C.S.P. Singh, J.
1. The revising authority has referred the following three questions of law for the opinion of this Court:
(1) Whether, under the facts and circumstances of the case, the Additional Revising Authority, Gorakhpur Range, Gorakhpur, was legally justified to hold that the purchases of foodgrains and oil-seeds in U. P. by agents of ex-U. P. principals were not liable to tax under Section 3-D being inter-State purchases within the meaning of Section 3(a) of the Central Sales Tax Act ?
(2) Whether, under the facts and circumstances of the case, the assessee is liable to pay tax under Section 3-D(2) of the U. P. Sales Tax Act on sales of foodgrains made by him to unregistered dealers on behalf of ex-U. P. principals ?
(3) If the answer to the first question is in the negative and to the second question in the affirmative then whether the Additional Judge (Revisions), Gorakhpur, was justified in setting aside the assessment ?
2. 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. la the case of purchases made from the registered dealers, the asssssee 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 inter-State 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 commodities. The view taken by the Sales Tax Officer was upheld on appeal but the revising authority held in favour of the assessee.
3. It will be convenient to take up the second question first, as the discussion is short. In order to answer this question, it is necessary to extract the relevant part of Section 3-D(1) and Section 3-D(2) :
3-D. (1) Except as provided in Sub-section (2), there shall be levied and paid, for each assessment year or part thereof, a tax on the turnover, to be determined in the prescribed manner....
3-D. (2) Where in respect of any goods notified under Sub-section (1), the purchaser or, as the case may be, the first purchaser, whether on his own account or on account of any one else, is a person other than a registered dealer, there shall be levied and paid, for each assessment year or part thereof, a tax on the turnover, to be determined in the prescribed manner, of sale of such goods by the dealer who sells the goods or through whom the goods are sold to such purchaser, and the rate of tax shall be the same as notified under Sub-section (1).
4. Although the language of Section 3-D(2) is little involved, but a close perusal thereof indicates that where goods notified in Sub-section (1) are first purchases by a person, who is not a registered dealer from a selling agent, the turnover will be assessed in the hands of the selling agent. In the present case, the unregistered dealers had purchased from the assessee, who was the selling agent of ex-U. P. principals. Thus, two of the conditions required for the applicability of Section 3-D(2) are fulfilled, viz., the purchases should be made by an unregistered dealer and the sale should be made by a purchasing agent. The question, however, remains as to whether the purchases made by the unregistered dealers from the assessee was first purchases within the meaning of Section 3-D. Sri V. D. Singh, the standing counsel, contended that the words 'first purchase' meant the first purchase of the notified commodities in the State and the fact that before it was sold in the State of U. P., it had been purchased earlier in some other State is not relevant for deciding the taxability of the purchases under Section 3-D. On the contrary, the assessee's contention is that the words 'first purchase' meant a first purchase made anywhere, not necessarily within the State. The words 'first purchase' occur 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. P. and as, in the present case, this is so, the assessee was liable to be taxed on this turnover.
5. Coming now to the first question, the facts essential for answering the question have already been substantially stated earlier. It is not disputed that in case the matter is covered by Section 3 of the Central Sales Tax Act, purchase tax under Section 3-D of the U. P. Act cannot be levied. The relevant part of Section 3 of the Central Sales Tax Act (hereinafter to be referred as the Act) may now be referred to :
3. 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.
6. It will be seen that if a sale or purchase occasions the movement of goods from one State to another, Section 3 converts it into a sale or purchase in the course of inter-State trade or commerce. In the present case, the goods have been sold to the ex-U. P. principals through the agency of the purchasing agents and the purchasing agents had sent the goods to the ex-U. P. principals. In order to attract Section 3(a), the movement of the goods should be occasioned either by the sale or the purchase. It is not necessary that both should have occasioned the movement of the goods. In the present case, the purchase orders placed by the ex-U. P. principals to the assessee are not on the record but, from the conduct of the parties and on the facts found, it is clear that the ex-U. P. principals contracted with the assessee that he should purchase goods on their behalf in U. P. and despatch them to ex-U. P. destinations on the payment of commission. The purchases made by the assessee were thus contractual and the goods were sent to the ex-U. P. principals in fulfilment of the contract. The question is whether these purchases occasioned the movement of the goods from one State to another. The word 'occasions' the movement of goods has been the subject-matter of interpretation by the Supreme Court in a large number of cases. In the case of Tata Iron & Steel Co. Ltd. v. S. R. Sarkar A.I.R. 1961 S.C. 65, it was held that a sale can be said to occasion the movement of goods where the movement is the result of a covenant or incident of the contract of sale. To the similar effect are the decisions in the cases of Kelvinator of India Ltd. v. State of Haryana A.I.R. 1973 S.C. 2526 and State of Tamil Nadu v. Cement Distributors (Pvt.) Ltd. A.I.R. 1975 S.C. 1142. 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  15 S.T.C. 719 at 731 (S.C.), their Lordships gave an example of an inter-State trade on page 731:
The mere fact that the articles sold in the State had been brought from outside the State does not make the sale of that article a sale in the course of inter-State trade or commerce. It is only when A, in State X, purchased through a commission agent in State Y, and receives the articles purchased through the commercial agency that the sale comes within the expression 'in the course of inter-State trade'. (See State of Travancore-Cochin v. Shanmugha Vilas Cashew-nut Factory  4 S.T.C. 205 at 218 (S.C.).
