Inter-State sale test: movement of goods occasioned by the contract is decisive even without an express transport clause

Sales are inter-State under section 3(a) of the Central Sales Tax Act, 1956 where movement of goods from one State to another is occasioned by the contract of sale or forms an incident of that contract. An express stipulation in the contract requiring such movement is not decisive, and the test does not depend on passing of property alone. On the facts stated, the goods moved from Bihar to customers in West Bengal as part of the sale transaction, so the sales were treated as inter-State sales and the answer was against the assessee.

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Issues: Whether the sales of explosives from Bihar to customers in West Bengal constituted inter-State sales under section 3(a) of the Central Sales Tax Act, 1956.

Analysis: A sale is inter-State if the movement of goods from one State to another is occasioned by the contract for sale or is an incident of that contract. The existence of an express stipulation in the contract requiring movement from one State to another is not decisive. On the facts found, the assessee entered into contracts through its head office, the goods moved from the factory in Bihar to the customers in West Bengal, and the movement was part of the sale transaction. The Tribunal's inference of an implied contractual arrangement was not decisive, because the legal test turns on whether the movement of goods was occasioned by the contract and not on the passing of property or on a specific covenant alone.

Conclusion: The sales were inter-State sales within section 3(a) of the Central Sales Tax Act, 1956, and the answer was against the assessee and in favour of the Revenue.

Ratio Decidendi: A sale is inter-State where the movement of goods from one State to another is occasioned by, or is an incident of, the contract of sale, regardless of whether the contract expressly stipulates such movement.

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