Depot routing does not avoid first-sale tax where manufacturer ships directly to buyer and receives payment directly.

Goods ordered through a depot but despatched directly from the manufacturer to the buyer, with payment remitted to the manufacturer, are treated as sales to the buyer and not as sales to the depot. On the stated facts under the Mysore Sales Tax Act, 1957, the depot functioned only as a forwarding channel for orders, so the relevant transactions were first sales in the State and attracted tax. The earlier decision relied on by the assessee was held inapplicable on the facts and statutory setting described.

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Issues: Whether the assessee's turnover in safety matches was exempt on the ground that the sales were not the first sales in the State and, consequently, not liable to tax under the Mysore Sales Tax Act, 1957.

Analysis: The sales were routed through depots, but the goods were despatched by the factories directly to the assessee and the sale price was remitted directly to the factories. On the undisputed facts, the Court held that the depots were only a channel for forwarding orders and that there was no real sale by the manufacturer to its depot. Under section 2(t) and Explanation (3)(a) of the Mysore Sales Tax Act, 1957, the relevant transactions were sales taking place in the State and were the first sales in favour of the assessee. The reliance placed on the earlier decision was held not to assist the assessee on the facts and statutory context of the present case.

Conclusion: The assessee's sales were the first sales in the State and were taxable. The contention that the turnover was not liable to tax failed.

Ratio Decidendi: Where goods are ordered through a depot but are sold by the manufacturer and despatched directly to the buyer, the depot's involvement does not convert the transaction into a sale to the depot; the first taxable sale is the sale completed in the State under the governing sales tax definition.

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