Branch transfer vs inter-State sale: goods moved without a proved sale contract were not taxable as inter-State sales.

To attract inter-State sale treatment under section 3(a) of the Central Sales Tax Act, the movement of goods must be occasioned by a contract of sale, and the dealer may rebut that inference by proving under section 6A that the dispatch was otherwise than by sale. On the facts, the materials did not show that the cement sent from the factory in Orissa to the West Bengal branch was moved pursuant to purchase orders or any inseparable link between dispatch and sale to stockists. The transfers were therefore treated as branch transfers, not inter-State sales, and CST was not exigible on the disputed dispatches.

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Issues: Whether the movement of cement from the factory in Orissa to the branch office in West Bengal constituted an inter-State sale under section 3(a) of the Central Sales Tax Act, 1956, or a branch transfer otherwise than by way of sale under section 6A of that Act.

Analysis: The burden under section 6A lay on the dealer to prove that the goods moved to another State otherwise than as a result of sale. The declarations in Form F and the surrounding materials were to be tested to see whether there was a pre-existing contract of sale or an inseparable link between dispatch from Orissa and sale to stockists in West Bengal. The mere existence of stockist applications containing general particulars did not by itself establish such a link. The Revenue failed to show that the cement was dispatched pursuant to purchase orders or that each movement from Orissa was occasioned by a concluded contract of sale. The Court also found that the Tribunal had not been justified in treating the transfers as inter-State sales on the material before it.

Conclusion: The movement of cement was held to be a branch transfer and not an inter-State sale. The question was answered in the negative, in favour of the dealer and against the Revenue.

Final Conclusion: The revision was disposed of after holding that tax under the Central Sales Tax Act was not exigible on the disputed dispatches as inter-State sales.

Ratio Decidendi: To attract section 3(a) of the Central Sales Tax Act, 1956, the movement of goods to another State must be occasioned by a contract of sale; where the dealer discharges the statutory burden under section 6A and no inseparable link between dispatch and sale is proved, the movement is a branch transfer.

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