Inter-State sale classification turns on movement caused by the sale contract, not mistaken stock-transfer declarations.

Where goods moved from one State to another in pursuance of purchase orders and accompanying despatch records, the movement was held to be occasioned by the contract of sale and not by a stock transfer. The mistaken use of form F declarations did not alter the true legal character of the transactions. On that basis, the local assessing authority had no jurisdiction to treat the sales as intra-State sales or levy local sales tax. The assessments were quashed, the transactions were treated as inter-State sales, and the tax collected was directed to be refunded.

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Issues: Whether the impugned assessments treating the transactions as local sales were sustainable, or whether the transactions were inter-State sales liable to be assessed under the Central Sales Tax regime.

Analysis: The purchase orders, invoices and despatch records showed that the buyer placed orders with the head office at Bangalore and that the goods moved from Karnataka to the buyer's workshops in Tamil Nadu in pursuance of those orders. The movement of goods was therefore occasioned by the contract of sale and not by a mere stock transfer. The use of form F declarations by mistake did not alter the true character of the transactions. On these facts, the local assessing authority lacked jurisdiction to treat the sales as intra-State sales and levy local sales tax.

Conclusion: The transactions were inter-State sales and the assessments as local sales were unsustainable; the assessee succeeded.

Final Conclusion: The assessment orders for both years were quashed and the tax collected under them was directed to be refunded.

Ratio Decidendi: Where the movement of goods from one State to another is the direct result of a contract of sale, the transaction is an inter-State sale, and an erroneous stock-transfer declaration cannot change its legal character.

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