Inter-State sale test applied to timber auctions where contract required movement outside Punjab and C forms from buyers.

Auction sales of timber at Nangal were treated as inter-State sales where the contract required outside-State purchasers to furnish C forms and the goods moved from Punjab to other States directly under that bargain. A sale falls within section 3(a) of the Central Sales Tax Act, 1956 when it occasions movement of goods from one State to another; here, the movement was referable to the sales contracts, with no intervening contract breaking the link. Even if property passed on the fall of the hammer, the auction condition bound the purchasers to take the timber outside Punjab. The sales up to 19 January 1969 were therefore held to be inter-State sales, in favour of the assessee.

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Issues: Whether auction sales of timber conducted at Nangal, where outside-State purchasers were required to furnish C forms under the auction terms, were inter-State sales for the period up to 19 January 1969.

Analysis: A sale falls within section 3(a) of the Central Sales Tax Act, 1956 if it occasions the movement of goods from one State to another. The accepted facts showed that the timber moved from Punjab to other States directly because of the sales contracts, with no intervening contract, and that the auction condition requiring C forms was part of the bargain. Even if property passed on the fall of the hammer, the auction condition bound the purchasers to take the goods outside the State, making the movement referable to the contract of sale.

Conclusion: The sales effected up to 19 January 1969 were inter-State sales and the question was answered in favour of the assessee and against the Revenue.

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