JUDGMENT

This appeal arises from the judgment of the Madras High Court in a Sales Tax Revision Case. The appellant is a co-operative sugar factory having its sugar factory at Chittur in Kerala State. Inasmuch as sufficient quantity of sugarcane was not available within the state of Kerala, the appellant and the Government of Kerala approached the State of Tamil Nadu for supply of sugarcane to the appellant-factory. In pursuance of the understanding arrived at between them, the Government of Tamil Nadu issued an order contained in G. O. M.S. No. 2260 dated July 20, 1963. By virtue of this order, the appellant was permitted to draw sugarcane from not more than 3,000 acres in Coimbatore and Pollachi taluks in Tamil Nadu, subject to the conditions specified therein. Condition No. 5 read thus :

"(Cl. (5) : The Co-operative Sugar Ltd.. Chittur, should remit to this Government the Sales Tax, on the cane supplies made from areas in Madras State. The basis for purposes of calculation will be taken as 3% of the purchase price of cane for a recovery of 9.8% (Rs. 1.62 per maund)"

2. In pursuance of the said order, appellant opened its offices at Coimbatore and Pollachi. The sugarcane inspectors from these offices used to visit the fields, inspect the sugarcane and also take delivery of the sugarcane from the farmers. They also arranged the transport of sugarcane to the factory under the cover of delivery notes in Form XX. In Form XX, the appellant itself was shown both as the seller and the buyer. (The learned counsel for the appellant denies the correctness of the above statement, which is a statement of fact found in the judgment of the High Court. According to him, Form XX mentions merely that the appellant is both -consigner and consingee -and not as the seller and the purchaser.)

3. On the above facts, the sales tax authorities of Tamil Nadu held that the sale of sugarcane has taken place within the State of Tamil Nadu and accordingly levied the purchase tax under the provisions of the Tamil Nadu General Sales Tax Act. The appellant disputed the levy contending that it was an Inter-state sale within the meaning of clause (a) of S. 3 of the Central Sales Tax Act and, therefore, not eligible to tax under the Tamil Nadu General Sales Tax Act. The matter ultimately reached the High Court of Madras. On a consideration of the above circumstances, the High Court concluded that inasmuch as the sale took place within the State of Tamil Nadu and the property in the goods passed to the appellant in Tamil Nadu, the mere fact of transport of the goods later from Tamil Nadu to Kerala as its own goods makes no difference. In such a case, the High Court held, it cannot be said that the movement of the goods was a stipulation of or an incident of the contract of sale. The correctness of the said view is challenged in this appeal.

4. Section 3 of the Central Sales Tax Act, 1956 reads as follows :

"3. When is a sale or purchase of goods said to take place in the course of inter-State trade or commerce- A sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce if the sale or purchase-

(a) occasions the movement of goods from one State to another; or

(b) is effected by a transfer of documents-of title to the goods during their movement from one State to another."

5. The scope and content of S. 3 has been explained in several decisions of this Court. It is sufficient for the purpose of this case to refer to the recent decision of this Court in Commr. of Sales Tax, U. P. v. Bakhtawar Lal, 87 STC 196. After reviewing the earlier decisions of this Court, it was held (paras 7, 15, 16 and 17 of AIR) :

"............. According to clause (a) of S. 3, an inter-State sale or purchase is one which occasions the movement of goods from one State to another. In other words, the movement of goods from one State to another must be the necessary incident - the necessary consequence of sale or purchase. A case of cause and effect - the