Inter-State sale turns on contract-caused movement of goods, not merely where property passes at auction.

Auction sales of diamonds are treated as inter-State sales under the Central Sales Tax Act, 1956 where the contract and surrounding circumstances require movement of the goods from one State to another. The fact that property passed at the fall of the hammer is not conclusive if the bargain stipulates delivery in another State and the movement forms an integral part of the transaction. Written delivery terms, C forms, and actual movement from Madras to Bombay supported the conclusion that the sales were occasioned by interstate movement and were therefore not taxable under the Tamil Nadu General Sales Tax Act.

---

---

Issues: Whether the auction sales of diamonds resulted in inter-State sales taxable under the Central Sales Tax Act, 1956, or local sales taxable under the Tamil Nadu General Sales Tax Act, and whether the passing of property at the fall of the hammer was ative of the situs and character of the transaction.

Analysis: The auction rules, the buyer's written stipulation for delivery at Bombay, the submission of C forms, and the movement of the diamonds from Madras to Bombay showed that the transaction was not complete for tax purposes merely because the hammer fell at the auction. In applying sections 3(a) and 4(2) of the Central Sales Tax Act, 1956, the decisive question was whether the sale occasioned the movement of goods from one State to another. The Court held that, for section 3(a), the passing of property within the State was not conclusive where the contract and surrounding circumstances required movement of the goods to another State. The facts established that the movement to Bombay was in pursuance of the bargain and was an integral part of the transaction.

Conclusion: The sales were inter-State sales and were not exigible to tax under the Tamil Nadu General Sales Tax Act.

Ratio Decidendi: For purposes of section 3(a) of the Central Sales Tax Act, 1956, a sale is inter-State if the movement of goods from one State to another is occasioned by the contract or is its integral incident, and the State where property passes is not ative.

---