Inter-State sale under CST law applied to allocated newsprint supplies where movement across States was integral to the transaction.

Sale of newsprint under the allocation system was treated as an inter-State sale because the movement of goods from West Bengal to other States was an integral incident of the supply arrangement. The Tribunal applied section 3(a) of the Central Sales Tax Act, 1956, holding that a sale is inter-State where the contract or allocation mechanism occasions movement across State borders, even if the agreement does not expressly stipulate dispatch and the place of passing property is not decisive. On that basis, the adverse orders and recovery action were unsustainable.

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Issues: Whether the sale of newsprint under the allocation system constituted an inter-State sale under section 3(a) of the Central Sales Tax Act, 1956.

Analysis: The goods were supplied pursuant to allocation and authorisation orders issued by the Registrar of Newspapers for India, and the purchasers had no free choice as to source or place of despatch. The governing test under section 3(a) is whether the sale occasions movement of goods from one State to another as a covenant or incident of the contract of sale. On the facts, the movement from West Bengal to other States was an integral part of the transaction, and the place where property passed was not determinative. The Tribunal applied the settled principle that a sale may be inter-State even if the contract does not expressly stipulate movement, so long as the movement is the result of the contractual arrangement or its incident.

Conclusion: The transaction was an inter-State sale within section 3(a) of the Central Sales Tax Act, 1956, and the adverse orders and recovery action were unsustainable.

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