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Report No. 30

Contract involving.-Finally, reference may be made to an Andhra Pradesh decision,1 where the following observations occur:-

'We need only refer to a recent decision of the Supreme Court in Cement Marketing Co. of India (Pvt) Ltd. v. State of Mysore, AIR 1963 SC 980: 14 STC 175. in the course of which the entire case law was reviewed and the position was summed up thus at p. 984 of the AIR.:-

"Thus the tests which have been laid down to bring a sale within inter-State sales are that the transaction must involve movement of goods across the border,2 transactions are inter-State in which as a direct result of such sales the goods are actually delivered for consumption in another State;3 a contract of sale must involve transport of goods from one State to another under the contract of sale.4

So the true test is that where under a contract of sale, there is a transport of goods from outside a State into the territory of the State, and the contract itself involves the movement of goods across the border, the transaction is stamped with the character of an inter-State sale. Nothing more is necessary. In other words, where the sale or purchase occasions the transport of goods from one State to another, the sale or purchase would be in the course of inter-State trade.

1. Tungabhadra Industries v. State of Andhra Pradesh, AIR 1966 AP 85 para. 18 (FB) (March 1966 issue).

2. Mohan Lal Hargovind Das v. State of Madhya Pradesh, (1955) 2 STC 509: 1955-56 STC 687.

3. Ram Narain & Sons Ltd. v. Assistant Commissioner of Sales Tax, AIR 1955 SC 765 (773): 6 STC 627.

4. Bengal Immunity Co. Ltd. v. State of Bihar, AIR 1955 SC 661 (734): 6 STC 446.

Section 5 of the Central Sales Tax Act, 1956 - Taxation by the States of Sales in the Course of Import Back

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