Inter-State sale test: tendu leaf purchases were treated as intra-State sales because export movement was not contractually mandated.

Purchases of tendu leaves under the tender and agreement framework were held not to be inter-State sales because the statutory scheme created regulatory controls, not a contractual requirement to move the goods outside the State. The tender terms covered delivery, payment, storage, transit permits, taxes, and statutory compliance, but did not expressly or impliedly obligate inter-State movement as part of the sale. Since the post-delivery movement was independent of the contract and not the proximate result of the sale, the transaction did not satisfy the test under section 3(a) of the Central Sales Tax Act. The sales were therefore intra-State sales, and liability under the State enactments applied.

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Issues: Whether the purchase of tendu leaves by registered exporters under the tender and agreement framework constituted an inter-State sale or an intra-State sale.

Analysis: The statutory scheme under the Tendu Patta Act and the Rules imposed a State monopoly and regulated purchase, transport, registration, and transit permits, but those requirements operated as regulatory controls and not as contractual stipulations requiring inter-State movement. The agreement and tender conditions provided for delivery, payment, storage, transport permits, taxes, and compliance with the statute, yet they did not oblige the purchasers to move the goods outside the State as an express or implied term of sale. The movement of goods after delivery was therefore found to be independent of the contract of sale and not the proximate result of the sale itself. Applying the settled test under section 3(a) of the Central Sales Tax Act, a sale qualifies as inter-State only when movement of goods from one State to another is occasioned by, or incidental to, the contract of sale.

Conclusion: The sale was not an inter-State sale and was an intra-State sale; the petitioners were liable to pay tax under the State enactments.

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