Inter-State sale characterization prevails despite depot routing, where goods moved under the sale contract to out-of-State buyers.

Transactions routed through depots outside the State were treated as inter-State sales where the movement of goods from the head office State to the buyer in another State occurred under the contract of sale or as an incident of it. Depot-based order collection, invoice preparation and local price collection did not change the character of the movement when the goods were despatched from the head office for delivery to the out-of-State buyer and freight was to be borne by the buyer. The absence of a direct contract between the head office and the buyer was not determinative. The transactions were therefore characterised as inter-State rather than merely depot sales, and the matter was remitted for transaction-wise examination on that basis.

---

---

Issues: Whether the transactions, though routed through depots outside the State with orders, invoicing, and collection at the depots, were inter-State sales occasioned by movement of goods from one State to another.

Analysis: The decisive test was whether the movement of goods from the State of the head office to the buyer in another State occurred under the contract of sale or as an incident of it. The existence of depot-based order collection, preparation of invoices at the depots, and local collection of price did not alter the character of the movement where the goods were despatched from the head office to the buyer in another State and the buyer was informed to take delivery and bear the freight. The absence of a direct contract between the head office and the buyer was not treated as determinative.

Conclusion: The transactions were held to be clearly inter-State in character and not merely outside-State depot sales.

Final Conclusion: The assessee's contention failed on the main legal issue, and the matter was sent back for examination of the individual transactions in the light of the ruling on inter-State character.

---