Inter-State sale turns on contractual movement of goods, not merely passing of title in another State.

A contract that makes movement of goods to another State an integral part of performance is treated as an inter-State sale under section 3(a) of the Central Sales Tax Act, even if title passes only on appropriation in the other State. The place of passing of title does not by itself defeat inter-State character where transport outside the State is required by the bargain and forms part of the sale transaction. On that reasoning, the goods were held to have moved in the course of inter-State trade and were taxable under the Central Sales Tax Act, not under the Orissa Sales Tax Act.

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Issues: (i) Whether the transaction between the mine-owner and the State Trading Corporation constituted one inter-State sale or two distinct sales, and whether the first sale was exigible to tax under the Orissa Sales Tax Act. (ii) Whether the movement of goods from Orissa to West Bengal was occasioned by the contract so as to fall within section 3(a) of the Central Sales Tax Act, 1956.

Issue (i): Whether the transaction between the mine-owner and the State Trading Corporation constituted one inter-State sale or two distinct sales, and whether the first sale was exigible to tax under the Orissa Sales Tax Act.

Analysis: The contract required the goods to be loaded and transported outside the State for approval, weighment, and appropriation in fulfilment of the corporation's existing commitments. The sale was not complete as a local sale merely by delivery within Orissa, because the terms of the bargain contemplated movement to another State as an integral part of performance. The completed sale emerged only upon appropriation in West Bengal, and the movement was not independent of the contract.

Conclusion: The transaction constituted one inter-State sale and was not exigible to tax under the Orissa Sales Tax Act.

Issue (ii): Whether the movement of goods from Orissa to West Bengal was occasioned by the contract so as to fall within section 3(a) of the Central Sales Tax Act, 1956.

Analysis: Under section 3(a), a sale is in the course of inter-State trade if it occasions movement of goods from one State to another as a covenant or incident of the contract. Section 4 operates subject to section 3, so the place where title passes does not exclude inter-State character when the contractual terms require such movement. The contract here made transport outside Orissa a necessary consequence of the bargain, with approval and final acceptance at the mill siding forming part of the sale transaction.

Conclusion: The movement of goods was occasioned by the contract and the sale fell within section 3(a) of the Central Sales Tax Act, 1956.

Final Conclusion: The reference was answered by holding that the goods were sold in the course of inter-State trade or commerce and that the transaction was taxable under the Central Sales Tax Act, not under the Orissa Sales Tax Act.

Ratio Decidendi: Where a contract of sale makes movement of goods to another State an integral and necessary part of performance, the sale is an inter-State sale under section 3(a) notwithstanding that title passes only on appropriation in the other State.

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