Inter-State sale through contract performance was held outside local trade tax where Central sales tax had been paid.

A supply contract concluded between parties in different States, executed by movement of goods pursuant to that contract, was treated as an inter-State sale under the Central Sales Tax regime. Because Central sales tax had already been paid and declaration forms were produced, the transaction was not regarded as a local sale liable to U.P. trade tax. The principle applied is that where inter-State movement of goods is integral to performance of a pre-existing cross-State contract, the sale falls outside the recipient State's local trade tax net.

---

---

Issues: Whether the transaction for supply of equipment, machinery and apparatus to the buyer in Uttar Pradesh was an inter-State sale covered by the Central Sales Tax Act, 1956 and therefore not liable to U.P. trade tax.

Analysis: The contract was concluded between parties situated in different States before the movement of goods, and the supplies were made pursuant to that contract. The assessee had already paid Central sales tax on the transactions and had produced the relevant declaration forms before the Tribunal. On these facts, the transaction was treated as an inter-State trade transaction falling within the Central sales tax regime and not as a local sale exigible to tax under the U.P. Trade Tax Act, 1948.

Conclusion: The transaction was not liable to U.P. trade tax and the revision failed.

Ratio Decidendi: A sale pursuant to a contract concluded between parties in different States, where the movement of goods is in execution of that contract and Central sales tax has been paid, is an inter-State sale not taxable as a local sale in the recipient State.

---