Inter-State sale requires contractual movement of goods; Delhi appropriation defeated Haryana tax jurisdiction.

Sales are inter-State only when movement of goods from one State to another is an integral and necessary incident of the contract of sale. Here, the contracts and shipping arrangements showed delivery at Delhi, with goods sent from Rohtak to Delhi in self-name and remaining unappropriated until specific goods were allotted to buyers at Delhi. On those facts, the movement from Haryana was not occasioned by the contract, and there was no direct nexus between the sale and the inter-State movement. The transactions were therefore treated as sales from Delhi, not inter-State sales taxable by Haryana, and the assessee succeeded.

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Issues: Whether the disputed sales were inter-State sales or intra-State sales, and whether the sales tax authorities at Haryana had jurisdiction to levy tax on the transactions in question.

Analysis: The sales were effected through the Delhi sales office on standard contracts which, read as a whole, showed that delivery was to be made at Delhi and that goods were first transported from Rohtak to Delhi in the name of self. The bales were unappropriated when they reached Delhi, and the property passed only when specific goods were appropriated to particular buyers at Delhi. On those facts, the movement from Rohtak was not occasioned by the contract of sale, and there was no direct nexus between the sale and the movement from Haryana to another State. The authorities at Rohtak therefore could not treat the transactions as inter-State sales taxable by Haryana.

Conclusion: The transactions were sales from Delhi, not inter-State sales from Rohtak, and the disallowance of the deductions was not justified. The answers were in favour of the assessee and against the department.

Final Conclusion: The reference was answered by holding that the disputed turnovers were not taxable as inter-State sales by the Haryana authorities, and the assessee succeeded on the referred questions.

Ratio Decidendi: A sale is inter-State only when the movement of goods from one State to another is an integral and necessary incident of the contract of sale and the seller has no real scope to divert the goods before appropriation.

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