Inter-State sale test: goods moved under the sale contract, so the turnover was treated as inter-State trade.

Inter-State sales are determined by whether the movement of goods was required by, or incidental to, the contract of sale. Transport documents standing in the consignee's name are not conclusive of an intra-State transaction where the surrounding records show sale to an out-of-State buyer and movement pursuant to that buyer's instructions. On the facts, the bills, purchase orders and challans supported the assessee, while the Revenue failed to prove local delivery or the existence of a buyer firm at the alleged in-State location. The turnover was therefore treated as sales in the course of inter-State trade and commerce, and tax under the State provision did not apply.

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Issues: Whether the turnover in question represented sales in the course of inter-State trade and commerce, or whether the transaction was completed within the State so as to attract tax under the proviso to section 5(1) of the Rajasthan Sales Tax Act, 1954.

Analysis: The determining test is whether the inter-State movement of goods was the result of a covenant, express or implied, in the contract of sale, or was an incident of that contract. Mere issuance of transport documents in the name of the consignee is not conclusive of an intra-State sale if the surrounding evidence shows that the goods were sold to an out-of-State buyer and moved of the State pursuant to that buyer's instructions. On the record, the bills, purchase orders and challans supported the assessee's version, while the revenue failed to prove delivery at Pali or the existence of any buyer firm there. The movement of goods outside Rajasthan was thus found to be an integral part of the sale transaction and not independent of it.

Conclusion: The turnover in question was held to be exigible as sales in the course of inter-State trade and commerce, and the Revenue's revisions failed.

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