Inter-State sale test under CST law: goods moved under the bargain itself, making local sales tax unsustainable.

Purchase and transport of kendu leaves under a tender, agreement and transport-permit regime were treated as inter-State sales because the movement from Orissa to West Bengal was occasioned by the bargain itself. The governing test under section 3(a) of the Central Sales Tax Act, 1956 is whether the sale or purchase and the resulting movement of goods are inseparably connected, even if the contract does not expressly stipulate inter-State movement. On the stated facts, accepted tenders, executed agreements, delivery-linked permits and destination-specific instructions showed that movement was a necessary incident of the transaction. The transactions were therefore inter-State sales, and local sales tax was not sustainable.

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Issues: Whether the purchase and transport of kendu leaves under the tender, agreement and transport-permit regime constituted a sale in the course of inter-State trade under section 3(a) of the Central Sales Tax Act, 1956, or an intra-State sale liable only to local sales tax.

Analysis: The determining test under section 3(a) is whether there is a sale or purchase and whether that transaction occasions the movement of goods from one State to another. The movement need not be expressly provided for in the contract itself, but it must arise as a covenant, incident, or necessary consequence of the sale, and the sale and movement must be inseparably connected. On the facts, the purchasers were registered purchasers, their tenders were accepted, agreements were executed, and delivery was linked to issuance of transport permits specifying the destination in West Bengal. The permit requirement, the delivery instructions, and the documentary record showed that the goods were required to move from Orissa to West Bengal as part of the bargain and not merely by the independent volition of the purchaser after an completed local sale.

Conclusion: The transactions were inter-State sales within section 3(a) of the Central Sales Tax Act, 1956, and the levy of Orissa sales tax on those transactions was not sustainable; refund of the excess collection was warranted.

Ratio Decidendi: A sale is inter-State if the movement of goods from one State to another is occasioned by the sale or is an inseparable incident of the contract, even if the contract does not expressly stipulate the inter-State movement.

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