Inter-State sale test under CST law: direct contract occasioning movement kept the transactions outside Orissa sales tax.

A sale is an inter-State sale under section 3 of the Central Sales Tax Act, 1956 where the contract itself occasions movement of goods from one State to another and the sale and movement form part of the same transaction. On the facts, direct agreements existed between supplier and purchasers, vehicles were appropriated and delivered under a direct billing system in Haryana, and the assessee's presence at an intermediate stage did not break the link of inter-State movement. The transactions were therefore correctly treated as inter-State sales, and sales tax in Orissa was not leviable.

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Issues: Whether the sale transactions in question were inter-State sales under section 3 of the Central Sales Tax Act, 1956, so as to exclude liability to sales tax in Orissa.

Analysis: A sale in the course of inter-State trade requires a sale of goods, movement of those goods from one State to another, and the sale and movement forming part of the same transaction. The decisive test is whether the contract of sale occasioned the movement of goods, meaning that the movement must arise from the contract itself or be incidental to it, with the transaction remaining incapable of diversion without breach. On the materials found by the Tribunal, the vehicles were delivered under a direct billing system at Haryana, appropriation took place there, direct agreements existed between the supplier and the purchasers, specific vehicles were identified and allotted after payment, and the presence of the assessee at an intermediate stage did not break the link of inter-State movement.

Conclusion: The transactions were correctly held to be inter-State sales and the assessee was not liable to pay sales tax in Orissa.

Final Conclusion: The reference was answered in favour of the assessee, and the Tribunal's view on the inter-State character of the sales was upheld.

Ratio Decidendi: Where the contract of sale itself occasions the movement of goods from one State to another, the presence of an intermediary at the delivery stage does not convert an inter-State sale into an intra-State sale.

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