Inter-State sale requires contractual movement across State lines; post-delivery transport for price ascertainment did not change local sales status.

A sale is inter-State only where the contract of sale itself requires movement of goods across State boundaries in fulfilment of that sale. Here, the contracts provided for delivery at Katangi within the State, with the buyer taking delivery there and arranging further despatch; the later weighment at Gondia was only for price ascertainment and did not amount to a stipulation for delivery outside the State. The movement from Katangi to Gondia was therefore not incident to the sale, and a payment condition linked to weighment did not convert the local sale into an inter-State sale. The court treated the transactions as intra-State sales taxable under the State enactment.

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Issues: Whether the sales of manganese ore were sales in the course of inter-State trade and commerce or intra-State sales.

Analysis: The decisive test was whether the movement of goods from one State to another was occasioned by a covenant or incident of the contract of sale. The contracts showed delivery at Katangi within the State, with the buyer taking delivery there and arranging despatch thereafter; the later determination of weight at Gondia was only for ascertainment of price and not a contractual stipulation requiring delivery outside the State. The movement from Katangi to Gondia was, therefore, not movement in fulfilment of the sale as such. The condition relating to payment after weighment did not convert an otherwise completed local sale into an inter-State sale.

Conclusion: The sales were not in the course of inter-State trade and commerce and were intra-State sales.

Final Conclusion: The reference was answered against the assessee and the sales were held taxable as local sales under the State enactment.

Ratio Decidendi: A sale is inter-State only when the contract itself requires movement of goods across State boundaries for delivery pursuant to the sale; mere post-delivery movement or a condition for price ascertainment does not suffice.

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