Branch transfers are not sales, and retrospective purchase tax liability can arise under the amended tax provision.

A transfer of goods from a head office to its branches does not amount to a sale or an inter-State sale because it lacks the essential elements of a sale between two competent persons for consideration. The issuance of C forms by the branches did not change the character of the transaction. On that footing, the amended section 5-A of the Rajasthan Sales Tax Act, 1954 operated retrospectively, so the assessee's purchases became liable to purchase tax. The Board of Revenue's order was set aside and the matter remitted to the assessing authority for fresh determination of liability under section 5-A.

---

---

Issues: (i) Whether transfer of goods from the head office to the branches constituted a sale or inter-State sale. (ii) Whether, on the facts found, the assessee became liable to purchase tax under section 5-A of the Rajasthan Sales Tax Act, 1954.

Issue (i): Whether transfer of goods from the head office to the branches constituted a sale or inter-State sale.

Analysis: The findings of the assessing authority and the appellate authority that the goods were sent to the branches remained undisturbed. A sale requires two persons competent to transfer property for money consideration pursuant to an agreement. A transfer between a branch and the head office does not satisfy that requirement, and the issuance of C forms by the branches did not convert the transfer into a sale or an inter-State sale.

Conclusion: The transaction was not a sale and was not an inter-State sale.

Issue (ii): Whether, on the facts found, the assessee became liable to purchase tax under section 5-A of the Rajasthan Sales Tax Act, 1954.

Analysis: Once the transaction was held not to be a sale, the purchase of goods against declaration forms for resale or inter-State sale from the manufacturer attracted the amended section 5-A. The amended provision operated retrospectively, and therefore the assessee's purchases became liable to purchase tax.

Conclusion: The assessee was liable to purchase tax under section 5-A.

Final Conclusion: The order of the Board of Revenue was set aside, the revision was allowed, and the matter was remitted to the assessing authority for fresh determination of liability under section 5-A.

Ratio Decidendi: A transfer of goods between a head office and its branch does not amount to a sale; where such transfer is not a sale, the retrospective purchase-tax provision applies to the relevant purchases.

---