Inter-State sale test: movement of goods under a sales contract, not place of title transfer, determines tax liability.

Movement of chicks from Haryana to Delhi was held to constitute an inter-State sale because the consignments were made against advance orders, transported pursuant to a pre-existing contractual arrangement, and moved as part of the selling process. The court treated the place where property in the goods passed as irrelevant to the character of the sale, holding that the decisive test under section 3(a) of the Central Sales Tax Act, 1956 is whether the contract occasioned movement of goods from one State to another. On that basis, the tax levy was upheld and the challenge failed.

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Issues: Whether the movement of chicks from Haryana to Delhi was in pursuance of a pre-existing contract of sale so as to constitute an inter-State sale liable to tax under the Central Sales Tax Act, and whether the place where property in the goods passed was decisive for determining the nature of the sale.

Analysis: The chicks were booked against advance orders received at the Delhi office, were transported from the farm in Haryana to Delhi or Delhi railway station for onward delivery, and were moved because of the contractual arrangement with buyers. The goods were perishable and there was no storage arrangement at Delhi, so the movement was found to be part of the selling arrangement and incidental to the contracts. The location where title passed was held to be irrelevant; what mattered was whether the sale occasioned movement of goods from one State to another. On that basis, the governing test under section 3(a) of the Central Sales Tax Act, 1956 was satisfied.

Conclusion: The movement of chicks constituted inter-State sales, and the tax levied on that basis was upheld.

Final Conclusion: The references were answered against the assessee and the writ petition failed, as the sales were held to be inter-State sales notwithstanding that property in the goods may have passed at the place of delivery.

Ratio Decidendi: A sale is an inter-State sale when the movement of goods from one State to another is occasioned by, or is incidental to, the contract of sale, and the place where property in the goods passes is not determinative.

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