Inter-State sale chain and section 6(2) exemption depend on contractual movement of goods and prescribed certificates.

A sale is treated as inter-State where the contract itself occasions movement of goods from one State to another, and the first and later sales form one integrated transaction. Even if the initial sale is completed within the State, the transaction remains inter-State if the seller is contractually bound to move the goods outside the State and the movement is inseparable from the bargain. For exemption under section 6(2) of the Central Sales Tax Act, the prescribed Forms E-1 and E-2 must be furnished, and a direction allowing time to produce them is a procedural step that gives effect to the substantive entitlement.

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Issues: (i) Whether the sales by the mine owners to the assessee were sales in the course of inter-State trade or commerce so as to attract exemption for the subsequent sale under section 6(2) of the Central Sales Tax Act, 1956. (ii) Whether the Tribunal was justified in directing opportunity to furnish certificates in Forms E-1 and E-2 for claiming the exemption.

Issue (i): Whether the sales by the mine owners to the assessee were sales in the course of inter-State trade or commerce so as to attract exemption for the subsequent sale under section 6(2) of the Central Sales Tax Act, 1956.

Analysis: A sale is in the course of inter-State trade where the contract itself occasions the movement of goods from one State to another. The decisive question is whether the first sale and the later supply form part of one integrated transaction, with an obligation under the contract to move the goods outside the State. Even if the first sale is completed within the State, it remains an inter-State sale where the goods are required by the contract to move to destinations outside the State and the movement is inseparably connected with the bargain. On the facts found, the mine owners were bound to load the goods, move them to destinations outside Bihar, and bear risks and incidental liabilities until delivery.

Conclusion: The first sale was an inter-State sale, and the assessee's subsequent sale was exempt under section 6(2) of the Central Sales Tax Act, 1956.

Issue (ii): Whether the Tribunal was justified in directing opportunity to furnish certificates in Forms E-1 and E-2 for claiming the exemption.

Analysis: The exemption under section 6(2) is subject to production of the prescribed certificates. Once the substantive character of the transaction entitled the assessee to exemption, the direction to permit filing of the certificates was a consequential procedural step to give effect to that entitlement.

Conclusion: The Tribunal's direction to afford opportunity to furnish Forms E-1 and E-2 was valid.

Final Conclusion: The transaction was rightly treated as an inter-State sale chain, and the assessee was entitled to the statutory exemption from tax.

Ratio Decidendi: Where the contract of sale obliges the seller to move goods to another State and the first and subsequent sales are so integrated that the movement cannot be separated from the bargain, the initial sale is in the course of inter-State trade and the subsequent sale to a registered dealer is exempt under section 6(2) of the Central Sales Tax Act, 1956.

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