7. The other decision is the case of State of Travancore-Cochin v. S. V. C. Factory  4 S.T.C. 205 at 218 (S.C.), to which reference has been made in the decision just noticed. There the court was concerned with Article 286 of the Constitution. One of the questions that arose as to whether the transactions, the description of which will be given hereinafter, fell within Article 286(2). Article 286(2) is to the following effect:
Article 286(2). Except in so far as Parliament may by law otherwise provide, no law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of any goods where such sale or purchase takes place in the course of inter-State trade or commerce.
8. The finding given by the High Court was not clear as to how purchases were effected by the dealers. The assessee's contention was that the purchases were effected and deliveries taken by their own paid servants outside the State of Travancore-Cochin and thereafter brought inside the State and as such the sales were outside sales. On the other hand, the State's contention was that though the purchases were made outside the State in the neighbouring district of Madras, deliveries were effected through ordinary commercial channels by employing commission agents, who made the purchases and arranged for the deliveries at the assessee's depots within the State. Referring to the position in law, in case the contention made by the State was correct, their Lordships of the Supreme Court observed on page 218 as follows:
On the other hand, if, as claimed by the Advocate-General, the purchases were effected by the employment of firms doing business as commission agents outside the State and the deliveries were made through normal commercial channels, the transactions would partake of an inter-State character and fall under Clause (2).
9. A similar 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.
10. 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 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.
11. 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 latter part of this contention is concerned, that is based on the observations contained on page 1021 of the Reports (page 214 of 37 S.T.C.), wherein it was observed :
Furthermore we can hardly conceive of any case where a sale would take place before the movement of goods.
12. So far as these tests and observations are concerned, they have to be read in the context of the facts of that case. The question that arose in the case was as to whether goods which had moved in pursuance to an agreement for sale and not an agreement of sale would fall under Section 3(a) of the Act. The three tests that were formulated have to be read in the context of the facts of that case and, in every case, where movement of goods had started in pursuance to an agreement for sale, the tests have to be satisfied. As to #the observation that the movement of goods normally takes place before the sale, the learned Judges have on page 1022 (page 214 of 37 S.T.C.), held that although cases where movement had started after the sale are rare, inasmuch as Section 3 contemplates a movement in pursuance of contract of sale, such transactions would also be covered by Section 3(a) of the Act. There is another aspect of this matter. In the present case, we are concerned with the question as to whether the purchases have occasioned the movement of the goods and not a case where the goods have moved in pursuance to a contract for sale or an agreement for sale. It has already been seen that Section 3(a) of the Act applies both to cases where the movement of goods is in pursuance of a purchase or a sale. Once this is kept in mind and the word 'purchase' is substituted for the word 'sale' or 'sell', in the three tests formulated, all the requirements are met even in the present case. The agreement of purchase contains an implied stipulation for the movement of goods from one State to another and the goods have moved outside U. P. The purchase ultimately took place when the ex-U. P. buyers took delivery of the goods outside the State.
13. Reference may also be made to illustration III given on page 1021 of the Reports (page 214 of 37 S.T.C.) in this very case. Illustration given is :
Case No. III.-B, a purchaser in State Y, comes to State X and purchases the goods and pays the price thereof. After having purchased the goods he then books the goods from State X to State Y in his own name. This is also a case 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.
14. 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  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  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. There is, therefore, no direct connection between the sale and export of the goods which would make them parts of an integrated transaction of sale in the course of the export.
15. In the first place, this case dealt with the question of an export sale and not with a case of an inter-State purchase. Secondly, in the present case, there is a contract between the ex-U. P. buyers and the assessee to buy notified goods and send them to the ex-U. P. principals. On the purchase of the goods for the ex-U. P. principals in their account, the assessee could not divert the goods. As regards the necessity of the seller to have a say in the movement of the goods, the tests appear to be satisfied, as it was the purchaser who had contracted with the ex-U. P. buyers and sent the goods outside the State.
16. These cases do not match the facts of the present case and it appears to be more akin to the cases alluded to in Hajee Abdul Shukoor's case  15 S.T.C. 719 (S.C.).
17. So far as the third question is concerned, that becomes academic as the first question is being answered in the affirmative.
18. The first and the second questions are answered in the affirmative and the third question is returned unanswered. The assessee is entitled to its costs, which is assessed at Rs. 200.