Inter-State sale by endorsement of railway receipts during transit treated as transfer of title under CST law.

Endorsement of railway receipts while goods were in transit from one State to another constituted an inter-State sale under section 3(b) of the Central Sales Tax Act, 1956, because the transfer of documents of title completed the sale during movement. Where the railway receipts were first taken in the seller's name and then endorsed to the purchaser before delivery, the transaction was treated as a sale in the course of inter-State movement rather than a completed local sale followed by a separate dispatch. Earlier similar bilti-cut transactions were treated on the same footing, while authorities cited by the dealer were distinguished on their facts.

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Issues: Whether the transaction effected by endorsement of railway receipts during the movement of goods from one State to another constituted an inter-State sale under section 3(b) of the Central Sales Tax Act, 1956.

Analysis: Section 3(b) covers a sale effected by transfer of documents of title to the goods during their movement from one State to another. The material facts showed that the railway receipts were initially prepared in the dealer's own name and were thereafter endorsed in favour of the purchasers while the goods were in transit. On those facts, the sale was completed through transfer of documents of title during movement and not as a completed local sale followed by an independent dispatch. The facts were found to be on the same footing as the earlier Division Bench decision which had treated similar bilti-cut transactions as inter-State sales. The authorities relied on by the dealer were distinguished on the basis that they involved different contractual terms or a different factual pattern.

Conclusion: The transaction was an inter-State sale falling under section 3(b) of the Central Sales Tax Act, 1956, and the Revenue's contention succeeded.

Ratio Decidendi: Where railway receipts are taken in the seller's name and are endorsed to the purchaser during the movement of goods from one State to another, the sale is an inter-State sale under section 3(b) as a transfer of documents of title during transit.

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