Inter-State sale tax exemption depends on direct despatch outside the State where no sale element arises within the taxing State.

Cotton lint purchased outside Andhra Pradesh and directly despatched to a buyer in another State was held not to attract tax as an inter-State sale in the assessee's hands, because the goods were never brought into Andhra Pradesh and no sale element arose within that State. On those facts, the turnover fell outside the taxing State's claim, and exemption under section 6(2) of the Central Sales Tax Act, 1956 was accepted. The assessee's position on the disputed turnover was therefore sustained.

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Issues: Whether the disputed turnover relating to cotton lint was liable to tax as an inter-State sale in the hands of the assessee, or was exempt under section 6(2) of the Central Sales Tax Act, 1956.

Analysis: The goods were found, on facts, to have been purchased at Bellary outside the State and despatched directly to the dealer at Coimbatore. They were not brought into Andhra Pradesh, and no element of sale took place within Andhra Pradesh. On that factual finding, the turnover could not be treated as an inter-State sale in the hands of the assessee for tax purposes.

Conclusion: The disputed turnover was not taxable in the hands of the assessee and the claim for exemption was accepted.

Final Conclusion: The revision failed and the assessee's position on the disputed turnover was sustained.

Ratio Decidendi: Where goods purchased outside the State are directly despatched to the buyer in another State and no sale element arises within the taxing State, the turnover is not taxable as an inter-State sale in the seller's hands.

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