Inter-State sale requires sale and movement of goods under one contract; local delivery to agents defeated the constitutional exemption.

Sales are in the course of inter-State trade only when the sale and the movement of goods from one State to another form integral parts of the same contract of sale. Although the buyers were outside the State, delivery was made within the State to their agents, and the transaction did not satisfy the essential conditions of an inter-State sale. It was also not part of a continuous flow of inter-State trade or commerce. The sales were therefore not protected by the constitutional sales tax exemption, and the assessment to sales tax was upheld.

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Issues: Whether the sales in question were in the course of inter-State trade or commerce so as to be exempt from sales tax under Article 286 of the Constitution of India.

Analysis: The sales were to buyers outside the State, but delivery was made within the State to their agents. On the materials placed before the Court, the transaction did not satisfy the essential conditions of a sale in the course of inter-State trade, namely a sale of goods coupled with transport of those goods from one State to another under the contract of sale. Even viewed from the commercial significance of the transactions, they did not form an integral part of a continuous flow or course of inter-State trade or commerce.

Conclusion: The sales were not exempt under Article 286 and the assessment to sales tax was upheld against the petitioner.

Final Conclusion: The petition failed on merits because the disputed sales were held not to be inter-State sales protected by the constitutional exemption.

Ratio Decidendi: A sale is in the course of inter-State trade or commerce only when the sale and the movement of goods from one State to another are both integral parts of the same contract of sale.

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