Statutory monopoly sale of tendu leaves treated as intra-State because later out-of-State movement was not caused by the sale itself.

A statutory monopoly sale of tendu leaves completed within Madhya Pradesh was held to be an intra-State sale for sales tax purposes. The court applied the settled test that a sale is inter-State only if the sale itself occasions movement of goods from one State to another. Purchasers' intention to use the leaves for manufacture outside the State did not alter the character of the transaction, because any later movement arose from the buyer's own choice and not from the terms of sale. The earlier precedent was distinguished on the basis that its contractual terms required delivery for onward movement outside the State.

---

---

Issues: Whether the sale of tendu leaves under the Madhya Pradesh statutory monopoly scheme was an inter-State sale or an intra-State sale for the purpose of sales tax.

Analysis: The scheme under the M.P. Tendu Patta (Vyapar Viniyaman) Adhiniyam, 1964 created a State monopoly in the trade of tendu leaves, regulated appointment of agents, registration of manufacturers, restrictions on purchase and transport, and controlled disposal and resale of the produce. The contention that the purchasers bought the leaves for manufacture outside Madhya Pradesh did not, by itself, make the sale inter-State. The decisive test was whether the sale itself occasioned the movement of goods from one State to another. On the facts, the statutory sale was completed within Madhya Pradesh and the possibility of later movement pursuant to the purchaser's own choice did not convert it into an inter-State sale. The earlier decision relied upon by the petitioners was distinguished because there the contractual terms themselves required delivery for onward movement outside the State.

Conclusion: The sale of tendu leaves was an intra-State sale exigible to tax under the State law and not an inter-State sale under the Central Sales Tax Act, 1956.

Ratio Decidendi: Where a statutory monopoly sale is completed within the State and the movement of goods outside the State is not occasioned by the sale itself, the transaction is an intra-State sale for sales tax purposes.

---