Branch transfer versus inter-State sale: goods moved through an intermediary branch were taxed as inter-State sales.

Movement of goods from the Trichy unit to the Chittoor branch was treated as an inter-State sale, not a genuine branch transfer, because the Chittoor branch functioned only as an intermediary before onward sale to Balaji Mill Stores. Identical goods, quantity and price, the short interval between receipt and resale, and the absence of dealings with any other purchaser at Chittoor supported the inference that the movement was made pursuant to Balaji Mill Stores' orders. The incorrect factual assumption about separate partnership entities did not displace that conclusion, and the turnover was therefore rightly taxed as inter-State sales.

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Issues: Whether the movement of goods from the Trichy unit to the Chittoor branch and onward sale to Balaji Mill Stores constituted a mere branch transfer or an inter-State sale liable to tax.

Analysis: The assessee's claim of branch transfer was rejected on the factual finding that the Chittoor branch acted only as an intermediary and that the goods were ultimately sold to Balaji Mill Stores. The materials showed a direct link between the assessee and the ultimate purchaser, with identical goods, quantity, and price, and with sales effected within a short time after receipt at Chittoor. The absence of dealings with any other party at Chittoor supported the inference that the goods moved pursuant to orders placed by Balaji Mill Stores. The factual premise adopted by the revisional authority regarding separate partnership entities was incorrect, but that did not alter the conclusion that the transactions were inter-State sales and not genuine branch transfers.

Conclusion: The turnover was rightly treated as inter-State sales and the assessee's challenge to the revisional orders failed.

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