Inter-State sales under CST arise only when the sale contract itself causes movement of goods across State borders.

Section 3(a) of the Central Sales Tax Act, 1956 applies only where the contract of sale itself occasions movement of goods from one State to another. Where goods are first transferred to a branch, entered in its stock, and the branch sells locally on its own account, the movement is an internal branch transfer rather than movement caused by the sale contract. On the stated facts, the Bangalore branch dealt with its own buyers, delivery was contemplated in Bangalore, local Karnataka tax applied, and the Madras office had no direct link to the ultimate buyers. The turnovers were therefore treated as local sales in Karnataka and not inter-State sales taxable in Tamil Nadu.

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Issues: Whether the disputed turnovers represented inter-State sales taxable in Tamil Nadu under the Central Sales Tax Act, 1956, or local sales in Karnataka outside the taxing power of Tamil Nadu.

Analysis: The decisive test under section 3(a) of the Central Sales Tax Act, 1956 is whether the sale itself occasions the movement of goods from one State to another, so that such movement is a result of the contract of sale, express or implied, or an incident of that contract. On the facts found, the Bangalore branch dealt with its own buyers, the contracts contemplated delivery at Bangalore with local Karnataka tax, the Madras office had no direct connection with the ultimate buyers, the goods were first transferred to the Bangalore branch and entered in its stock, and the branch retained ownership and risk until delivery to the buyer. Those features showed that the movement from Madras to Bangalore was not caused by the contract with the Bangalore buyer. The facts were materially different from the precedent relied upon by the Revenue, where the branch acted merely as an intermediary and the contract itself required despatch from Madras to the buyer.

Conclusion: The disputed turnovers were local sales in Karnataka and not inter-State sales taxable in Tamil Nadu; the Revenue's revisions failed.

Final Conclusion: The tax revision cases were dismissed, and the assessee's turnover was held not exigible to tax in Tamil Nadu as inter-State sales.

Ratio Decidendi: A sale falls within section 3(a) of the Central Sales Tax Act, 1956 only when the contract of sale itself occasions the movement of goods from one State to another; where the movement is merely an internal branch transfer and the branch sells locally on its own account, the sale is not inter-State.

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