Stock transfer versus inter-State sale: movement against OFS without binding purchase obligation was not liable to central sales tax.

Movement of beer from Rajasthan to depots in Bihar and Jharkhand was held not to be occasioned by a contract of sale. The arrangement under the liquor policy, master agreement and OFS mechanism created no binding obligation on the buyer to purchase any minimum quantity; it only allowed supply from stock against later indents or orders. Clause 10.1 treated supply against OFS as an agreement to sell, but the transfers remained stock transfers maintained for depot requirements. On that basis, the inter-State sales tax demand could not be sustained.

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Issues: Whether the movement of beer from the manufacturing unit in Rajasthan to the depots in Bihar and Jharkhand was an inter-State sale liable to central sales tax, or only an inter-State stock transfer.

Analysis: The movement of goods was examined against the Liquor Policy, the Master Agreement, the OFS mechanism, and the depot-stock requirements. The Corporation was not obliged to purchase any specified minimum quantity, the OFS was issued according to requirement, and the delivery arrangement did not create a binding obligation to purchase. The agreement operated only as a future option to buy, akin to a standing order, and clause 10.1 treated supply against OFS as an agreement to sell under section 4(3) of the Sale of Goods Act, 1930. On that footing, the movement from Rajasthan to the depots was for maintaining stock and not because of any prior contract of sale.

Conclusion: The movement of goods was not occasioned by an inter-State sale and was only a stock transfer.

Final Conclusion: The tax demand founded on inter-State sale could not be sustained, and the assessee succeeded in all the appeals.

Ratio Decidendi: Where the buyer is under no binding obligation to purchase and the arrangement merely enables supply from stock against later indents or orders, movement of goods is not treated as having been occasioned by a contract of sale.

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