Inside sale classification for goods in Orissa turns on where the contract was made and the goods were located.

Registered dealers could purchase goods free of tax against a declaration for resale in Orissa, and the proviso to section 5(2)(A)(a)(ii) was triggered only if the goods were used for a purpose other than that stated in the registration certificate. The Orissa Sales Tax Act's definition of "sale" in section 2(g), as amended, treated a sale of specific goods as inside the State when the goods were within Orissa at the time of the contract, reflecting the same principle as section 4 of the Central Sales Tax Act. Accordingly, goods later resold in the course of inter-State trade could still be treated as inside sales on that factual basis, and no breach of the declaration arose merely because tax was ultimately assessed under the Central Act.

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Issues: Whether sales of goods purchased on declaration for resale in Orissa, but actually resold in the course of inter-State trade, could still be treated as sales inside the State when the goods were within Orissa at the time the contract of sale was made, and whether the Tribunal was right in relying on the definition of "sale" in section 2(g) of the Orissa Sales Tax Act, 1947, read with its explanation.

Analysis: The statutory scheme allowed a registered dealer to purchase goods free of tax against a declaration for resale in Orissa, but the proviso to section 5(2)(A)(a)(ii) applied only when those goods were used for a purpose other than that specified in the certificate of registration. The definition of "sale" in section 2(g) of the Orissa Sales Tax Act, 1947, as amended, deemed a sale to take place inside the State if specific or ascertained goods were within the State when the contract was made. That explanation was treated as embodying the same principle as section 4 of the Central Sales Tax Act, under which a transaction otherwise falling within inter-State trade could still be an inside sale if the goods were within the State at the relevant time. On the facts, the goods were resold in Orissa, and there was no violation of the declaration merely because the sales were later taxed under the Central Act rather than under the Orissa Act.

Conclusion: The Tribunal was correct in holding that the sales could be treated as inside sales if the goods were within Orissa when the contract of sale was made, and the proviso to section 5(2)(A)(a)(ii) was not attracted.

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