Inter-State trade requires movement under the contract itself, not a later outside-State resale after a local purchase.

A purchase made wholly within a State does not acquire an inter-State character merely because the buyer later resells the goods outside the State. Inter-State trade requires a sale or purchase that itself involves movement of goods from one State to another under the contract of sale or purchase. Where the taxable event is a local purchase completed within the State, the later outside-State resale is legally separate and does not attract constitutional immunity under Article 286(2). On that basis, the intra-State levy under the Orissa Sales Tax Act was valid.

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Issues: Whether purchases made inside the State, which were later resold outside the State in breach of the registration declaration, were sales or purchases in the course of inter-State trade so as to be immune from tax under Article 286(2) of the Constitution.

Analysis: The taxable event was the purchase made within Orissa. The transactions taxed were sales completed wholly within the State, and the subsequent resale by the purchaser to dealers outside the State was distinct from, and legally separate from, the purchases on which tax was levied. For a transaction to fall within inter-State trade, there must be a sale or purchase and a movement of goods from one State to another under the contract of sale or purchase. A mere purchase within the State for the purpose of later resale outside the State does not by itself satisfy that requirement. The constitutional protection against taxation therefore did not extend to the impugned levy under section 5 of the Orissa Sales Tax Act, 1947.

Conclusion: The levy was not hit by Article 286(2), and the tax on the intra-State purchases was valid.

Final Conclusion: The petition failed because the impugned assessment related to local purchases within the State and not to a taxable inter-State sale or purchase.

Ratio Decidendi: A purchase made wholly within a State does not become a transaction in the course of inter-State trade merely because the purchaser later resells the goods outside the State; inter-State character requires movement of goods under the contract of sale or purchase.

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