Inter-State sale test applies where goods move across states pursuant to customer order and incidental to the sales contract.

Motor cars ordered through the dealer's Mumbai branch, procured in Mumbai and moved to Cuttack for delivery were held to be sold in the course of inter-State trade because the movement from Maharashtra to Odisha was occasioned by, and incidental to, the contract of sale. Applying the section 3(a) test, the court treated the movement as part of the sale itself rather than a later independent step, and rejected the Tribunal's reliance on an inapposite illustration. The transaction was therefore inter-State and not taxable under the Odisha Sales Tax Act, 1947; the revision was allowed and the order deleting the disputed turnover was restored.

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Issues: Whether the sale of motor cars by the dealer from its Mumbai branch to customers in Odisha was an inter-State sale under section 3(a) of the Central Sales Tax Act, 1956 or an intra-State sale exigible to tax under the Odisha Sales Tax Act, 1947.

Analysis: The transaction showed that the customers placed orders with the Mumbai branch, the cars were procured from the manufacturer in Mumbai, and the vehicles were moved to Cuttack for delivery to the customers. The movement of the goods from Maharashtra to Odisha was not a later, independent step but was occasioned by the contract and was incidental to the sale. The Tribunal had applied the wrong illustration from the decision in Balabhagas Hulschand, while the facts were instead aligned with the principles governing inter-State movement laid down in English Electric, Sahney Steel and Rolta Motors. On the statutory test under section 3(a), a sale occasions inter-State movement when the movement is in pursuance of the contract or incidental to it.

Conclusion: The sale was inter-State in nature and not liable to tax under the Odisha Sales Tax Act, 1947.

Final Conclusion: The revision was allowed, the Tribunal's order was set aside, and the first appellate order deleting the disputed turnover was restored.

Ratio Decidendi: Where goods are moved from one State to another in pursuance of a customer order and the movement is incidental to the contract of sale, the transaction is an inter-State sale under section 3(a) of the Central Sales Tax Act, 1956.

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