Inter-State sale principle applies where goods are allotted for named out-of-State factories and moved as part of the original transaction.

Goods allotted for specified factories outside Tamil Nadu and moved uninterrupted from the supplier's godown at Chennai form an inter-State sale when the destination factories are named in the allotment and delivery documents and the movement is integral to the transaction from the outset. On that analysis, the sale cannot be treated as a local purchase taxable at the last purchase point within the State. The stated conclusion is that transactions of this kind are outside the scope of intra-State last purchase taxation and fall within the character of inter-State trade.

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Issues: Whether the transactions involving delivery of raw rubber from the State Trading Corporation godown at Chennai and its movement to factories outside Tamil Nadu constituted inter-State sales or local purchases liable to tax as last purchase within the State.

Analysis: The allotment applications, delivery orders and despatch documents showed that the rubber was requisitioned for factories situated in Andhra Pradesh and Pondicherry, the destinations were specifically named, and the goods were intended for use only in those factories. The movement of the goods was not a post-delivery private transfer disconnected from the contract, but was integral to the very arrangement under which the rubber was allotted and delivered. Where the movement of goods is an incident of the transaction and is uninterrupted from the supplier's godown to the out-of-State factories, the sale assumes the character of an inter-State sale and cannot be treated as a local purchase taxable at the last purchase point.

Conclusion: The transactions were inter-State sales and not intra-State purchases liable as last purchase within Tamil Nadu; the Revenue's revisions failed.

Final Conclusion: The assessments treating the turnover as local last purchase were not sustainable, and the Tribunal's order cancelling the assessments was confirmed.

Ratio Decidendi: If goods are allotted and delivered for specified out-of-State factories and their movement from the supplier to those factories forms part of the transaction from the outset, the sale is an inter-State sale under Section 3(a) of the Central Sales Tax Act.

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