Inter-State sale by transfer of title documents during transit remains taxable as such, despite simultaneous sales.

A sale completed by transfer of documents of title while goods were still moving from one State to another is treated as an inter-State sale under section 3(b) of the Central Sales Tax Act, 1956. Here, the first sale from the Bombay supplier to the assessee was already an inter-State sale under section 3(a) because the contract occasioned movement from Maharashtra to Gujarat. The later sale to the Gujarat purchasers, with railway and transport receipts taken in their names, freight borne by them, and delivery made during movement, was also inter-State and not a local sale under the Gujarat Sales Tax Act, 1969. The simultaneous existence of two sales did not prevent this result.

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Issues: Whether the sale by the assessee to the purchasers in Gujarat was an inter-State sale under section 3(b) of the Central Sales Tax Act, 1956 or a local sale liable to tax under the Gujarat Sales Tax Act, 1969.

Analysis: The first sale between the assessee and the Bombay supplier was already an inter-State sale under section 3(a) of the Central Sales Tax Act, 1956, because the contract occasioned movement of goods from Maharashtra to Gujarat. For the second sale, the transport receipts and railway receipts were taken in the names of the purchasers at the instance of the assessee, freight was borne by the purchasers, and the goods were delivered during movement through transfer of documents of title. On these facts, the sale to the purchasers was effected while the goods were in the course of movement from one State to another. The existence of two sales at the same time did not prevent the second sale from being an inter-State sale.

Conclusion: The second sale was an inter-State sale under section 3(b) of the Central Sales Tax Act, 1956 and not a local sale under the Gujarat Sales Tax Act, 1969; the finding was in favour of the assessee.

Ratio Decidendi: A sale effected by transfer of documents of title while goods are in the course of movement from one State to another is an inter-State sale under section 3(b) of the Central Sales Tax Act, 1956, and simultaneous sales may coexist in law.

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