Inter-State sale requires movement of goods under the sale contract, not mere buyer's later transport outside the State.

A sale is treated as inter-State only if the movement of goods from one State to another is occasioned by, or is incidental to, the contract of sale, whether by express or implied covenant. Mere knowledge that the buyer will later remove the goods outside the State is insufficient. Where the sale is completed on delivery within the State and the seller has no contractual obligation regarding later removal, the buyer's transport is independent of the sale and the transaction remains intra-State.

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Issues: Whether the sale of two generating sets at Jaipur to an out-of-State buyer amounted to a sale in the course of inter-State trade.

Analysis: The governing test was whether the movement of goods from one State to another was occasioned by, or was an incident of, the contract of sale, whether by express or implied covenant. Mere knowledge that the buyer would remove the goods outside the State after completion of the sale was insufficient. On the facts, the sale was completed at Jaipur on delivery, the seller had no contractual obligation in relation to removal of the goods thereafter, and the buyer's subsequent transport of the machinery to Bombay was independent of the contract.

Conclusion: The transaction was not an inter-State sale and was rightly treated as an intra-State sale.

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