State reorganisation and sales tax: movement between Telangana and Andhra areas remained intra-State, not inter-State sales.

After State reorganisation, sales involving movement of goods between the Telangana and Andhra areas of the same State remained intra-State transactions. The court noted that the reorganisation law continued pre-existing local sales tax enactments in force in the transferred territories until adaptation, but that continuation did not alter the constitutional position that both areas formed one State. Because inter-State trade requires movement of goods from one State to another under the contract of sale, movement within the same State could not be treated as inter-State sale merely due to separate local tax laws. The petitioners' contention therefore failed.

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Issues: Whether, after the reorganisation of States, sales involving movement of goods from the Telangana area to the Andhra area within the State of Andhra Pradesh could be treated as inter-State sales, or whether they remained intra-State sales by reason of the continuance of separate sales tax laws in the two areas.

Analysis: The statutory scheme of the reorganisation law preserved the pre-existing laws in force in the transferred territories and merely continued their operation until competent legislative or executive adaptation. The continuation of different sales tax enactments in the Telangana and Andhra areas did not alter the constitutional fact that, from the appointed day, both areas formed part of one State. Inter-State trade or commerce requires movement of goods from one State to another under the contract of sale; movement between two areas within the same State does not satisfy that requirement. The preservation of local fiscal laws under the reorganisation statute could not convert an intra-State transaction into an inter-State one.

Conclusion: The sales in question were intra-State sales and not inter-State sales; the contention of the petitioners failed.

Ratio Decidendi: Preservation of pre-existing local laws on State reorganisation does not create inter-State trade between areas that have become part of the same State, because inter-State sale requires movement of goods across State boundaries under the contract of sale.

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