Inter-State sale requires contractual movement of goods; Delhi delivery made the turnover local, while Defence Ministry exemption applied.

A sale is inter-State only where the contract itself requires movement of goods from one State to another as an integral part of the bargain; because the goods were delivered in Delhi and later moved by the purchaser, the turnover was treated as a local sale. An exemption under rule 29(iii) of the Delhi Sales Tax Rules, 1951 was also available because the Ministry of Food and Agriculture acted for the disclosed principal, the Ministry of Defence, so the purchase was construed as one for the Defence Ministry's official use. Both referred questions were answered against the Revenue.

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Issues: (i) Whether the turnover in question constituted inter-State sales or local sales. (ii) Whether the sales were exempt under rule 29(iii) of the Delhi Sales Tax Rules, 1951.

Issue (i): Whether the turnover in question constituted inter-State sales or local sales.

Analysis: The decisive test was whether the agreement to sell envisaged movement of goods from one State to another as an integral part of the contract. The goods were delivered in Delhi, and the subsequent movement was found to have been undertaken by the purchaser after delivery. On those facts, the movement was not occasioned by the contract of sale.

Conclusion: The turnover did not constitute inter-State sales and was a local sale.

Issue (ii): Whether the sales were exempt under rule 29(iii) of the Delhi Sales Tax Rules, 1951.

Analysis: The contract documents showed that the Ministry of Food and Agriculture acted for the Ministry of Defence, which was the disclosed principal. The rule was construed in light of its object so that purchases made for the Ministry of Defence would receive the intended exemption, and the sale was treated as one to the Ministry of Defence for official use.

Conclusion: The sales were exempt under rule 29(iii) of the Delhi Sales Tax Rules, 1951.

Final Conclusion: Both referred questions were answered against the Revenue and the assessee succeeded on the merits.

Ratio Decidendi: A sale is inter-State only when the contract itself stipulates movement of goods from one State to another as an integral part of the bargain, and an exemption provision intended for purchases by a named government department may be applied to purchases made through an agent acting for its disclosed principal.

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