Statutory control does not negate a sale; contract-linked interstate movement makes the transaction liable to Central sales tax.

Statutory directions controlling supply, price, destination or buyer identity do not by themselves negate a sale where property passes for consideration. On that principle, supplies made under governmental direction may still be taxable as sales if the legal elements of transfer and consideration are present. Where the movement of goods from one State to another occurs pursuant to the contract of sale, the transaction is an inter-State sale and falls within Central sales tax, excluding the local taxing competence of the originating State. The note states that the decisive tests are the existence of sale ingredients and contract-linked cross-border movement of goods.

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Issues: (i) Whether the supply of crude oil by the Commission to the Corporation, made pursuant to governmental directions, constituted a sale exigible to sales tax; and (ii) whether the supply of crude oil from Assam to the Barauni refinery was an inter-State sale so as to attract Central sales tax and exclude Bihar's taxing competence.

Issue (i): Whether the supply of crude oil by the Commission to the Corporation, made pursuant to governmental directions, constituted a sale exigible to sales tax.

Analysis: The governing principle applied was that statutory control over supply, price, destination or the identity of the buyer does not by itself destroy the character of a sale. The transaction still remains a transfer of property for consideration when the parties are fixed by law or governmental direction, and the absence of unfettered volition does not negate a sale if the legal ingredients of transfer and consideration are present. The Commission's supplies were made in the course of its business of producing and selling petroleum products, and the statutory framework treated it as liable to tax accordingly.

Conclusion: The supply constituted a sale and was exigible to sales tax.

Issue (ii): Whether the supply of crude oil from Assam to the Barauni refinery was an inter-State sale so as to attract Central sales tax and exclude Bihar's taxing competence.

Analysis: The movement of crude oil from Assam to Barauni was found to be the result of the contract for sale and not a mere incident of delivery unconnected with the bargain. Where movement of goods across State boundaries is pursuant to the contract, the transaction falls within the inter-State sale provision. On that basis, the State of Bihar could not levy local sales tax on the transaction, and Central sales tax was attracted.

Conclusion: The transaction was an inter-State sale and the Central sales tax liability was upheld.

Final Conclusion: The writ petition failed because the supplies were held to be taxable sales, including inter-State sales on the relevant movement of crude oil, and the taxing levy was sustained.

Ratio Decidendi: Statutory directions regulating supply do not negate a sale where there is transfer of property for consideration, and movement of goods pursuant to the contract renders the transaction an inter-State sale.

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