are actually delivered as a direct result of sales or purchases, for consumption in that State, to tax inter-state sales or purchases.”

7. We have recently held in Tax Revision Case No. 5 of 19545 that in the case of a transaction of sale involving inter-State elements, only that State where the goods are actually delivered for the purpose of consumption would be entitled to tax the transaction. But the fact that the goods have been delivered for consumption within a particular State should be established by evidence. It is not enough, to attract that Explanation, that the goods purchased in one State have ultimately reached a different State where they were utilised for consumption in that State. It is necessary to prove that the delivery for consumption was the direct result of the sale or the purchase as the case may be. If the goods were sold and delivery effected to the buyers in a particular State, the mere fact that subsequently the buyer took the goods to another State for purpose of consumption, could not affect the liability of the goods for sales tax in the state where delivery was effected as in that case the goods were not delivered in the state as a direct result of the sale.

8. If, therefore, the petitioner in this revision case is able to prove facts entitling him to invoke the aid of Explanation to Section 286(1)(a) the sale would be exempt from taxation. The petitioner claims exemption in respect of the groundnut kernel alleged to have been purchased within the State and exported to Calcutta on the petitioner's own account representing a turnover of Rs. 17,684-5-0. The petitioner has not placed before us any facts which entitle him to claim the benefit of the exemption. There is no material whatsoever in support of the petitioner's contention and in the absence of such material, it is difficult to accept his contention.

9. The Second submission of the petitioner's Counsel is that he is entitled to exemption from tax on a turnover of Rs. 70,240-15-9 which represents the value of the purchase made by him of railway receipts relating to groundnuts consigned to Calcutta. The Appellate Tribunal rejected the petitioner's claim holding that though the goods were deliverable at Calcutta and the railway receipts relating to them were purchased while the goods were in transit, the purchase cannot be deemed to be in the course of inter-state trade or commerce because both the seller and the purchaser are merchants of this State and that the delivery at a place outside the state is not the direct result of the sale.

10. The word “course” etymologically denotes “movement from one place to another” and the expression “in the course of” not only implies a period of time during which the movement is in progress but postulates also a connected relation. The sale of a trader in one state to a user in another State would be a sale in the course of inter-State trade, according to the natural meaning of those words. As has been pointed out by Their Lordships of the Supreme Court, Article 286(1)(a) read with the Explanation prohibits the taxation of sales or purchases involving inter-State elements by all States except the state in which the goods are actually delivered as a direct result of such sales or purchases, for consumption in that state. In the present case we find that the goods were actually in transit. They were consigned to the railway and the railway receipts were purchased by the petitioner. Therefore this transaction has an inter-State element and if the petitioner is able to prove that the goods are to be delivered in Calcutta for the purpose of consumption therein, the petitioner will be entitled to the exemption. This is a matter on which the petitioner should be given an opportunity to adduce evidence.

11. The third contention of the Petitioner's learned Counsel is that the addition of a sum of Rs. 11,476/- to the turnover representing an estimate of the gross profit which should have been earned by the assessee, is arbitrary and capricious. In his order the D.C.T.O stated that the margin of profit shown by the dealer was only 3.5 per cent and an addition of 6 percent was made to the book turnover towards profit and added Rs. 11,476/-. On appeal the Commercial Tax Officer saw no reason to interfere with the addition made by the D.C.T.O The Sales Tax Appellate Tribunal disposed of the matter thus:

“The Deputy Commercial Tax Officer added a sum of Rs. 11,476/- adopting a gross profit of 6 per cent rejecting the profit of 3.5 per cent shown by the Accounts. This estimation was felt necessary since the appellant had not brought many of the purchases shown by the boat and railway extracts in the regular accounts. We are of the opinion that the adoption of gross profit of 6 per cent is not too high as contended by the appellants. We therefore confirm the addition of this turnover.”

12. It is not clear from any of these orders on what material this estimate of profit is based. If the estimate of profit is made on the basis of profit earned by similar trade, similarly situated and circumstanced, then it is the duty of the assessing authority to intimate the assessee that the profit earned in trades similarly situated and circumstanced is so much and give an opportunity to the assessee to show cause why his profits should not similarly be estimated. The orders under revision do not disclose the existence of any material before the assessing authority which has furnished the basis for the estimate of the profits. In T.R.G No. 3 of 1954 we have considered the material provisions of the Sales Tax Act and the relevant decisions and held that Rule 8 of the Turnover and the Assessment Rules makes it obligatory on the assessing authority to make an enquiry to determine the turnover of the dealer to the best of his judgment and that an estimate made in similar circumstances as in this case was bad and must beset aside. There we remanded the case to the Tribunal with a direction that in arriving at its estimate of gross profits, it Should give full opportunity to the assessee to place any relevant material on the point and if the Tribunal thought fit, it might remit the case to the D.G.T.O for making a fresh assessment after taking such further evidence as is furnished by the assessee or the Department. There will be a similar order in this case also. Lastly the learned Counsel for the petitioner contended that a sum of Rs. 62,280/- being the amount added to the turnover on the ground that amount represented the suppression, must be excluded. It is not disputed that the goods in dispute have been consigned to the godown of the petitioner. It is not also disputed that the goods were consigned in the name of the petitioner. But even so, the petitioner's Counsel contends that no attempt has been made to connect the boat extracts with the petitioner. The petitioner has not let in any evidence to prove that the stocks so received by him have been returned to the owners. We hold that in the absence of such proof, the assessing authority was justified in assuming that these stocks must have been received and sold by the petitioner. This contention on behalf of the petitioner must therefore be rejected.

13. In the result, we remit the Tax Revision Case to the Appellate Tribunal to give an opportunity to the petitioner to adduce evidence as to whether the purchase of the railway receipts sought to be charged to tax fall within the. Explanation to Article 286(1)(a). There will also be a direction to the Tribunal that in arriving at the estimate of gross profits it should give full opportunity to the assessee to place any relevant material on the point and the Tribunal may, if it thinks fit, remit the case to the D.C.T.O for making A fresh assessment after taking such further evidence as is furnished by the assessee or the Department. The contentions of the learned Counsel for the petitioner on points (1) and (4) having failed, there will be no order as to costs.

T.A.B

14. Revision partly allowed.