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Issues: Whether the inter-State character of the purchase was lost when HR coils were sent for conversion into pipes in Tamil Nadu for execution of the works contract, and whether the turnover was liable to tax under the Tamil Nadu General Sales Tax Act, 1959.
Analysis: The Court followed the principle that a sale is inter-State where it occasions movement of goods from one State to another. It noted that the goods were purchased pursuant to the contract, moved in connection with the tender requirements, and were sent for conversion only at the instance of the buyer for eventual use in the same contract. Mere stoppage at the job-work site and conversion into pipes did not change the character of the transaction or terminate the inter-State movement. The Court found the ruling in Sun Paper Mills applicable and held that the nature of the goods after conversion did not justify treating the transaction as a local sale for Tamil Nadu tax purposes.
Conclusion: The transaction remained an inter-State sale and was not exigible to tax as a local turnover under the Tamil Nadu General Sales Tax Act, 1959. The questions of law were answered against the Revenue and in favour of the assessee.
Ratio Decidendi: Stoppage of goods in the destination State for conversion or job work, when undertaken pursuant to the contract and the buyer's instructions, does not by itself destroy the inter-State character of the sale.
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