Inter-State sale requires contractual movement of goods; voluntary transport after auction leaves sandalwood sales as local sales.

Auction sales of sandalwood in Tamil Nadu are treated as inter-State sales only if the sale contract expressly or impliedly requires movement of the goods to another State and the movement is occasioned by that contract. Where the purchaser's later transport decision is independent of the auction purchase, the transaction remains intra-State. Forest controls, transport permits, and certificates did not create any contractual obligation to move the sandalwood to Karnataka. The Tamil Nadu seller was concerned only with the sale price and did not covenant for out-of-State movement. The court therefore treated the movement as voluntary and held that the sales were local sales, not sales chargeable under the Central Sales Tax Act.

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Issues: Whether the auction sales of sandalwood effected in Tamil Nadu and followed by transportation of the goods to Karnataka were inter-State sales chargeable under the Central Sales Tax Act, or intra-State sales taxable under the Tamil Nadu General Sales Tax Act.

Analysis: A sale qualifies as inter-State only when the contract of sale contains an express or implied stipulation for movement of goods from one State to another and the movement is occasioned by that contract. If the movement occurs independently of the sale and is merely the purchaser's choice after completion of the auction purchase, the transaction does not acquire an inter-State character. The control placed on transit under forest and permit rules, and the fact that the purchaser obtained transport permits and certificates, did not create a legal obligation on the purchaser to move the goods to Karnataka. The auction seller in Tamil Nadu was concerned only with the sale price and did not covenant, expressly or impliedly, that the goods must be transported outside the State. The movement of sandalwood from Tamil Nadu to Karnataka was therefore voluntary and not the proximate result of the auction sale.

Conclusion: The transactions were not inter-State sales and were liable to be treated as local sales.

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