Inter-State sale by V.P.P. attracts Central sales tax when goods move as a direct result of the sale

Goods sent by V.P.P. from Punjab to Uttar Pradesh were treated as sold in the course of inter-State trade because the sale was completed only on payment against delivery and the post office acted as the seller's agent for receiving price. The movement of goods from one State to another was a direct result of the contract of sale, so the requirements of sale and inter-State movement co-existed under section 3 of the Central Sales Tax Act, 1956. The contention that the movement must precede completion of the sale was rejected, and the transaction was therefore liable to Central sales tax in Punjab.

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Issues: Whether goods sent from Punjab to Uttar Pradesh by V.P.P. were sold in the course of inter-State trade so as to attract Central sales tax and make the tax leviable by the Punjab authorities.

Analysis: A sale by V.P.P. was held to be complete only on payment of price against delivery, and the post office was treated as the seller's agent for receiving the price. The sale necessarily required movement of the goods from Punjab to Uttar Pradesh for completion. Under section 3 of the Central Sales Tax Act, 1956, a sale is inter-State if it occasions the movement of goods from one State to another. The Court held that the movement of the goods was a direct result of the sale and that the statutory requirements of sale and interstate movement co-existed. The contention that movement must precede completion of sale was rejected.

Conclusion: The sale was an inter-State sale and was liable to Central sales tax, which was leviable by the Punjab authorities.

Ratio Decidendi: A sale occasions inter-State movement when the movement of goods from one State to another is a direct result or incident of the contract of sale, irrespective of whether the movement occurs before or after completion of the sale.

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