For a transaction to be treated as inter-State sale under...

For a transaction to be treated as inter-State sale under section 3(a) of the CST Act, the movement of goods must be occasioned by a prior contract of sale. On the agency agreement effective from 01.08.1995, the goods remained the principal's property, the agent sold on behalf of the principal, and the appellant discharged the initial burden under section 6A by producing documents and Form F declarations. The CESTAT erred in relying on pre-agreement material to characterise later movements as sales, so the post-01.08.1995 turnover was held to be consignment sales and the contrary assessment was set aside. The enhanced penalty based on that finding also fell away, while the reduced penalty on the remaining tax difference was maintained.

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