Inter-State sale character depends on movement of goods being referable to the contract of sale and supporting documents.

Goods moving from Madras to Calcutta were treated as inter-State sales because the surrounding documents, including invoices, correspondence, bills of lading and C forms, showed that the movement was referable to prior contracts with out-of-State buyers. The revenue's theory of an initial local sale followed by onward sale was not supported by the materials, and the local dealer's role was equally consistent with agency. On that evidence, the movement of goods was an incident of the contract of sale, so assessment under the Madras General Sales Tax Act could not stand; the State could, however, proceed under the Central sales tax regime.

---

---

Issues: Whether the disputed turnover represented inter-State sales or intra-State sales and was therefore not assessable under the Madras General Sales Tax Act, 1959.

Analysis: The disputed goods admittedly moved from Madras to Calcutta. Although the written contracts were not produced, the available invoices, correspondence, bill of lading documents and C forms indicated that the movement of goods was referable to prior contracts of sale with out-of-State buyers. The materials relied on by the revenue to suggest a sale first to the local dealer and then to the Calcutta buyers were found inconclusive, and the advance payment and despatch instructions were equally consistent with the local dealer acting as an agent. On the evidence available, the movement of goods was held to be an incident of the contract of sale.

Conclusion: The disputed turnover represented inter-State sales and not intra-State sales, and the revision by the State failed.

Final Conclusion: The assessment on the disputed turnover under the State sales tax law could not be sustained, though the revenue was left free to proceed under the Central sales tax regime.

Ratio Decidendi: A sale is inter-State where the movement of goods from one State to another is shown, on the available surrounding documents, to be in pursuance of and incidental to the contract of sale.

---