Inter-State sale in transit exemption applies only when title transfers during movement of goods, not after destination

A subsequent sale qualifies for exemption under section 6(2) of the Central Sales Tax Act, 1956 only when it is effected by transfer of documents of title while the goods are still in movement from one State to another. Section 3(b) is confined to sales made during transit, and Explanation 1 only fixes the start and end of movement without enlarging that requirement. Where the goods had already reached the destination and no transfer during transit was shown, the sale was not treated as an inter-State sale in transit and remained taxable.

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Issues: Whether the subsequent sales effected after the goods had reached their destination could be treated as sales in the course of inter-State trade so as to qualify for exemption under section 6(2) of the Central Sales Tax Act, 1956.

Analysis: Section 3(b) deems a sale to take place in the course of inter-State trade only when it is effected by transfer of documents of title during the movement of goods from one State to another. Explanation 1 does not enlarge that substantive requirement; it only fixes the commencement and termination of movement for the purpose of clause (b). Exemption under section 6(2) is available only when the subsequent sale is effected by transfer of documents of title while the goods are still in transit. On the facts, the goods had already reached the destination months earlier, and no material showed a transfer during movement. The earlier decisions relied on were distinguished on facts because they involved transfers while the goods were still moving.

Conclusion: The sales were not inter-State sales in transit and did not qualify for exemption under section 6(2) of the Central Sales Tax Act, 1956. The revisional order was in law and the assessee's challenge failed.

Ratio Decidendi: A subsequent sale is exempt under section 6(2) only if the transfer of documents of title occurs while the goods are still in movement from one State to another; once the movement has terminated at destination, the sale is intra-State and taxable.

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