Stock transfer versus inter-State sale: goods moved to the assessee's depot were not taxable without a concluded sale contract.

Inter-State sales tax applied only where the movement of goods was occasioned by a concluded contract of sale; here, the correspondence showed no firm purchase contract, the goods were first sent to the assessee's own Calcutta office, entered in stock, and sold thereafter, so the transfer was treated as a stock transfer and not taxable as inter-State sales. On the refund issue, once the assessee became entitled to repayment of the withheld tax amount, statutory interest followed on the refunded sum from the prescribed date. The tax demand was set aside and the refund claim succeeded with simple interest at 12% per annum.

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Issues: (i) Whether the turnover in question represented inter-State sales exigible to tax under the Central Sales Tax Act, 1956, or only stock transfers to the assessee's Calcutta office. (ii) Whether, on the assessee succeeding in the revision, the refunded tax amount was payable with interest under the Andhra Pradesh General Sales Tax Act, 1957.

Issue (i): Whether the turnover in question represented inter-State sales exigible to tax under the Central Sales Tax Act, 1956, or only stock transfers to the assessee's Calcutta office.

Analysis: The documentary correspondence showed that the so-called purchase orders from Dey's Medical Stores did not amount to a firm or concluded contract. The assessee repeatedly stated that it could not bind itself to supply, that supplies would depend on availability at Calcutta and price confirmation, and that the buyers should deal with the Calcutta depot. The goods were first moved to the assessee's own Calcutta office, entered in its stock register, and thereafter sold from there. The Tribunal's finding that the movement from Patancheru to Calcutta was not in pursuance of any contract of sale, and that the goods were not earmarked for any particular purchaser, was supported by the evidence. The Court also distinguished cases where the inter-State movement was clearly referable to a concluded sale contract.

Conclusion: The turnover was not liable to tax as inter-State sales and was only a stock transfer; the finding was in favour of the assessee.

Issue (ii): Whether, on the assessee succeeding in the revision, the refunded tax amount was payable with interest under the Andhra Pradesh General Sales Tax Act, 1957.

Analysis: Once the assessee became entitled to refund, the amount had been withheld during the pendency of the revision. Under the refund scheme, where refund is withheld pending appeal or other proceedings, interest becomes payable on the amount ultimately found due after the prescribed period from the date of the relevant order. The Court applied the statutory refund and interest provisions to the amount withheld in the present case.

Conclusion: The assessee was entitled to refund of the amount claimed with simple interest at 12% per annum from the relevant statutory date; this issue was in favour of the assessee.

Final Conclusion: The tax demand based on alleged inter-State sales was set aside, and the assessee's refund claim succeeded with statutory interest.

Ratio Decidendi: Goods moved to another State are taxable as inter-State sales only when the movement is occasioned by, and is in pursuance of, a concluded contract of sale; where the transfer is merely to the dealer's own branch or depot and the goods remain unsold stock available for sale to any buyer, the transaction is a stock transfer and not an inter-State sale.

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