Inter-State sale under CST arises when the sale contract itself requires movement of goods across State borders.

Contracts requiring foodgrains and oil-seeds to be despatched from Uttar Pradesh to places outside the State created movement of goods occasioned by the sale itself, so the transactions fell within inter-State sales under section 3(a) of the Central Sales Tax Act. The fact that railway receipts were first taken in the seller's name and later endorsed to purchasers did not change the character of the sales into transfers of documents of title during transit under clause (b). The common State residence of both contracting parties was immaterial where the contract itself compelled movement across State borders.

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Issues: Whether the sales of foodgrains and oil-seeds were inter-State sales chargeable to Central sales tax.

Analysis: The sales were made under contracts which required the goods to be despatched from Uttar Pradesh to places outside the State. The despatch of goods outside the State was an integral part of the bargain, and the movement of the goods was therefore occasioned by the contracts of sale. The circumstance that the railway receipts were first taken in the seller's name and later endorsed in favour of the purchasers did not bring the case within the category of sales by transfer of documents of title during transit. Clause (a) of section 3 applied because the sale itself caused the movement of goods from one State to another, and the fact that both contracting parties belonged to Uttar Pradesh was immaterial.

Conclusion: The sales were inter-State sales liable to tax under the Central Sales Tax Act.

Ratio Decidendi: Where a contract of sale itself requires movement of goods from one State to another, the sale is an inter-State sale under section 3(a) of the Central Sales Tax Act, and subsequent endorsement of railway receipts does not convert it into a clause (b) transaction.

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