Inter-State sale and sale in the course of import turn on timing of title transfer and movement of goods.

A transfer of documents of title during movement from one State to another constitutes an inter-State sale under the Central Sales Tax Act, and the first turnover item was exempt as a subsequent sale to a registered dealer. A postal intimation of arrival of imported goods is not a document of title, so endorsement after the goods reached destination did not make the transaction a sale in the course of import; the second turnover item remained taxable as an intra-State sale. Transfer of a bill of lading after the import licence had expired also did not qualify as a sale in the course of import, because later licence extension did not retrospectively validate the transfer; the third turnover item was taxable.

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Issues: (i) Whether the turnover arising from the sale of batteries moved from Calcutta to Madras was an inter-State sale effected by transfer of documents of title during movement and therefore exempt under section 6(2) of the Central Sales Tax Act; (ii) Whether the sale of goods imported by post parcel from England was a sale in the course of import; (iii) Whether the transfer of the bill of lading in respect of the ship consignment, when the import licence had expired, could be treated as a sale in the course of import.

Issue (i): Whether the turnover arising from the sale of batteries moved from Calcutta to Madras was an inter-State sale effected by transfer of documents of title during movement and therefore exempt under section 6(2) of the Central Sales Tax Act.

Analysis: The movement of the goods commenced when they were delivered to the carrier and terminated only when delivery was taken in Madras. The sale bill issued by the assessee while the goods were still in transit, together with the carrier's delivery records, showed that the transfer to the buyer took place during the course of inter-State movement. Under section 3 of the Central Sales Tax Act, a sale effected by transfer of documents of title during movement from one State to another is an inter-State sale. Section 6(2) protects a subsequent sale of such goods to a registered dealer where the statutory conditions are satisfied.

Conclusion: The transaction was an inter-State sale and the turnover was exempt under section 6(2) of the Central Sales Tax Act in favour of the assessee.

Issue (ii): Whether the sale of goods imported by post parcel from England was a sale in the course of import.

Analysis: A postal intimation of arrival of a parcel is not a document of title to goods within the meaning of section 2(4) of the Sale of Goods Act. The endorsement on such intimation did not amount to a transfer of title before completion of import. Even if the endorsement was treated as operative between the parties, it occurred only after the goods had reached Madras, and therefore after the import movement had ended. The buyer's receipt of the goods on that basis did not convert the transaction into a sale in the course of import.

Conclusion: The sale was not in the course of import and was taxable as an intra-State sale, against the assessee.

Issue (iii): Whether the transfer of the bill of lading in respect of the ship consignment, when the import licence had expired, could be treated as a sale in the course of import.

Analysis: The bill of lading was transferred after the expiry of the import licence. The later extension of the licence could permit clearance of the goods, but it did not retrospectively validate the transfer so as to confer title on the buyer at the earlier date. Since the transfer was made when the assessee had no subsisting authority to import, the purported transfer could not sustain a sale in the course of import. The import movement had in any event crossed the customs frontier before effective title passed.

Conclusion: The transaction did not qualify as a sale in the course of import and was correctly treated as an intra-State sale, against the assessee.

Final Conclusion: Relief was granted only in respect of the first turnover item, while the remaining two turnover items were held taxable.

Ratio Decidendi: A sale is inter-State when documents of title are transferred during the movement of goods from one State to another, but a postal intimation is not a document of title and a transfer made after the goods have reached destination or after the transferor's authority to import has expired does not amount to a sale in the course of import.

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