Inter-State sale test applied to fuel supplies where contract itself caused movement of goods across State borders.

Where the contract itself required petroleum and high speed diesel to move from Bihar to Orissa, the movement of goods was an integral part of the bargain and was occasioned by the sale. On those facts, the transactions satisfied the test of inter-State trade, so they could not be treated as intra-State sales for Orissa sales tax purposes. The destination State therefore lacked jurisdiction to levy local sales tax on the supplies, and the sales were held to be exigible only as inter-State sales.

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Issues: Whether the sales of petroleum and high speed diesel oil were inter-State sales exigible to Central sales tax or intra-State sales exigible to Orissa sales tax.

Analysis: The correspondence and invoices showed that the contract contemplated supply from Jamshedpur to Kiriburu and that movement of goods from Bihar to Orissa was an integral part of the bargain. The goods were in fact despatched from one State to another pursuant to the pre-existing arrangement, so the movement was occasioned by the contract and not a mere incident after sale. On these facts, the transactions answered the legal test of inter-State sales, and the State of Orissa could not treat them as intra-State sales for levy under its sales tax law.

Conclusion: The sales were in the course of inter-State trade and were not exigible to Orissa sales tax; the finding was in favour of the assessee.

Ratio Decidendi: Where the contract of sale itself occasions movement of goods from one State to another, the sale is an inter-State sale and the destination State lacks jurisdiction to levy local sales tax on it.

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