Inter-State sales under the CST Act: proviso to section 9(1) does not apply to section 3(a) sales.

Section 3 of the Central Sales Tax Act, 1956 determines whether a sale is inter-State by reference to movement of goods from one State to another or transfer of documents of title during such movement. Section 6(2) grants exemption only to qualifying subsequent sales during movement, subject to its statutory conditions. The proviso to section 9(1) is confined to subsequent sales covered by section 3(b) and does not apply to sales already found to fall under section 3(a). Tax on sales under section 3(a) is therefore leviable in the State from which the movement of goods commenced.

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Issues: Whether the proviso to section 9(1) of the Central Sales Tax Act, 1956 applies to sales that are held to fall under section 3(a) of the Act and, if not, which State is competent to levy and collect tax on such sales.

Analysis: Section 3 of the Central Sales Tax Act, 1956 determines whether a sale is inter-State by reference to whether the sale occasions movement of goods from one State to another or is effected by transfer of documents of title during such movement. Section 6(2) grants exemption only to qualifying subsequent sales during movement, subject to its statutory conditions. The proviso to section 9(1) is confined to subsequent sales covered by section 3(b) and does not govern sales already found to fall under section 3(a). Where the taxing authority has concluded that the transactions are sales under section 3(a), the proviso to section 9(1) cannot be invoked to fasten tax in a different State on the footing of a subsequent sale.

Conclusion: The proviso to section 9(1) was inapplicable, and the tax on the sales falling under section 3(a) was leviable in the State from which the movement of the goods commenced. The assessee succeeded.

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