Inter-State sale requires a contractual nexus with the movement of goods; branch transfer to local stock was not taxable.

A sale is not an inter-State sale under the Central Sales Tax Act unless the movement of goods is occasioned by a contract of sale and the necessary contractual nexus is established. Here, goods were ordered through the Bombay branch, manufactured at Madras, sent to Bombay stock, and then sold locally by the branch. As there was no direct contact between the Madras office and Bombay buyers, and no evidence that the buyers intended to purchase goods in transit from Madras to Bombay, the movement was treated as branch transfer rather than inter-State sale, and the turnover was held not liable as such.

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Issues: Whether the disputed turnover of Rs. 20,694 constituted inter-State sales liable to tax under the Central Sales Tax Act, 1956.

Analysis: The goods were ordered through the Bombay branch, manufactured at Madras, and then dispatched to the Bombay branch, which cleared the goods from the carrier, took them into its own stock, and thereafter effected sales to local customers. There was no direct contact between the Madras head office and the Bombay buyers, and the record did not show any intention by the buyers to purchase goods moving from Madras to Bombay. The movement of goods was not shown to have been occasioned by a contract of sale with the Bombay buyers, and the contractual nexus necessary to constitute an inter-State sale was absent.

Conclusion: The disputed turnover of Rs. 20,694 was not inter-State sales turnover and was not liable to assessment as such; the finding was in favour of the assessee.

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