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TMI Blog1978 (10) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee dealt in foodgrains and oil-seeds. It purchased these commodities on its own account as also on commission for ex-U.P. principals. The purchases made for ex-U.P. principals were from three sources, (i) from registered dealers, (ii) from cartmen, and (iii) from agriculturists. In the case of purchases made from the registered dealers, the assessee paid the price of the commodity purchased and thereafter the registered dealers used to despatch the goods to the ex-U.P. principals. In the case of purchases made from cartmen and agriculturists, the assessee after purchasing the goods used to despatch them on the same day if railway wagons were available but, in case they were not available, the longest interval not being more than three days. The Sales Tax Officer assessed these purchases under section 3-D of the Act. He repelled the assessee's contention that the purchases made were in the course of interState trade and commerce. Apart from these transactions, the assessee also sold foodgrains received in its commission agency from the ex-U.P. dealers. These sales were taxed under section 3-D(2), although the assessee contended that he was not the first purchaser of these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur both in section 3-D(1) and section 3-D(2) and, as such, unless there is some contextual indication to the contrary, the same meaning which is to be ascribed to the words "first purchase" in section 3-D(1) has to be given to those words in section 3-D(2). As the Act has to be interpreted as not having extra-territorial operation, the words "first purchase" in section 3-D(1) obviously refer to the first purchase made within the State. It would be doing no violence to the context of section 3-D(2) in case the same meaning is ascribed to the words "first purchase" as has to be given to them under section 3-D(1). This conclusion is fortified further by the consideration that both section 3-D(1) and section 3-D(2) are parts of the charging provision relating to purchase tax. This being so, the fact that the notified commodities were purchased outside the State and brought inside the State to be sold through a selling agent would not absolve the selling agent from paying the tax, where the sale had been effected to unregistered dealers. All that is required in such cases is that the transaction sought to be taxed must be a first purchase by an unregistered dealer within the State of U. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... na[1973] 32 S.T.C. 629 (S.C.); A.I.R. 1973 S.C. 2526. and State of Tamil Nadu v. Cement Distributors (Pvt.) Ltd.[1975] 36 S.T.C. 389 (S.C.) Thus, where goods have moved as a result of the contract of sale or the movement had been caused by such a contract of sale, the transaction would be an inter-State sale. In the present case, we are concerned with the question as to whether the purchases have occasioned the movement of the goods Inasmuch as the ex-U.P. purchasers and the assessee contracted that the goods should be purchased by the assessee on behalf of the ex-U.P. principals and thereafter the goods should be sent to the buyers outside U.P., it is clear that the goods moved pursuant to the contract of purchase entered into between the purchasing agent and the ex-U.P. buyers. Although, the cases referred to were dealing with the question as to whether the contract of sale had caused the movement, the same principle would apply in the case of purchases, as section 3 embraces both sales and purchases. The matter appears to be concluded by two decisions of the Supreme Court. In A. Hajee Abdul Shukoor & Co. v. State of Madras[1964] 15 S.T.C. 719 at 731 (S.C.)., their Lordships gave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... situation obtains here. These two decisions really conclude the point, for the ex-U.P. buyers bought through the commercial agency of the assessee and the assessee arranged delivery of the goods to the ex-U.P. destinations. Sri V.D. Singh, the standing counsel, contended that, in view of the decision of the Supreme Court in Balabhagas Hulaschand v. State of Orissa[1976] 37 S.T.C. 207 at 214 (S.C.); A.I.R. 1976 S.C. 1016 at 1021., before a sale can be said to take place in the course of inter-State trade or commerce, three tests must be satisfied: (i) that there is an agreement to sell, which contains a stipulation expressed or implied regarding the movement of the goods from one State to another, (ii) that in pursuance of the said contract the goods in fact moved from one State to another, and (iii) that ultimately a concluded sale takes place in the State where the goods are sent, which must be other than the State from which the goods moved. It was urged that none of the conditions are satisfied in the present case. Adumbrating this contention further, it was said that there can be no case of an inter-State sale where the goods have moved after a concluded sale. So far as the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where the sale is purely an internal sale having taken place in State X and the movement of goods is not occasioned by the sale but takes place after the property is purchased by B and becomes his property." The simple answer to this illustration is that the purchases in the present case have been effected through a commercial agent and the illustration given in A. Hajee Abdul Shukoor's case[1964] 15 S.T.C. 719 (S.C.).is more apposite and is to be preferred. Sri V.D. Singh then relied strongly on certain observations in the case of Ben Gorm Nilgiri Plantations Co. v. Sales Tax Officer[1964] 15 S.T.C. 753 at 760 (S.C.). for the contention that unless the seller is directly connected with the movement of the goods, the sale and the movement would not be an integrated transaction as required by section 3(a). The observations are to be found on page 760 and are to the following effect: "There is nothing in law or in the contract between the parties, or even in the nature of the transactions which prohibits diversion of the goods for internal consumption. The sellers have no concern with the actual export of the goods, once the goods are sold. They have no control over the goods. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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