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Issues: Whether the sale of crude oil from the Barmer fields to nominees of the Central Government, though agreed to be sold with the point of sale in Rajasthan, was an inter-State sale attracting Central Sales Tax and excluding levy of Rajasthan VAT.
Analysis: The petitioner sold crude oil only to nominees of the Central Government, whose refineries were outside Rajasthan. The contractual arrangement and the undisputed facts showed that the crude oil had necessarily to move out of Rajasthan for processing, and that movement was an essential incident of the sale. Under Section 3(a) of the Central Sales Tax Act, 1956, a sale occasions inter-State trade when it causes movement of goods from one State to another. The Court held that the point of sale or delivery, and the passing of title or risk, were not decisive where the sale itself necessarily resulted in movement of goods outside the State in one continuous transaction. The petitioner's undertaking that the point of sale would be in Rajasthan could not override the statutory incidence of tax, because tax can be levied only by authority of law.
Conclusion: The sale was an inter-State sale. The Rajasthan authorities had no jurisdiction to levy VAT under the Rajasthan Value Added Tax Act, 2003, and only Central Sales Tax was payable.
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