Inter-State sales under CST law turn on contractual movement of goods as an integral part of the bargain.

Sales are inter-State under section 3(a) of the Central Sales Tax Act, 1956 where movement of goods from one State to another is the direct result of the contract of sale or an incident of its performance. The contracts for manganese ore required delivery, freight, weighment, despatch and payment arrangements that necessarily involved movement from Madhya Pradesh to Maharashtra or Andhra Pradesh, showing that cross-border movement was integral to the bargain and not merely incidental after the sale. The sales were therefore treated as inter-State sales and were not taxable under the Madhya Pradesh General Sales Tax Act, 1958.

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Issues: Whether the disputed sales of manganese ore were inter-State sales within section 3(a) of the Central Sales Tax Act, 1956, and therefore not taxable under the Madhya Pradesh General Sales Tax Act, 1958.

Analysis: The constitutional scheme after the Sixth Amendment and the definition in section 3(a) of the Central Sales Tax Act, 1956 make a sale inter-State where the movement of goods from one State to another is the direct result of the covenant of the contract of sale or an incident of that contract. The contracts in question contained stipulations as to delivery, freight, weighment, despatch, and payment that necessarily required movement of manganese ore from Madhya Pradesh to Maharashtra or Andhra Pradesh. The contractual terms showed that the movement across the State frontier was not accidental or subsequent to the sale, but integral to performance of the bargain.

Conclusion: The sales were inter-State sales under section 3(a) of the Central Sales Tax Act, 1956 and were not liable to be taxed under the Madhya Pradesh General Sales Tax Act, 1958; the assessee succeeded.

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