State purchase test governs last-dealer sales tax liability; cotton sales completed locally were not inter-State trade.

Cotton sales were treated as completed within the Madras area because the contracts were concluded, price was received, and delivery was made there; the common carrier took goods as the buyer's agent and transit insurance was arranged by the buyers, so the later movement outside the State was not in pursuance of the sale and the transactions were not inter-State trade. For levy under section 5(2) read with rule 4-A(iv)(b), the decisive test was where the purchase occurred, not the buyer's residence or business location. The non-resident mills that bought the cotton within the State were therefore the last dealers buying the goods in the State, and the sellers were not liable as last dealers.

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Issues: (i) Whether the sales of cotton to non-resident buyers were completed within the Madras area and were not sales in the course of inter-State trade. (ii) Whether a non-resident buyer who purchased the cotton within the State could be treated as the last dealer buying the goods in the State for the purpose of levy under section 5(2) read with rule 4-A(iv)(b).

Issue (i): Whether the sales of cotton to non-resident buyers were completed within the Madras area and were not sales in the course of inter-State trade.

Analysis: The transactions showed that the contracts were concluded, the price was received, and delivery was made within Bellary in the Madras area. The common carrier took delivery as agent of the buyer, and the buyers insured the goods during transit at their own cost, indicating that property had already passed to them before movement outside the State. The subsequent movement of the cotton was by the buyers after completion of the sale. The movement was therefore not the result of the contract of sale and the sales did not constitute inter-State trade.

Conclusion: The sales were completed within the Madras area and were not sales in the course of inter-State trade.

Issue (ii): Whether a non-resident buyer who purchased the cotton within the State could be treated as the last dealer buying the goods in the State for the purpose of levy under section 5(2) read with rule 4-A(iv)(b).

Analysis: The rule fastened liability on the dealer who buys the goods in the State and is the last dealer not exempt from taxation. The relevant test was the place of purchase, not the residence or business location of the buyer. Since the outside mills purchased the cotton within the State, they were the last dealers buying the goods in the State. The respondents, having sold the cotton, were not the taxable last dealers under the rule.

Conclusion: The non-resident buyers, and not the respondents, were the last dealers buying the cotton in the State.

Final Conclusion: The levy of single-point sales tax could not be shifted to the sellers merely because the buyers were outside the State, and the appeals failed.

Ratio Decidendi: For sales tax under a rule taxing the last dealer who buys goods in the State, the decisive factor is the act of purchase within the State, not the buyer's place of residence or business.

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