Stock transfer to commission agent, not inter-State sale, where advance payment served only as security.

Goods moved to a commission agent under a genuine agency arrangement were treated as a stock transfer, not an inter-State sale. The Court noted that the recipient was appointed as a commission agent for sale of the goods and that the arrangement was undisputed. Advance payment of part of the price did not change the character of the transaction or by itself prove a concluded contract of sale; at most, it operated as security. The Tribunal's finding that the dispatch was by way of stock transfer for sale through a consignment agent was therefore upheld, and the revision failed.

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Issues: Whether the movement of goods to the commission agent in Tamil Nadu was in pursuance of a prior contract of sale so as to constitute an inter-State sale, or whether it was a stock transfer for sale through a consignment agent.

Analysis: The agreement appointed the recipient as a commission agent for sale of the goods and the genuineness of that arrangement was not in dispute. The mere fact that the agent was required to make advance payment of a part of the value did not alter the character of the transaction or convert the movement of goods into a sale pursuant to a prior contract. Advance payment could operate only as security and did not by itself establish a concluded contract of sale. The finding of the Tribunal that the goods were dispatched by way of stock transfer for sale, and not in pursuance of a prior contract of sale, was therefore well founded.

Conclusion: The transaction was a stock transfer to a commission agent and not an inter-State sale; the revision was liable to fail.

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