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Issues: Whether the movement of duplicating ink from the Madras office to the Hyderabad branch constituted a stock transfer or an inter-State sale under section 3(a) of the Central Sales Tax Act, 1956.
Analysis: A sale falls within inter-State trade only if the sale occasions the movement of goods from one State to another. On the facts, the goods were standard items manufactured in the ordinary course of business, were despatched to the appellant's Hyderabad branch as branch stock, were taken delivery of by that branch, and were thereafter supplied locally against orders received at the branch. There was no direct contract between the Madras office and the Andhra Pradesh buyer, no direct despatch to the buyer, and no reliable material showing that the movement from Madras to Hyderabad was in fulfilment of any specific pre-existing contract with the buyer. The marking on the goods in the name of the Andhra Pradesh Government, standing by itself, was insufficient to establish that the movement was occasioned by a contract of sale with the Madras office.
Conclusion: The turnover of Rs. 90,500 did not represent inter-State sales and was properly treated as branch transfer.
Ratio Decidendi: Where standard goods are moved to a branch in the ordinary course of business for local disposal and no direct nexus is shown between the movement and a contract of sale with the head office, the transaction is not an inter-State sale under section 3(a) of the Central Sales Tax Act, 1956.
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