Inter-State sale principle: movement caused by customer orders prevails over branch routing under the Central Sales Tax Act.

The Madras HC held that turnover supported by customer orders in other States constituted an inter-State sale under section 3(a) of the Central Sales Tax Act, 1956, because the movement of goods from Madras was occasioned by the contract of sale. Routing the railway receipt or lorry receipt through branches did not change the character of the transaction. The court applied the settled principle that the decisive factor is whether the sale itself caused the movement of goods, not the intermediary route taken. The earlier appellate view treating the turnover as a stock transfer was therefore unsustainable.

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Issues: Whether the disputed turnover represented a stock transfer from the head office to branches or an inter-State sale under section 3(a) of the Central Sales Tax Act, 1956.

Analysis: The assessment records showed that the orders for supply identified customers in other States and described the goods to be supplied. The movement of goods from Madras was found to have been occasioned by those orders, and the fact that the railway receipt or lorry receipt was routed through branches did not alter the true character of the transaction. Applying the settled principle that it is the occasioning of movement by the contract of sale, and not the number of stopovers or the intermediary route, that determines the nature of the sale, the earlier appellate view treating the turnover as a stock transfer was held to be unsustainable.

Conclusion: The transaction was held to be an inter-State sale and not a stock transfer.

Ratio Decidendi: Where movement of goods is occasioned by customer orders and is in pursuance of the contract of sale, the transaction is an inter-State sale under section 3(a) of the Central Sales Tax Act, 1956, even if the goods pass through branches before reaching the buyer.

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