Inter-State sale doctrine: transformer movement under the supply contract was liable to Central sales tax, not a branch transfer.

Movements of transformers from the assessee's Haryana factory to its Punjab depot were held to be inter-State sales, because the purchase orders, factory inspection, testing requirements, and manufacture to the purchaser's specifications showed that the goods were earmarked under the sale contract before despatch. The later fitting of accessories or oiling at the depot, and contractual clauses describing the supply as from Patiala or excluding Central sales tax, did not change the true character of the transaction. The decisive factor was that the inter-State movement of goods was occasioned by the contract of sale, so the transfer was not a mere branch transfer and was liable to Central sales tax.

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Issues: Whether the movement of transformers from the assessee's factory in Haryana to its Rajpura/Patiala depot in Punjab was a branch transfer or an inter-State sale attracting Central sales tax.

Analysis: The purchase orders required inspection and testing at the factory before despatch, and the goods were manufactured to the Board's specifications with advance notice required before supply. The contractual terms and the manner of performance showed that the transformers were identified for the Board at the factory and that their movement from Sonepat was occasioned by the contract of sale. The fact that fitting of accessories and oiling took place at Rajpura, or that clauses purported to treat the supply as from Patiala and exclude Central sales tax, did not alter the real character of the transaction. The passing of property or the place where final fitting was done was not decisive; what mattered was that the movement of goods from one State to another was the result of the sale contract.

Conclusion: The movement of the transformers was in pursuance of the contract of sale and amounted to an inter-State sale liable to Central sales tax, not a mere branch transfer.

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