The movement of goods from one State to another does not automatically constitute an inter-State sale under section 3 of the Central Sales Tax Act, 1956. There must be a direct link or nexus between the movement of goods and a contract for sale entered into between the parties.

RATNAM, J.

The appellant, who is a manufacturer and dealer at Madras with branches outside in duplicators, its accessories and duplicating ink, etc., reported a total and taxable turnover of Rs. 6, 08, 344.91 and Rs. 5, 70, 056.30 respectively under the Central Sales Tax Act, 1956

2. Before this Court, the learned counsel for the appellant contended that the turnover of Rs. 90, 500 represented transfer of stock from the Madras office to the Hyderabad branch and it did not relate to inter-State sales effected by the appellant. Drawing attention to all the several steps and features leading up to the despatch of goods to and delivery of the same by the branch of the appellant at Hyderabad to the Government of Andhra Pradesh, the learned counsel urged that the goods had been moved from Madras to the branch office not in fulfilment of any contract entered into by the appellant with the Director of Stationery and Printing, Hyderabad, and therefore, there was no connection or nexus between the contract and movement of the goods. On the other hand, the learned Additional Government Pleader submitted that the tender of the Hyderabad branch of the appellant had been accepted by the Government of Andhra Pradesh and thereafter, the goods were indented on the factory at Madras, which manufactured the same with the markings "Government of Andhra Pradesh 1972-73" and then the goods were despatched to the branch of the appellant at Hyderabad and that would clearly indicate that the goods moved from Tamil Nadu to Andhra Pradesh Pursuant to a contract entered into between the Director of Stationery and Printing, Hyderabad, with the branch of the assessee at Hyderabad.

3. Before embarking upon a consideration of these rival arguments, we may refer to section 3 of the Central Sales Tax Act, 1956, which is 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." *

For purposes of the present case, the two explanations are not germane. Whether on the features laid bare relating to the despatch and delivery of goods in this case, in the light of the provisions aforesaid, the sales effected by the appellant, occasioned the movement of goods from Tamil Nadu to Andhra Pradesh, is the only question that has to be considered, for, only if a sale occasions the movement of goods from one State to another, it can be deemed to have taken place in the course of inter-State trade or commerce within the meaning of section 3(a) of the Central Sales Tax Act. Clause (b) of section 3 is not very relevant for our purposes. The method and manner of transfer of goods by the appellant to its branch in Andhra pradesh, as could be gathered from the records, appears to be as under. The stock transfer invoices are drawn on the branch at Hyderabad. The goods are despatched to the appellant at its Hyderabad branch, taken delivery of by the branch and then made available to the local buyer against orders placed by the buyer with the branch office at Hyderabad. There was no contract for the supply of goods by the Madras office to the Government of Andhra Pradesh, Hyderabad. Nor has any link or nexus with the buyer either in the matter of manufacture, despatch of goods or delivery at the branch office has been established. The goods despatched by the appellant to its branch office at Hyderabad were tubes of duplicating ink which is one of the standard items manufactured by the appellant in the usual and ordinary course of its business and not against a special or specific order with a view to fulfil the particular requirement of the Government of Andhra Pradesh. The despatch of goods had not been don