Branch transfer classification depends on a prior agreement to sell; mere out-of-State movement does not make an inter-State sale.

Branch transfers are not treated as inter-State sales unless the goods move pursuant to a prior agreement to sell with an out-of-State purchaser. The Tribunal found no material showing any such prior agreement between the factory and the purchaser, and that factual conclusion was not shown to be erroneous. On that basis, mere movement of goods outside the State was insufficient to characterise the transactions as inter-State sales, and the revisional court declined to disturb the finding. The transactions were accordingly treated as branch transfers rather than inter-State sales.

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Issues: Whether the transactions disclosed by the assessee as branch transfers were in law inter-State sales.

Analysis: The Tribunal had recorded a categorical finding that there was no material to show that the goods were sent pursuant to any prior agreement to sell between the Ghaziabad factory and the out-of-State purchaser. In the absence of such a finding, the transactions could not be treated as inter-State sales merely because goods moved outside the State. The revisional court found no error in that factual conclusion, and no ground was shown to disturb it in revisional jurisdiction.

Conclusion: The transactions were branch transfers and not inter-State sales.

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