State purchase tax applies where goods bought locally are later sent any obligation linking the sale to interstate movement.

Purchase tax was held sustainable on fish bought within Orissa because the goods were purchased by the assessee as buyer, not as commission agent, and later despatch outside the State did not affect the State levy. The statutory scheme under section 3-B operated with single-point taxation and did not bar tax where no constitutional or Central Sales Tax restriction applied. The transaction was also not treated as inter-State trade, because section 3(a) of the Central Sales Tax Act applies only where movement between States is occasioned by the sale or purchase itself. As no obligation linked the purchase to outward movement, the later sale in Calcutta did not change the tax character.

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Issues: (i) Whether purchase tax under section 3-B of the Orissa Sales Tax Act could be levied on fish purchased within Orissa though the fish were intended for and in fact sold outside the State. (ii) Whether the purchase of fish could be treated as a purchase in the course of inter-State trade so as to exclude levy under the State Act.

Issue (i): Whether purchase tax under section 3-B of the Orissa Sales Tax Act could be levied on fish purchased within Orissa though the fish were intended for and in fact sold outside the State.

Analysis: Section 3-B authorises the State to declare goods liable to purchase tax and its proviso operates consistently with the scheme of single point taxation under section 8. The statutory arrangement is that the same goods are not to suffer both sales tax and purchase tax at the same point. Once the assessee was found to be a purchaser and not a commission agent, the mere fact that the fish were later sent outside Orissa did not defeat the levy. The absence of a constitutional or Central Sales Tax restriction left the purchase taxable within the State.

Conclusion: The levy of purchase tax on the fish purchased by the assessee within Orissa was valid and was not barred by section 3-B of the Orissa Sales Tax Act.

Issue (ii): Whether the purchase of fish could be treated as a purchase in the course of inter-State trade so as to exclude levy under the State Act.

Analysis: A transaction falls within section 3(a) of the Central Sales Tax Act, 1956 only when the movement of goods from one State to another is occasioned by the sale or purchase itself. The controlling test is whether there is an integral nexus or obligation linking the transaction with the movement, akin to the principles governing export transactions under section 5(2). On the facts, there was no contractual, statutory, or understood obligation requiring the assessee to export the fish, and the fishermen who sold the fish had no connection with any movement outside the State. The later despatch of fish to Calcutta was only a subsequent act by the purchaser and did not convert the purchase into an inter-State trade transaction.

Conclusion: The purchase of fish was not in the course of inter-State trade and remained taxable under the Orissa Sales Tax Act.

Final Conclusion: The reference was answered against the assessee and the State was held competent to impose purchase tax on the fish purchased within Orissa.

Ratio Decidendi: Where a purchaser buys goods within the State and later exports or sends them outside the State without any obligation linking the sale or purchase to that movement, the transaction is neither protected as inter-State trade nor exempt from State purchase tax merely because the goods are ultimately sold outside the State.

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