Inter-State sale test applied to vehicle sales where out-of-State movement was part of the sale contract.

Sale of vehicles was treated as an inter-State sale where the surrounding facts showed that the cars were meant to move out of Karnataka pursuant to the sale contract. Although delivery was claimed to have occurred locally at Bangalore, the vehicles were soon taken to Chennai or Pondicherry, later registered there, and financed through institutions in those places. Applying the settled test that a sale is inter-State when the movement of goods from one State to another is occasioned by the contract and forms an incident of the sale, the transactions were held to fall within Central sales tax. The concurrent factual findings below were supported by cogent reasons.

---

---

Issues: Whether the sale of vehicles constituted inter-State sales exigible to Central sales tax.

Analysis: The assessee claimed that the sales took place at Bangalore and that delivery was given locally, but the surrounding circumstances showed that the vehicles were taken out of Karnataka soon after sale and were ultimately registered at Chennai or Pondicherry. The records also indicated temporary registration in those places and financing through institutions situated there, supporting the inference that movement outside the State was contemplated at the time of sale. Applying the settled test that a sale is inter-State only when there is a sale and the movement of goods from one State to another is occasioned by the contract, the movement here was found to be an incident of the sale. The question was also treated as one of fact, and the concurrent findings of the authorities below were based on cogent reasons.

Conclusion: The sale was rightly treated as an inter-State sale and the levy of Central sales tax was upheld.

Ratio Decidendi: Where the movement of goods from one State to another is occasioned by the contract of sale and forms an incident of the sale, the transaction constitutes an inter-State sale, even if delivery initially occurs within the State.

---