Inter-State sale test: goods moved out as an integral incident of purchase, so local sales tax did not apply.

Movement of beedi leaves from depots to a factory outside the originating State was treated as an inter-State sale because the purchase, destination and transport arrangement were inseparably connected. The goods were bought with prior disclosure that they had to be taken directly out of the State, and the permits showed no intention to retain or use them locally. A later independent movement was absent; transport to the other State was an incident of the purchase itself. On that basis, the transaction was not an intra-State sale and was not liable to tax under the local sales tax law.

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Issues: Whether the purchase and transport of beedi leaves from depots in Andhra Pradesh to the factory in Maharashtra constituted an inter-State sale, so as to exclude levy under the Andhra Pradesh sales tax law.

Analysis: The determining test was whether the movement of goods and the sale were inseparably connected. The purchase was made with prior disclosure of the destination, route and mode of transport, and the transport permits showed that the goods were required to be taken directly outside the State. On the facts found, the goods were never intended to be retained or dealt with in Andhra Pradesh as local purchases for consumption there. The movement to Maharashtra was not a later independent act but an incident of the purchase itself. Where the movement of goods is occasioned by the sale or purchase and is implicit in the arrangement, the transaction is of inter-State character and cannot be treated as an intra-State taxable sale merely because delivery was taken within the State.

Conclusion: The transactions were inter-State sales and were not exigible to tax under the Andhra Pradesh General Sales Tax Act for the year in question.

Ratio Decidendi: If the movement of goods from one State to another is an integral and inseparable incident of the sale or purchase, the transaction is an inter-State sale even though delivery is taken within the originating State.

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