Inter-State sale ends on arrival of goods; later endorsement does not preserve transit character, and freight may enter turnover.

Sale of coal by endorsement of railway receipts after the goods had physically landed in Delhi was treated as an intra-State sale, because a transfer of documents of title qualifies as an inter-State sale only while the goods remain in movement across State lines. Later endorsement after arrival did not preserve the inter-State character. Freight paid by retailers was also included in sale price and turnover, as exclusion is available only where freight is separately charged under a clear contractual arrangement. The local sales tax authorities were therefore competent to tax the transactions as intra-State sales with freight included in turnover.

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Issues: (i) Whether the sale of coal by endorsement of railway receipts after the goods had landed in Delhi was an inter-State sale under section 3(b) read with Explanation 1 of the Central Sales Tax Act, 1956, or an intra-State sale under section 2(g) of the Bengal Finance (Sales Tax) Act, 1941. (ii) Whether freight paid by the retailers was includible in the sale price and turnover of the dealer under section 2(h) of the Bengal Finance (Sales Tax) Act, 1941.

Issue (i): Whether the sale of coal by endorsement of railway receipts after the goods had landed in Delhi was an inter-State sale under section 3(b) read with Explanation 1 of the Central Sales Tax Act, 1956, or an intra-State sale under section 2(g) of the Bengal Finance (Sales Tax) Act, 1941.

Analysis: A sale by transfer of documents of title falls within section 3(b) only while the goods are still in movement from one State to another. Once the goods have physically landed in the importing territory, the movement contemplated by the provision is regarded as terminated. Explanation 1 does not permit the buyer to prolong inter-State movement merely because delivery from the carrier is taken later. Section 4(2) also supports the view that goods physically within the territory at the relevant time attract the local taxing regime. On the facts, the endorsements were made after landing in Delhi and the sales were the first sales by the importer after importation into Delhi.

Conclusion: The transactions were intra-State sales within Delhi and did not fall under section 3(b) of the Central Sales Tax Act, 1956.

Issue (ii): Whether freight paid by the retailers was includible in the sale price and turnover of the dealer under section 2(h) of the Bengal Finance (Sales Tax) Act, 1941.

Analysis: Under section 2(h), freight is excluded only when it is separately charged in a manner showing a clear contractual intention that it is outside the sale price. In the absence of evidence of such separate treatment, the freight paid in the course of the transaction forms part of the consideration for sale and is includible in turnover.

Conclusion: The freight charges were liable to be included in the sale price and turnover of the dealer.

Final Conclusion: The reference was answered against the dealer on the principal questions, and the local sales tax authorities were held competent to tax the transactions as intra-State sales with freight included in turnover.

Ratio Decidendi: A sale by transfer of documents of title is inter-State only while the goods are in transit across State lines; once the goods have physically landed in the importing territory, later endorsement of the documents does not preserve inter-State character, and freight is excluded from sale price only when separately charged pursuant to a clear contractual intention.

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