Inter-State sale turns on movement under the contract, not where property passes, for sales of goods across States.

Sales are inter-State under section 3(a) of the Central Sales Tax Act where the movement of goods from one State to another is occasioned by, or is an incident of, the contract of sale, and the passing of property in the goods in a particular State is immaterial. Here, the buyers' factories were outside Madhya Pradesh and the contracts restricted the ore to use in India for manufacture of ferro-manganese with no resale, showing that the movement of ore was brought about by the bargain itself. Both referred questions were answered in favour of treating the transactions as inter-State sales.

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Issues: (i) Whether the sales made to the buyers were inter-State sales under section 3(a) of the Central Sales Tax Act. (ii) Whether the sales occasioned the movement of goods in pursuance of the covenant or incident of the contract of sale.

Issue (i): Whether the sales made to the buyers were inter-State sales under section 3(a) of the Central Sales Tax Act.

Analysis: The buyers' factories were located outside Madhya Pradesh and the contracts restricted the ore to consumption in India for manufacture of ferro-manganese, with no resale. On these terms, and applying the principle that a sale is inter-State if the movement of goods from one State to another is under a covenant or incident of the contract, the sales were treated as inter-State sales. The place where property in the goods passed was immaterial.

Conclusion: The sales were inter-State sales under section 3(a) of the Central Sales Tax Act.

Issue (ii): Whether the sales occasioned the movement of goods in pursuance of the covenant or incident of the contract of sale.

Analysis: The contractual stipulations, read with the fact that the buyers' factories were outside the State, showed that movement of the ore from Madhya Pradesh to those places was brought about by the sales themselves. The movement need not be expressly stipulated in the contract so long as it is an incident of the bargain and is attributable to it.

Conclusion: The sales occasioned the movement of goods as an incident of the contract of sale.

Final Conclusion: Both referred questions were answered in favour of treating the transactions as inter-State sales and as sales that occasioned movement of goods under the contract.

Ratio Decidendi: A sale is inter-State where the movement of goods from one State to another is occasioned by, and is a covenant or incident of, the contract of sale, and the passing of property in the goods in one State or another is immaterial.

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