Inter-State trade sales depend on contractual movement of goods across States; only questions arising from the order are referable.

A sale is treated as inter-State trade where the contract or mutual understanding obliges movement of goods from one State to another and that movement actually occurs; on that basis, the turnover of Rs. 3,53,623.85 was held outside the State sales-tax net. On the separate reference issue, a question cannot be referred unless it genuinely arises out of the Board of Revenue's order; the proposed question concerning Rs. 4,73,860 did not arise from that order and was therefore not answerable on reference.

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Issues: (i) Whether the sales of Rs. 3,53,623.85 were rightly taxed as intra-State sales or were sales in the course of inter-State trade and therefore exempt from State sales tax; (ii) whether the question relating to Rs. 4,73,860, claimed to represent sale price of goods sold in the previous year, arose out of the order of the Board of Revenue so as to be referable.

Issue (i): Whether the sales of Rs. 3,53,623.85 were rightly taxed as intra-State sales or were sales in the course of inter-State trade and therefore exempt from State sales tax.

Analysis: For exemption on the ground of inter-State trade, the transaction had to show a common intention to move goods from Bihar to Uttar Pradesh, actual transportation of the goods, and an obligation to transport arising from the contract or mutual understanding between the parties. The materials on record showed that the goods were moved from Muzaffarpur to Izatnagar under the contract and that the Tribunal's supplementary statement supported the existence of such obligation. The earlier observation treating the assessee's claim as contradictory did not amount to a finding that the inter-State character of the sales was disproved.

Conclusion: The sales of Rs. 3,53,623.85 were not rightly taxed as intra-State sales and were liable to be treated as inter-State sales in favour of the assessee.

Issue (ii): Whether the question relating to Rs. 4,73,860, claimed to represent sale price of goods sold in the previous year, arose out of the order of the Board of Revenue so as to be referable.

Analysis: The Board of Revenue had recorded a clear factual finding that, on the materials produced, it was not possible to hold that the amount represented sale price of goods sold in the previous year. Under the reference provision, only a question of law arising out of the Board's order could be referred. Since the proposed question sought to reopen a matter not arising from that order, it was outside the permissible scope of reference.

Conclusion: The question relating to Rs. 4,73,860 did not arise out of the order of the Board of Revenue and was not answerable on reference.

Final Conclusion: The reference succeeded in part, with the principal turnover of Rs. 3,53,623.85 held to be outside the State sales-tax net, while the other referred question was declined as not legally referable.

Ratio Decidendi: A sale is in the course of inter-State trade when the contract or mutual understanding obliges the movement of goods from one State to another and such movement actually occurs; a reference court can answer only questions of law that genuinely arise out of the order under reference.

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