Inter-State sale characterization upheld where cashewnut transfers through artificial agency arrangements remained liable to Central sales tax.

The supply of cashewnuts purchased by the dealer on its own account to non-resident principals was treated as an inter-State sale because the intervening sales and repurchases were found to be unreal and designed to avoid Central sales tax. The movement of goods from the dealer's stock in one State to the principals in another State satisfied the statutory character of an inter-State transaction, and the dealer's attempt to describe the dealings as agency transactions did not change the tax consequence. The disputed turnover was therefore held liable to Central sales tax.

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Issues: Whether the supply of cashewnuts purchased on the dealer's own account to non-resident principals, through the intervening arrangement of sales and purchases, constituted an inter-State sale liable to Central sales tax.

Analysis: The dealer had purchased the goods on its own account, but attempted to present the subsequent movement of those goods to non-resident principals as agency transactions. The arrangement involving sales to M/s. J.S. Ranganaikulu and repurchases within a short span was treated as unreal and designed to avoid Central sales tax. The transfer of goods from the dealer's stock to the non-resident principals caused movement of goods from one State to another and therefore satisfied the character of an inter-State sale under the Central Sales Tax Act. The dealer's reliance on dual capacity as owner and agent did not alter the tax consequence because the effective transaction was between the dealer and the non-resident principals and resulted in interstate movement.

Conclusion: The disputed turnover was held liable to Central sales tax and the dealer's challenge failed.

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