Intra-State sale test for auctioned timber depends on any binding obligation to move goods outside the State.

The sale of sandalwood was treated as an intra-State transaction because, at the time of bidding and confirmation, there was no statutory or contractual obligation requiring the purchaser to move the goods outside Kerala. The auction conditions were ordinary sale terms only, and the sale was completed on acceptance of the bids and confirmation in the auction process. The purchasers' later intention to transport the timber to other States was held immaterial. Authorities involving pre-existing obligations linking movement of goods to the transaction were distinguished. The sale was therefore taxable under the Kerala General Sales Tax Act, not as an inter-State sale under the Central Sales Tax Act.

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Issues: Whether the auction sale of sandalwood was an inter-State sale exigible only to Central sales tax, or an intra-State sale taxable under the Kerala General Sales Tax Act.

Analysis: The decisive test was whether, at the time of bidding and completion of the auction, there existed any statutory or contractual obligation requiring the purchaser to move the goods outside the State. The auction conditions were found to be ordinary sale conditions, with no binding requirement to transport the timber to other States. The sale became complete on acceptance of the bids and confirmation in the auction process, and the purchasers' later intention to take the goods outside Kerala was held to be immaterial. The authorities relied on by the appellants were distinguished because they involved pre-existing obligations or statutory conditions connecting the movement of goods with the transaction itself.

Conclusion: The sale was held to be an intra-State sale taxable under the Kerala General Sales Tax Act and not an inter-State sale under the Central Sales Tax Act.

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