Section 6(2) exemption depends on transfer of a true document of title and sale during the original inter-State movement.

Exemption for a subsequent sale under section 6(2) of the Central Sales Tax Act depends on two conditions: the sale must be effected by transfer of a recognised document of title to goods, and it must occur while the goods are still in the course of the original inter-State movement. The note explains that lorry receipts can be documents of title, but form XX delivery notes, authorisation letters and invoices do not have that character because they are only transport or delivery arrangements. It also states that once movement ends at the original destination, a later onward dispatch under a fresh arrangement does not fall within the original movement for section 6(2) purposes.

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Issues: (i) Whether the assessees' subsequent sales were effected by transfer of documents of title to goods so as to qualify for exemption under section 6(2) of the Central Sales Tax Act, 1956; (ii) whether those sales were effected during the movement of the goods from one State to another within the meaning of section 6(2) read with section 3(b) of the Central Sales Tax Act, 1956.

Issue (i): Whether the assessees' subsequent sales were effected by transfer of documents of title to goods so as to qualify for exemption under section 6(2) of the Central Sales Tax Act, 1956.

Analysis: The expression "sale effected by transfer of documents of title to goods" requires a transfer through a recognised document of title within section 2(4) of the Sale of Goods Act, 1930. The original lorry receipts were documents of title, but they were not transferred to the purchasers. The form XX delivery notes, the authorisation letters and the invoices were held not to be documents of title to goods, since they were only transport or delivery arrangements and did not satisfy the statutory characteristics of a delivery order or other document used as proof of possession or control of the goods.

Conclusion: The sales were not effected by transfer of documents of title to goods, and the assessee was not entitled to exemption on that ground.

Issue (ii): Whether those sales were effected during the movement of the goods from one State to another within the meaning of section 6(2) read with section 3(b) of the Central Sales Tax Act, 1956.

Analysis: For section 6(2) to apply, the subsequent inter-State sale must occur while the goods are still in movement pursuant to the earlier inter-State sale. On the facts, the movement under the original lorry receipts ended at Coimbatore, where notional delivery to the assessees was treated as having taken place. The later transportation from Coimbatore to the purchasers' destinations was under a fresh arrangement and did not extend the original inter-State movement. Explanation 1 to section 3(b) did not assist the assessees because the relevant movement had already terminated at the original destination.

Conclusion: The subsequent sales were not effected during the course of the original movement of the goods, and section 6(2) exemption was unavailable.

Final Conclusion: The Tribunal's view granting exemption was unsustainable, the revised assessment was restored, and the tax revisions were allowed in favour of the Revenue.

Ratio Decidendi: Exemption under section 6(2) of the Central Sales Tax Act, 1956 is available only when the subsequent sale is both effected by transfer of a document of title to goods and made during the continuance of the original inter-State movement; a later arrangement for onward transport after termination of that movement does not satisfy either condition.

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