Inter-State sale test: movement must arise from the contract itself; later buyer-directed despatch makes the sale intra-State.

A sale is inter-State under section 3(a) of the Central Sales Tax Act, 1956 only if the movement of goods from one State to another is an incident of the contract of sale, and section 3(b) applies only where property passes during movement by transfer of documents of title. On the facts stated, the standing order covered purchase and supply to the buyer, but did not make out-of-State delivery part of the original contract. The sale was completed within Madhya Pradesh when the goods were appropriated and payment received, and later despatch instructions were given by the buyer for dealings with third parties. The transactions were therefore intra-State sales and taxable under the State sales tax law.

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Issues: Whether the sales of oil-seeds to the Nagpur buyer were inter-State sales or intra-State sales.

Analysis: A sale falls within section 3(a) of the Central Sales Tax Act, 1956 only where the movement of goods from one State to another is the result of a covenant or incident of the contract of sale. Section 3(b) applies where property in the goods passes during the movement by transfer of documents of title. On the facts found, the standing order only covered purchase and supply to the Nagpur buyer; the destination outside the State was not part of the original contract. The contract was completed within Madhya Pradesh when the goods were appropriated and the price was received, and the later despatch instructions were given by the buyer for his own dealings with third parties.

Conclusion: The sales were not inter-State sales. They were intra-State sales and liable to tax under section 18(4) of the Madhya Pradesh General Sales Tax Act, 1958.

Final Conclusion: The reference was answered against the assessee, and the taxability of the turnover under the State sales tax law was upheld.

Ratio Decidendi: A sale is inter-State only when the movement of goods is directly attributable to the contract of sale or when property passes during such movement by transfer of documents of title; subsequent movement at the buyer's instruction after completion of the sale is intra-State.

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