Stock transfer to maintain depot buffer stock is not an inter-State sale without proof the movement was occasioned by sale.

Movement of goods from an assessee's Uttar Pradesh unit to a Delhi depot, made under an arrangement requiring maintenance of buffer stock, was not an inter-State sale absent proof that the transfer was occasioned by a sale. Form F was treated as material evidence, and in the absence of any defect in that form or reliable contrary evidence, the movement could not be taxed as an inter-State sale merely because sales tax forms were used or tax had been paid under protest. The prior decision on a similar depot arrangement was followed, and the transfer was held to be a stock transfer not liable to such tax.

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Issues: Whether the transfer of goods from the assessee's Uttar Pradesh unit to the Delhi depot under the relevant arrangement constituted an inter-State sale liable to tax, or only a stock transfer not taxable as inter-State sale.

Analysis: The arrangement required the assessee to maintain a buffer stock at Delhi and did not itself evidence any concluded sale or purchase. The submission of Form F was material, and in the absence of any infirmity in that form or reliable evidence showing that the movement of goods was occasioned by sale, the transfer could not be treated as inter-State sale merely because sales tax forms had been used or tax had been deposited under protest. The earlier decision on a similar agreement was applied, holding that movement of goods to maintain depot stock does not by itself amount to a sale.

Conclusion: The disputed transfer was not an inter-State sale and could not be taxed as such. The assessee succeeded and the Tribunal's order was set aside.

Ratio Decidendi: Movement of goods to another depot under an arrangement requiring maintenance of buffer stock, without proof that such movement was occasioned by a sale, is not an inter-State sale liable to tax.

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