ENDUPURI NARASIMHAM AND SON vs THE STATE OF ORISSA AND OTHERS

The Supreme Court held that the transactions of sale made by the petitioner, a registered dealer under the Orissa Sales Tax Act, 1947, were taxable under Section 5(2)(a)(II) as they occurred wholly within the State of Orissa, despite the goods being sold to dealers outside the State. The Court clarified that a purchase made inside a State cannot be classified as inter-State trade unless there is transport of goods from one State to another under a contract of sale. The imposition of tax on such transactions does not violate Article 286(2) of the Constitution of India.